Chapter 22 - Closing The Real Estate Transaction

Question 1

Which of the following is TRUE of real estate closings in Pennsylvania?

• Closings are generally conducted by real estate salespersons.
• The seller pays the broker fees.
• The buyer usually receives the rents for the day of closing.
• The buyer pays for title evidence

Answer 1

The buyer pays for title evidence

Question 2

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

Answer 2

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

Question 3

Which property does the Consumer Financial Protection Bureau require that the Closing Disclosure be used?

Answer 3

Federally related loan for a single-family home

Question 4

Which of the following would a lender generally require to be produced at the closing?

• Market Value Appraisal
• Credit Report
• Application
• Title Insurance Policy

Answer 4

-Title Insurance Policy

Question 5

The earnest money on deposit with the broker is

Answer 5

credit to the buyer

Question 6

The Loan Estimate and Closing Disclosure must be used to illustrate all settlement charges for …

Answer 6

residential transactions financed by federally related mortgage loans.

Question 7

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 debts is called?

Answer 7

-proration

Question 8

Security deposits should be listed on a closing statement as a credit to the …

Answer 8

buyer

Question 9

At the closing, the seller’s attorney gave credit to the buyer for certain accrued items. These items were …

Answer 9

-bills relating to the property that will have to be paid by the buyer

Question 10

An item prepaid by the seller is …

Answer 10

credited to the seller

Question 11

Under the new rules, if the annual percentage rate (APR) has increased prior to closing, for how many days, if any, is settlement delayed?

Answer 11

-Three Business Days

Question 12

At closing, the listings broker’s commission is usually shown as …

Answer 12

debit to seller

Question 13

The TILA RESPA Integrated Disclosure requires that, within three days of loan application, lenders …

Answer 13

-provide loan estimate

Question 14

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

Answer 14

title commitment or title insurance policy

Question 15

A mortgage reduction certificate is executed by …

Answer 15

a lending institution

Question 16

A debit is a …

Answer 16

an expense

Question 17

The details of a sales transaction are ALWAYS governed by the …

Answer 17

-terms of the properly executed purchase contract

Question 18

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

Answer 18

-debit to the seller

Question 19

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

Answer 19

-title commitment or title insurance policy

Question 20

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

Answer 20

-the residential borrower has a right to receive an estimate of available closing costs before the closing.

Question 21

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

Answer 21

lenders financing the purchase of a borrowers residence

Question 22

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

• The seller must clear the title so that the condition of the title complies with the terms of the contract
• the purchaser must pay the balance of the purchase price to the seller
• the broker must attend the closing to receive any commission
• the seller must deliver the deed to the purchaser.

Answer 22

-the broker must attend the closing to receive any commission

Question 23

The Real Estate Settlement Procedures Act (RESPA) is administered by the …

Answer 23

Department of Housing and Urban Development

Question 24

Which item is NOT usually prorated between the buyer and the seller at closing?

• Recording Charges
• Real Estate Taxes
• Rents
• Utility Bills

Answer 24

-recording charges

Question 25

The closing statement involves debits and credits to the parties in the transaction. A debit is a …

Answer 25

an expense

Question 26

In a closing statement, an accrued item is …

Answer 26

an item that is unpaid but is due

Question 27

The Real Estate Settlement Procedures Act requires …

Answer 27

that disclosure be made of all closing costs prior to the closing.

Question 28

An example of a kickback PROHIBITED by RESPA is a

• fee paid by broker A to broker B for referring a buyer to A
• share of the commission paid by a broker to her salesperson
• fee paid by surveyor to a broker for a lead on a property to be surveyed
• flower arrangement that a salesperson sends to the buyer as a housewarming gift.

Answer 28

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

Question 29

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

Answer 29

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