According to RESPA, who is responsible for delivering a good faith estimate of settlement costs?

The correct answer is that the lending institution is responsible for delivering a good faith estimate of settlement costs. Under the Real Estate Settlement Procedures Act (RESPA), lenders are required to provide borrowers with a good faith estimate (GFE) of settlement costs within three business days after a loan application is submitted. This estimate outlines the expected costs associated with the mortgage process, including loan fees, closing costs, and other expenses.

This requirement is in place to help borrowers better understand the financial implications of their loan and make informed decisions about moving forward. Providing this information promotes transparency in the lending process and allows borrowers to compare costs among different lenders. The good faith estimate must be as accurate as possible, helping to avoid surprises at closing.

While other parties involved in a real estate transaction, such as the buyer, selling broker, or escrow company, each have their own responsibilities, none are mandated by RESPA to provide a good faith estimate. The buyer receives the estimate, but it is the lender who creates and delivers it. Thus, the lending institution holds the primary responsibility in this context.