22. Closing the Real Estate Transaction

Question 1

ACCRUED ITEMS

Answer 1

On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.

Question 2

CLOSING

Answer 2

An event where promises made in a sales contract are fulfilled and mortgage loan funds (if any) are distributed to the buyer.

Question 3

CLOSING STATEMENT

Answer 3

A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made, and all cash paid out in the transaction.

Question 4

COMPUTERIZED LOAN ORIGINATION (CLO)

Answer 4

An electronic network for handling loan applications through remote computer terminals linked to various lenders’ computers.

Question 5

CONTROLLED BUSINESS ARRANGEMENT (CBA)

Answer 5

An arrangement where a package of services (such as a real estate firm, title insurance company, mortgage broker and home inspection company) is offered to consumers.

Question 6

CREDIT

Answer 6

On a closing statement, an amount entered in a person’s favor—either an amount the party has paid or an amount for which the party must be reimbursed.

Question 7

DEBIT

Answer 7

On a closing statement, an amount charged; that is, an amount that the debited party must pay.

Question 8

ESCROW

Answer 8

The closing of a transaction through a third party called an escrow agent, or escrowee, who receives certain funds and documents to be delivered upon the performance of certain conditions outlined in the escrow instructions.

Question 9

PREPAID ITEMS

Answer 9

On a closing statement, items that have been paid in advance by the seller, such as insurance premiums and some real estate taxes, for which he or she must be reimbursed by the buyer.

Question 10

PRORATIONS

Answer 10

Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at the closing.

Question 11

REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)

Answer 11

The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.

Question 12

SURVEY

Answer 12

The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions, and position of a house on a lot, including the determination of any existing encroachments or easements.

Question 13

UNIFORM SETTLEMENT STATEMENT

Answer 13

A special HUD form that itemizes all charges to be paid by a borrower and seller in connection with the settlement.