Ch 12 Quizzes Flashcards

1
Q

A(n) _____ is a third party who holds deeds and funds until the closing date.

A

Escrow agent

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2
Q

T/F: Deposits in escrow may be transferred from one party to the other without conditions.

A

False

A depositor must require that certain events occur before the deposit can be transferred to the other party.

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3
Q

T/F: A buyer who works for an escrow agent may act as the escrow agent in his own transaction.

A

FALSE

A buyer or seller may not act as an escrow agent in his or her own transaction.

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4
Q

T/F: An escrow deposit can be revoked

A
False

A valid escrow must have four basic elements: 
an enforceable contract, 
a neutral escrow agent, 
irrevocable deposits, and 
conditions imposed on those deposits
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5
Q

Who do escrow agents owe fiduciary duties to?

A

both the buyer and seller, as well as any other parties to the escrow (such as a lender).

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6
Q

T/F: escrow agents are dual agents

A

True

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7
Q

Escrow agents are licensed through the Department of _____

A

Business Oversight

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8
Q

When may a real estate broker be exempt from the license requirement for escrow agents?

A

when providing escrow services incidental to a real estate transaction in which he is acting as a real estate agent.

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9
Q

All escrow companies must post a ____ bond.

A

Surety

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10
Q

Surety vs fidelity bond

A

Surety:

Fidelity:

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11
Q

Escrow companies must maintain at least $_____ in liquid assets

A

$25,000

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12
Q

Escrow instructions are usually issued ____ the purchase agreement

A

after

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13
Q

If 2 contracts conflict, the court will rely on the provisions of the ____ contract

a) original
b) most recent

A

B) most recent

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14
Q

T/F: Once a depositor puts funds into escrow, he no longer owns those funds.

A

False

The general rule is that the depositor still owns the deposit, until all escrow conditions have been satisfied.

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15
Q

The Uniform Vendor and Purchaser Risk Act states that if possession transferred before the property was destroyed, the buyer must pay the full purchase price.

A

True

Under the Risk Act, if title or possession were transferred before the loss occurred, then the buyer remains responsible for the purchase price.

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16
Q

(T/F) The parties should enter into an interim occupancy agreement if a buyer takes possession before closing

A

True

An interim occupancy agreement is advisable if a buyer takes possession prior to closing, regardless of how the parties allocate the risk.

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17
Q

Under the relation back doctrine, the date of title transfer ‘relates back’ to___, if the seller dies or becomes incompetent

A

the date of the deposit into escrow

18
Q

An escrow agent will report sales proceeds to the IRS using form ____

A

1099-S

19
Q

A buyer must withhold 15% of the seller’s net proceeds and send them to the IRS, if the seller is _____

A

a non-resident alien

20
Q

To terminate a sale that had gone into escrow, both parties would need to cancel ____ and _____

A

The purchase agreement

The escrow instructions

21
Q

RESPA stands for

A

Real Estate Settlement & Procedures Act

22
Q

What is another term for RESPA?

A

Regulation X

23
Q

What provides consumers with the opportunity to shop for their best possible mortgage solution

A

RESPA

24
Q

Who is responsible for regulating RESPA?

A

Consumer Financial Protection Bureau (CFPB)

25
Q

What loans are exempt from RESPA? (7 types)

A
  • Loans on property 25 acres or more
  • Business purpose loans including commercial and agricultural
  • Temporary (interim) financing such as construction or bridge loans
  • Vacant land, unless structure is there within 2 years of settlement date
  • Any assumed mortgage loan where the lender did not have the right to approve a successive borrower on existing loan
  • Any conversion of a mortgage loan in which the existing terms are modified and a new note is not required (i.e. loan modification)
  • Loans sold in the secondary market to someone other than FNMA, FHLMC, or other non-federally-regulated entities
26
Q

What disclosures are all the required disclosures with RESPA?

A
(H)ome Ownership Counseling Disclosure
(F)orce Place Insurance
(F)orced Place Reminder 
(L)oss Mitigation
(A)ffiliated Business Arrangement
(A)nnual Escrow
(I)nitial Escrow
(G)FE
(H)UD Settlement Cost Booklet
(H)UD-1 & HUD-1A
(T)ransfer Statements (MSDS/NTS)
27
Q

The initial disclosure of the estimated settlement costs of a mortgage loan, expressed in dollar amounts = ____

A

GFE

28
Q

Key areas of GFE

A
Purpose
Summary of Loan
Summary of Settlement Charges
Understanding Settlement Charges
Instructions
29
Q

Any service provided in connection with closing

A

Settlement service

30
Q

RESPARequirements (5)

A
1)
2)
3)
4)
5)
31
Q

affiliated business arrangement disclosure

A

_____

32
Q

Impound account

A

___

33
Q

Before title insurance existed, a buyer protected himself by paying for an abstract of title.

A

True

An abstract of title is a summary of a property’s chain of title and any encumbrances found in the public records. This was a predecessor to title insurance.

34
Q

(T/F) A title insurance contract that protects the buyer is known as an owner’s policy.

A

True

The owner’s policy (which is traditionally a standard coverage policy) is for the protection of the buyer.

35
Q

(T/F) The insurer is always liable for the total amount of the policy holder’s losses.

A

False

The insurer is liable for the policy holder’s losses, up to the policy amount. If the losses exceed that amount, the insurer does not have further liability.

36
Q

(T/F) Title insurance is paid through annual premiums.

A

False.

Title insurance requires only one premium payment, which is paid at closing.

37
Q

(T/F) An owner’s policy lasts as long as the policy holder or her heirs own the property.

A

True

38
Q

(T/F) A preliminary report is considered to be a reliable, binding representation as to the condition of the title.

A

False.

A preliminary report is only an offer to issue a title insurance policy on the stated terms.

39
Q

(T/F) A standard coverage policy may also be known as an ALTA policy.

A

False.

A standard coverage policy may be known as a CLTA (California Land Title Association) policy.

40
Q

(T/F) Extended coverage, unlike standard coverage, covers matters that would only be discovered upon inspection, such as adverse possession and encroachments.

A

True.

Extended coverage covers adverse possession, encroachments, unrecorded easements, and survey errors.

41
Q

(T/F) Homeowner’s coverage is broader than standard coverage, and even includes certain ‘post-policy’ matters.

A

True.

Homeowner’s coverage, which many buyers obtain, covers many of the same problems as an extended policy, including some ‘post-policy’ matters.

42
Q

(T/F) In California, a title insurer may prepare a preliminary report at no charge.

A

False