Closing the Real Estate Transaction Flashcards

1
Q

the point at which ownership of a property is transferred in exchange for the selling price.

A

Closing (settlement and transfer)

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2
Q

a disinterested third party authorized to coordinate the closing activities.

A

escrow holder (escrow agent)

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3
Q

a federal law enacted to protect consumers in the settlement process by requiring accurate and timely information about the actual costs of a transaction, eliminating kickbacks and other referral fees, prohibiting the seller from requiring the buyer to buy title insurance from a particular company, and prohibiting lenders from requiring excessive escrow account deposits.

A

Real Estate Settlement Procedures Act (RESPA)

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4
Q

does not apply to a transaction financed solely by a purchase-money mortgage taken back by a seller, installment contracts (contract for deed), or a buyer’s assumption of a seller’s existing loan.

A

RESPA

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5
Q

must be provided to the borrower no later than three business days after receiving a loan application

A

Loan estimate form

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6
Q

given to the borrower and the seller itemizes all charges to be paid in connection with closing.

A

Closing disclosures

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7
Q

must be given by the lender to the borrower if the lender intends to sell or assign the servicing rights to the borrower’s loan.

A

mortgage servicing transfer statement

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8
Q

involves an accounting of the amounts paid by or received by the parties.

A

closing statement

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9
Q

a charge that must be paid by the buyer or the seller at closing

A

debit (give)

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10
Q

amount entered in favor of the buyer or the seller. In most instances, a debit to one party is a credit to the other party.

A

credit (receive)

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11
Q

MOST closings involve the division of financial responsibility between the buyer and the seller for such items as taxes, rents, and other items.

A

Prorations

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12
Q

The details of a closing are ALWAYS governed by

A

the terms of the properly executed purchase contract.

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13
Q

A lender is required to give the borrower the Loan Estimate

A

within three days after loan application.

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14
Q

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

A

lenders financing the purchase of residential properties.

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15
Q

If a buyer and a seller were to close on August 17, which of the following items would the title company prorate?

A

rents

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16
Q

A mortgage servicing transfer statement is executed by

A

a lending institution

17
Q

TRID requires that all charges normally paid by a borrower and a seller in connection with a real estate closing be

A

itemized in the Closing Disclosure.

18
Q

Under the TILA-RESPA Integrated Disclosure Rule (TRID), a lender must extend the closing how many days if the annual percentage rate (APR) has changed more than 0.125% before closing?

A

Three business days

19
Q

The Real Estate Settlement Procedures Act (RESPA) permits an affiliated business arrangement (ABA)

A

as long as a consumer is clearly informed of the relationship among the service providers.

20
Q

What information is included in the Loan Estimate form?

A

Monthly payment amount
Interest rate
Total closing costs

21
Q

A mortgage reduction certificate is executed by

A

a lending institution.

22
Q

At closing, the new loan proceeds would be

A

a credit to the buyer.

23
Q

The title insurance company may be able to sue the sellers on the basis of any false or incorrect statements provided by the seller in

A

the affidavit of title.

24
Q

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

A

proration

25
Q

In some parts of the country, the closing process involves the parties in the transaction sitting around a table and exchanging copies of documents, a process called

A

passing papers

26
Q

To verify property boundaries and location of improvements before real estate is sold,

A

a current survey should be made to confirm that no encroachments have arisen since the last transfer of title.

27
Q

In some parts of the country, closing is called

A

settlement and transfer.

28
Q

The purpose of an affidavit of title is to

A

give the title insurance company a basis on which to sue the seller should the statements in the affidavit be incorrect.

29
Q

A buyer purchases a home in an area where closings are traditionally conducted in escrow. Which item would a buyer deposit with the escrow agent before the closing date?

A

Cash needed to complete the purchase

30
Q

Expenses to be prorated (such as lawn care services) that have been paid by the seller but not fully used up are called

A

prepaid items.

31
Q

A security deposit made by a tenant to cover the last month’s rent of the lease or the cost of repairing damage caused by the tenant is generally

A

transferred by the seller to the buyer.

32
Q

Expenses to be prorated (such as water bills and unpaid property taxes) that are owed by the seller but will be paid late by the buyer are called

A

accrued items.

33
Q

In a face-to-face closing, who may be present?

A

buyer
seller
title insurance company rep
Lending rep

34
Q

In some parts of the country, the buyer and the seller never meet at closing; the paperwork is handled by an escrow agent in a process called

A

Closing escrow