Chapter 5: Closing

Question 1

Time when the buyer gives the seller the agreed upon purchase monied and in return the seller gives the buyer a deed that transfers title to the buyer

Answer 1

Closing/Settlement

Question 2

This person prepares statements and conducts proceedings at closing. Could be principal broker, supervising broker, escrow agent, buyer/seller attorney, lender representative, or title companys representative

Answer 2

Closing Agent

Question 3

What is the sequence of closing?

Answer 3

1. Seller satisfaction of mortgage
2. Sellers deed to buyer
3. Buyers mortgage

Question 4

This is prepared for the buyer, seller and RE brokers, and is a detailed accounting of all financial aspect of closing and is used to determine exactly how much is due seller at closing

Answer 4

Closing Statement

Question 5

RESPA

Answer 5

Real Estate Procedures Act 1976

Question 6

This was created to ensure that buyer and seller are fully informed as to all settlement costs, and to standardize RE settlements practices. It is administered by HUD, and only if financed by a federally related mortgage loan

Answer 6

RESPA

Question 7

What does RESPA prohibit?

Answer 7

1. Kickbacks or unearned fees
2. Prohibits seller from requiring a buyer to purchase title insurance from one particular title company
3. Prohibits the lender from collecting excessive amounts to cover property taxes and insurance payments in advance (can only collect a 2 month reserve placed in escrow account)

Question 8

T.R.I.D

Answer 8

TILA/RESPA Integrated Disclosure Rule

Question 9

also called the “Know Before You Owe” rule, combines several documents required by RESPA and TILA into two: one provided at the beginning of the process called a “Loan Estimate”, and one provided at the end called a “Closing Disclosure”.

Answer 9

TRID

Question 10

What does TRID rule not apply to?

Answer 10

HELOC, reverse mortgage, and loans secured by a mobile home

Question 11

What are the 3 categories of estimates?

Answer 11

1. Zero Tolerance
2. 10% Tolerance
3. Unlimited Tolerance

Question 12

Costs for which the actual costs cannot exceed estimated costs by any amount. These are items over which lender has control (loan origination fee, transfer fee, etc)

Answer 12

Zero Tolerance

Question 13

Charges where consumer is allowed to shop and where consumer chooses not to use the provider recommended by lender. No limit to how much these charges can exceed

Answer 13

Unlimited Tolerance

Question 14

When should the loan estimate be sent to the borrower?

Answer 14

3 days after lender receipt of loan application

Question 15

When does loan estimate expire?

Answer 15

10 days after delivered or mailed unless the borrower indicated an intent to proceed with loan

Question 16

Shows actual loan and settlement costs and MUST be received by borrower at least 3 buisness days prior to the consumption of the loan

Answer 16

Closing Disclosure

Question 17

Only revisions allowed on closing disclosure are:

Answer 17

1. If the interest rate changes in the period of time between the provision of closing disclosure and the loan consummation
2. If APR changes by more than 1/8th of a percent, or if loan producer changed, or if prepayment penalty is added to closing

Question 18

This is expressed as debts or credits on statement, the decision as to which party pays what costs (some prorated)

Answer 18

Closing Costs