Which regulation primarily governs the disclosure of settlement costs?

The regulation that primarily governs the disclosure of settlement costs is Regulation X. This regulation implements the Real Estate Settlement Procedures Act (RESPA), which ensures that borrowers are provided with clear and accurate information regarding the costs associated with closing a mortgage loan.

Regulation X mandates that lenders provide a Good Faith Estimate of settlement costs, which helps borrowers understand the various fees and charges they can expect to encounter during the settlement process. Additionally, Regulation X requires the delivery of a HUD-1 Settlement Statement, which outlines actual costs incurred at closing, thereby promoting transparency and preventing any potential surprises at the closing table.

This focus on transparency in settlement costs is essential for consumer protection, as it empowers borrowers with the knowledge needed to make informed financial decisions when purchasing real estate. The regulation also seeks to eliminate abusive practices associated with settlement services.