Ch 11

Question 1

In northern CA, escrow agents =___ companies

In southern CA, escrow agents = independent escrow companies

Answer 1

title insurance

Question 2

Goals of RESPA:

1) Inform borrowers about ___ costs
2) Eliminate kickbacks and ___ fees

Answer 2

closing

referral

Question 3

Escrow agents are required by THESE rules to report most sales of real property to the Internal Revenue Service

Answer 3

1099-S

“an escrow agent must use a 1099-s form to report the name of the seller and gross proceeds for most sales of real property”

Question 4

THIS law requires 15% of the amount realized by the seller to be withheld and forwarded to the Internal Revenue Service if the seller is not a US citizen or resident alien

Answer 4

FIRPTA

FIRPTA = Foreign Investment in Real Property Tax Act

Question 5

___ prohibits a lender from requiring excessive deposits into an impound account

Answer 5

RESPA

RESPA = Real Estate Settlement Procedures Act

Question 6

a requirement of RESPA is that a lender cannot require excessive deposits, meaning more than enough to cover expenses as they come due, plus a __-month cushion

Answer 6

2

Question 7

the purpose of this law is to prevent foreign investors from avoiding their tax liability when they sell property located in the us

Answer 7

FIRPTA

FIRPTA helps the IRS collect income taxes that foreign investors owe on real property sales

Question 8

withheld funds due to FIRPTA must be sent to the IRS within __ days after the closing date

Answer 8

20

Question 9

___ Act prohibits lenders from paying kickbacks to anyone for referrals in any federally related loan transaction

Answer 9

RESPA

RESPA prohibits kickbacks and referral fees paid by lenders

Question 10

Which of the following forms does an escrow agent use to report to the Internal Revenue service the gross proceeds of a sale of real property”

Answer 10

1099-s

Question 11

A seller’s costs are a $23,400 commission, $396 in excise tax, $650 for a buyers policy of title insurance, $250 in escrow fees, and a $246,000 loan payoff. The seller will receive a $360,000 purchase price and a $350 refund on property taxes paid in advance. How much are the seller’s proceeds?

Answer 11

$89,654

1) purchase price + prop tax refund:
$360,000+$350= $360,350

2) seller’s costs + excise tax + buyers policy of title insurance + escrow fees + loan payoff:
$23,400+$396+$650+$250+$246,000= $270,696

3)
$360,350-$270,696= $89,654

Question 12

which of the following insurance properties will protect against defects that only an inspection would reveal, such as encroachments or adverse possession?

Answer 12

Extended policy of title insurance