Ch 12 Quizzes Flashcards
A(n) _____ is a third party who holds deeds and funds until the closing date.
Escrow agent
T/F: Deposits in escrow may be transferred from one party to the other without conditions.
False
A depositor must require that certain events occur before the deposit can be transferred to the other party.
T/F: A buyer who works for an escrow agent may act as the escrow agent in his own transaction.
FALSE
A buyer or seller may not act as an escrow agent in his or her own transaction.
T/F: An escrow deposit can be revoked
False  A valid escrow must have four basic elements: an enforceable contract, a neutral escrow agent, irrevocable deposits, and conditions imposed on those deposits
Who do escrow agents owe fiduciary duties to?
both the buyer and seller, as well as any other parties to the escrow (such as a lender).
T/F: escrow agents are dual agents
True
Escrow agents are licensed through the Department of _____
Business Oversight
When may a real estate broker be exempt from the license requirement for escrow agents?
when providing escrow services incidental to a real estate transaction in which he is acting as a real estate agent.
All escrow companies must post a ____ bond.
Surety
Surety vs fidelity bond
Surety:
Fidelity:
Escrow companies must maintain at least $_____ in liquid assets
$25,000
Escrow instructions are usually issued ____ the purchase agreement
after
If 2 contracts conflict, the court will rely on the provisions of the ____ contract
a) original
b) most recent
B) most recent
T/F: Once a depositor puts funds into escrow, he no longer owns those funds.
False
The general rule is that the depositor still owns the deposit, until all escrow conditions have been satisfied.
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.
True
Under the Risk Act, if title or possession were transferred before the loss occurred, then the buyer remains responsible for the purchase price.
(T/F) The parties should enter into an interim occupancy agreement if a buyer takes possession before closing
True
An interim occupancy agreement is advisable if a buyer takes possession prior to closing, regardless of how the parties allocate the risk.
Under the relation back doctrine, the date of title transfer ‘relates back’ to___, if the seller dies or becomes incompetent
the date of the deposit into escrow
An escrow agent will report sales proceeds to the IRS using form ____
1099-S
A buyer must withhold 15% of the seller’s net proceeds and send them to the IRS, if the seller is _____
a non-resident alien
To terminate a sale that had gone into escrow, both parties would need to cancel ____ and _____
The purchase agreement
The escrow instructions
RESPA stands for
Real Estate Settlement & Procedures Act
What is another term for RESPA?
Regulation X
What provides consumers with the opportunity to shop for their best possible mortgage solution
RESPA
Who is responsible for regulating RESPA?
Consumer Financial Protection Bureau (CFPB)
What loans are exempt from RESPA? (7 types)
- 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
What disclosures are all the required disclosures with RESPA?
(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)
The initial disclosure of the estimated settlement costs of a mortgage loan, expressed in dollar amounts = ____
GFE
Key areas of GFE
Purpose Summary of Loan Summary of Settlement Charges Understanding Settlement Charges Instructions
Any service provided in connection with closing
Settlement service
RESPARequirements (5)
1) 2) 3) 4) 5)
affiliated business arrangement disclosure
_____
Impound account
___
Before title insurance existed, a buyer protected himself by paying for an abstract of title.
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.
(T/F) A title insurance contract that protects the buyer is known as an owner’s policy.
True
The owner’s policy (which is traditionally a standard coverage policy) is for the protection of the buyer.
(T/F) The insurer is always liable for the total amount of the policy holder’s losses.
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.
(T/F) Title insurance is paid through annual premiums.
False.
Title insurance requires only one premium payment, which is paid at closing.
(T/F) An owner’s policy lasts as long as the policy holder or her heirs own the property.
True
(T/F) A preliminary report is considered to be a reliable, binding representation as to the condition of the title.
False.
A preliminary report is only an offer to issue a title insurance policy on the stated terms.
(T/F) A standard coverage policy may also be known as an ALTA policy.
False.
A standard coverage policy may be known as a CLTA (California Land Title Association) policy.
(T/F) Extended coverage, unlike standard coverage, covers matters that would only be discovered upon inspection, such as adverse possession and encroachments.
True.
Extended coverage covers adverse possession, encroachments, unrecorded easements, and survey errors.
(T/F) Homeowner’s coverage is broader than standard coverage, and even includes certain ‘post-policy’ matters.
True.
Homeowner’s coverage, which many buyers obtain, covers many of the same problems as an extended policy, including some ‘post-policy’ matters.
(T/F) In California, a title insurer may prepare a preliminary report at no charge.
False
