Closing Statements Flashcards
RESPA’s TRID Rule applies to what types of purchases?
Any closed end-loan secured by real property, including unimproved property
What does RESPA require lenders to give to borrowers?
The correct figures pertaining to their closing costs.
The TRID rule does not apply to what kinds of loans?
Reverse mortgages
Home equity loans
Loans secured by mobile homes or other dwellings that are not real property, if the dwelling is not attached to real estate.
Loans made by persons who are not considered “creditors” because they make five or fewer mortgages per year.
Certain no-interest loans secured by subordinate liens made for the purpose of down payment, or similar home buyer assistance, property rehabilitation, energy efficiency, or foreclosure avoidance or prevention
List three items that a buyer usually pays at closing.
Credit fees
Loan origination
Homeowner’s insurance
If an item is paid for in advance by the seller, how will it be handled on the settlement statement?
The buyer will receive a debit and the seller will receive a credit.
What do you call those items that the seller has incurred but have not been paid and how will they be handled on the settlement statement?
These items are paid in arrears. The buyer will get a credit and the seller will get a debit.
What page of the Loan Estimate form gives the details of the closing costs?
page 2
When must the Closing Disclosure be delivered to the buyers?
at least 3 days prior to closing
RESPA
created to ensure that the buyer and seller in a residential real estate transaction involving a new first mortgage loan have knowledge of all settlement costs
According to the TRID rule Effective October 1, 2015
Lenders must give a copy of the booklet, “Your home loan toolkit” to every person at the time of application for a loan.
Lenders must provide a Loan Estimate of settlement costs at the time of loan application or within three business days of application.
A Closing Disclosure, a form designed to detail all financial particulars of a transaction, must be delivered to the borrower at least three days before closing. The actual time frame is based on the method of delivery. The settlement agent must also provide the seller with the Closing Disclosure, which may be done at consummation.
Closings that must comply with TRID include:
Any closed end-loan secured by real property, including unimproved property.
Closings that do not require compliance include:
Reverse mortgages
Home equity loans
Loans secured by mobile homes or other dwellings that are not real property, if the dwelling is not attached to real estate.
Loans made by persons who are not considered “creditors” because they make five or fewer mortgages per year.
Certain no-interest loans secured by subordinate liens made for the purpose of down payment, or similar home buyer assistance, property rehabilitation, energy efficiency, or foreclosure avoidance or prevention.
closing disclosure statement
The Closing Disclosure (settlement statement) has a list of the debits and credits for both the buyer and the seller.
Debit
A debit is money that the buyer or seller needs to pay at closing.
credit
A credit is money that the buyer or seller receives at closing, either because it was already paid, it’s being reimbursed or there is a promise to pay.
Items that the buyer usually pay include:
Mortgage recording fees Title insurance Appraisal fees Credit fees Survey Loan origination Attorney fees Homeowner’s insurance Reserves deposited with the lender, such as insurance, taxes, assessments Private Mortgage Insurance (PMI), if applicable
The buyer’s debits include:
Contract sales price
Other expenses, such as loan origination fee, closing fee, recording fee, attorney fees
Buyer’s Credits include:
Earnest money or deposit
Loan amount
Items that the seller usually pay include:
Broker commission
Title fees, such as for clearing the title
Fees for preparing the deed
Attorney fees
Seller’s Debits:
Loan balance
Unpaid items due from seller
Other expenses, such as closing fees and document preparation
Seller’s Credits
Contract sales price
Items paid for in advance
Some expenses paid at closing must be prorated or divided proportionately between the buyer and the seller. The most common items that fall into this category include:
Taxes
Insurance
Mortgage interest
Utilities
Loan Estimate and Closing Disclosure forms
provide a means for borrowers to comparison shop more effectively for competing loan offers. The new forms clearly break down the costs of the loan, such as the interest rate, mortgage insurance costs, and closing costs.
This form integrates and replaces the RESPA GFE and the initial TIL for these transactions.
For closed-end credit transactions secured by real property (other than reverse mortgages), the creditor is required to provide the consumer with good-faith estimates of credit costs and transaction terms on the Loan Estimate form
