Closing the Real Estate Transaction Flashcards
the point at which ownership of a property is transferred in exchange for the selling price.
Closing (settlement and transfer)
a disinterested third party authorized to coordinate the closing activities.
escrow holder (escrow agent)
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.
Real Estate Settlement Procedures Act (RESPA)
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.
RESPA
must be provided to the borrower no later than three business days after receiving a loan application
Loan estimate form
given to the borrower and the seller itemizes all charges to be paid in connection with closing.
Closing disclosures
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.
mortgage servicing transfer statement
involves an accounting of the amounts paid by or received by the parties.
closing statement
a charge that must be paid by the buyer or the seller at closing
debit (give)
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.
credit (receive)
MOST closings involve the division of financial responsibility between the buyer and the seller for such items as taxes, rents, and other items.
Prorations
The details of a closing are ALWAYS governed by
the terms of the properly executed purchase contract.
A lender is required to give the borrower the Loan Estimate
within three days after loan application.
The Real Estate Settlement Procedures Act (RESPA) applies to the activities of
lenders financing the purchase of residential properties.
If a buyer and a seller were to close on August 17, which of the following items would the title company prorate?
rents
A mortgage servicing transfer statement is executed by
a lending institution
TRID requires that all charges normally paid by a borrower and a seller in connection with a real estate closing be
itemized in the Closing Disclosure.
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?
Three business days
The Real Estate Settlement Procedures Act (RESPA) permits an affiliated business arrangement (ABA)
as long as a consumer is clearly informed of the relationship among the service providers.
What information is included in the Loan Estimate form?
Monthly payment amount
Interest rate
Total closing costs
A mortgage reduction certificate is executed by
a lending institution.
At closing, the new loan proceeds would be
a credit to the buyer.
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
the affidavit of title.
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
proration
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
passing papers
To verify property boundaries and location of improvements before real estate is sold,
a current survey should be made to confirm that no encroachments have arisen since the last transfer of title.
In some parts of the country, closing is called
settlement and transfer.
The purpose of an affidavit of title is to
give the title insurance company a basis on which to sue the seller should the statements in the affidavit be incorrect.
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?
Cash needed to complete the purchase
Expenses to be prorated (such as lawn care services) that have been paid by the seller but not fully used up are called
prepaid items.
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
transferred by the seller to the buyer.
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
accrued items.
In a face-to-face closing, who may be present?
buyer
seller
title insurance company rep
Lending rep
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
Closing escrow
