Chapter 10

Question 1

The Real Estate Settlement Procedures Act (RESPA) applies to the activities of:

Answer 1

Lenders financing the purchase of a borrower’s residence

Question 2

At the closing, the real estate broker’s commission generally appears as a:

Answer 2

Debit to the seller.

Question 3

The Real Estate Settlement Procedures Act (RESPA) provides that:

Answer 3

Sellers and buyers be informed of all settlement costs

Question 4

The process by which expenses are handled at the settlement of a real estate transaction so that both the buyer and the seller pay their respective portions of the debt is called:

Answer 4

Proration

Question 5

The Real Estate Settlement Procedures Act requires:

Answer 5

That disclosure be made of all closing costs prior to closing

Question 6

An example of a kickback that is prohibited by RESPA is:

Answer 6

A fee paid by a surveyor to a broker for a lead on a property to be surveyed

Question 7

Nick agrees to purchase Greg’s property for $285,500. Nick deposits the purchase price with Vera, and Greg deposits a warranty deed for the property with Vera. Vera is instructed to record the deed in Nick’s favor when Greg shows good title to the property. Vera is also instructed to pay the purchase price, less some agreed prorations, to Greg when Nick has received the deed. This transaction is called:

Answer 7

escrow.

Question 8

At the closing, Fred’s attorney informed him that he would be giving credit to Teri, the buyer, for certain accrued items. These items represent:

Answer 8

bills related to the real estate that have not been paid as of the time of the closing.

Question 9

The details of a sales transaction are always governed by:

Answer 9

the terms of the properly executed purchase contract.

Question 10

The condition of the seller’s title is generally determined from a:

Answer 10

title commitment or title insurance policy.

Question 11

The accrued interest on an assumed mortgage loan is entered on the closing statement as a:

Answer 11

debit to the seller and a credit to the buyer.

Question 12

As provided in a valid purchase contract, the real estate transaction must be closed. This means all of the following:

Answer 12

seller must clear the title so that the condition of the title complies with the terms of the contract, purchaser must pay the balance of the purchase price to the seller, seller must deliver the deed to the purchaser.

Question 13

As provided in a valid purchase contract, the real estate transaction must be closed. This means all of the following EXCEPT that the:

Answer 13

broker must attend the closing in order to receive any commission.

Question 14

Which of the following items is NOT usually prorated between the buyer and seller at closing?

Recording charges
Real estate taxes
Rents
Utility bills

Answer 14

Recording charges

Question 15

The principal balance on an assumed mortgage loan is entered on the closing statement as a:

Answer 15

debit to the seller and a credit to the buyer.

Question 16

The Real Estate Settlement Procedures Act (RESPA) is a regulation of the:

Answer 16

Department of Housing and Urban Development.

Question 17

The closing statement involves the debits and credits to the parties in the transaction. A debit is a(n):

Answer 17

expense.

Question 18

Services offered by computerized loan origination (CLO) systems are permitted under RESPA as long as certain conditions are met. These conditions include all of the following:

Answer 18

the broker may charge whatever fee the broker determines is fair for the service, the borrower must pay whatever fees are charged for the service, the broker is required to disclose the existence of other loan products that are not part of the CLO.

Question 18

In a closing statement, an accrued item is a(n):

Answer 18

item that is unpaid but is due.

Question 19

Services offered by computerized loan origination (CLO) systems are permitted under RESPA as long as certain conditions are met. These conditions include all of the following EXCEPT:

Answer 19

the mortgage broker may pay a referral fee for the mortgage loan.

Question 20

Real estate firms are often affiliated with title insurance companies or mortgage brokers. These business arrangements are permitted by RESPA as long as:

Answer 20

the companies make a written disclosure of their relationship with one another.