Which of the following is a requirement for mortgage lenders under RESPA?

The requirement for mortgage lenders under RESPA, or the Real Estate Settlement Procedures Act, is centered around the need for transparency and consumer protection during the real estate transaction process. Disclosures about closing costs are essential because they inform borrowers about the fees and expenses they will incur at closing, thereby promoting informed decision-making.

RESPA mandates that lenders provide a Good Faith Estimate (GFE) that outlines the expected closing costs and terms of the mortgage. This requirement aims to eliminate the potential for "surprise" fees that can occur at closing, ensuring that borrowers have a clear understanding of their financial obligations well before the settlement date. Keeping consumers informed helps maintain fairness and accountability in the lending process.

The other provided choices do not align with the stipulations under RESPA. For example, there are no prohibitions on adjustable-rate mortgages under this act; rather, any such loans must also adhere to disclosure requirements. While lenders typically follow strict income verification processes and often conduct credit checks as part of their underwriting guidelines, these practices are not dictated by RESPA and do not fall under its requirements for consumer disclosures. Thus, the focus on closing cost disclosures remains a cornerstone element of RESPA’s mandate for mortgage lenders.