Ch 12 Flashcards
When are real estate brokers are exempt from the escrow licensing requirement?
When handling escrow for a transaction in which they are also providing brokerage services.
T/F: A real estate broker may charge a separate fee for escrow services
True
* note: real estate brokers are onlu exempt from escrow licensing requirements when handling escrow for a transaction in which they are also providing brokerage services.
T/F: real estate brokers may not act as escrow agents for transactions in which they have no other involvement
True
T/F: an escrow agent only represents the seller
False: An escrow agent is a dual agent until the escrow instructions have been fully executed
when a real estate broker provides escrow services, he is representing the buyer as well as the seller.
Can a broker who was acting only as the seller’s agent when negotiating the sale also provide escrow services
Yes — however, he will be acting as a dual agent when providing escrow services. Once the escrow closes, the escrow agent becomes a separate agent for each principal.
Regarding escrow procedures, which of the following is true?
A.Once escrow conditions are fully met, the agency changes from dual agency to separate agency
B.An escrow officer arbitrates disputes between the buyer and seller
C.A broker who does not have a separate license for handling escrow may handle escrow for transactions in which they have no other interest
D.Once the escrow agent has received escrow instructions from the parties, escrow is complete
A. Once escrow conditions are fully met, the agency changes from dual agency to separate agency
Before escrow instructions have been fully executed, the escrow agent is a dual agent, representing both parties. Once the conditions have been met and the transaction closes, if there are any further matters for the escrow agent to take care of on behalf of one of the parties, the escrow agent is considered to be acting as a single or separate agent for that party.
Which of the following is not exempt from the escrow agent licensing requirement?
A. A broker in her own transaction who charges a separate escrow fee
B. A broker in her own transaction who does not charge a separate escrow fee
C. A broker handling escrow for other brokers’ transactions
D. An attorney at law
C. A broker handling escrow for other brokers’ transactions
A broker is not permitted to provide escrow services in a transaction in which she is not also acting as the broker (unless she complies with the escrow licensing requirements).
- An attorney at law or a real estate broker handling her own transaction is permitted to provide escrow services without being licensed as an escrow agent.
T/F: the closing agent is always a licensed escrow agent
False
it might be a broker or one of the other parties exempt from the Escrow Law.
T/F: On the settlement statement, the good faith deposit is listed in the buyer’s credit column and the seller’s deposit column
False
It is not listed in either of the seller’s columns
The buyer makes the deposit when the purchase agreement is signed, not at closing. At closing, the deposit is applied toward the PURCHASE PRICE
T/F: in residential transactions, the broker’s commission is listed in the seller’s debit column in the settlement statement - it is not entered on the buyer’s side of the statement.
True
In residential transactions, the real estate brokerage’s commission is almost always paid by the seller.
T/F: The financing for the transaction will always appear as a credit for the buyer on the settlement statement.
True
Whatever the source of the financing, it represents the portion of the purchase price that the buyer will not have to come up with in cash at closing.
T/F: If the financing is a loan from a third party lender (such as a bank), the loan amount is listed in the buyer’s credit column. It is not listed in eithe r of the seller’s columns
True
Like the deposit, the buyer’s loan is part of the purchase price already credited to the seller, so no entry is made on the seller’s side of the statement.
if the buyer is getting a loan from an institutional lender, the loan amount will appear on the settlement statement as one of the ___ (buyer/seller’s) ___ (debits/credits)
Buyer’s credits
When one party is required to make a payment to the other, that amount will show up on the settlement statement as a ___ (debit/credit) for the paying party and also a ___ (debit /credit) for the receiving party
Debit
Credit
Ex: The buyer pays the purchase price to the seller, so the purchase price is listed in the buyer’s debit column, and also in the seller’s credit column.
Like an assumption, seller financing reduces the ___’s (buyer / seller) cash at closing.
Seller’s
If the buyer isn’t going to assume or take title subject to this existing loan, the seller will have to pay it off at closing. This amount will be a ___ for the seller on the settlement statement.
Debit
T/F: If the buyer isn’t going to assume or take title subject to this existing loan, the seller will have to pay it off at closing. This amount is neither a debit nor a credit for the buyer
True
It is only a debit for the seller
Some lenders charge a ___ penalty if the borrower pays the loan off before payment is due.
Prepayment
Why do some lenders charge the borrower a prepayment penalty for paying off the loan before it’s due?
The penalty makes up for some of the interest the lender expected from the loan but is not going to receive because of the early payoff.
If the seller is going to be charged a prepayment penalty, the lender will specify the amount of the penalty in the ____ statement.
On the ___ statement, the escrow agent will enter this amount as a ___ (debit / credit) for the seller.
beneficiary’s
settlement
debit
T/F: Mortgage interest is paid into an impound account
False
Mortgage interest is paid directly to the lebder
For which of the following loans are impound accounts required?
Select your answer below:
A. VA
B. FHA
C. Cal-Vet
D. All of the above
D. All of the above
An impound account (a reserve account for tax and insurance payments) is generally required for any of these types of loans
In a closing statement, the term “recurring costs” refers to:
A. title insurance
B. costs common to all escrows
C. deed transfer taxes
D. impound items
D. impound items
Recurring costs are the expenses that a property buyer will have to pay each year, such as property taxes, mortgage interest, and fire insurance. Lenders often require borrowers to place funds for these expenses in an impound account (a reserve account), where they are held until payment is due.
A lender is often authorized to include in a monthly mortgage payment a charge equal to 1/12th of the yearly insurance and taxes. This money is deposited into a/an:
A. balloon payment account
B. blanket account
C. impound account
D. PMI account
C. impound account
In many loans, money that will be paid toward recurring costs (such as insurance and property taxes) will be held by the lender in an impound account. It may also be referred to as a reserve account or escrow account.
