Closings

Question 1

Real Estate Settlement Procedures Act (RESPA) purpose

Answer 1

clarify, disclose costs; eliminate kickbacks, undisclosed fees

Question 2

Information booklet

Answer 2

lender must provide Consumer Financial Protection Bureau (CFPB) booklet, “Your Home Loan Tool Kit”

Question 3

Loan Estimate

Answer 3

lender must provide CFPB’s H-24 Loan Estimate of settlement costs within three days of application

Question 4

Closing Disclosure

Answer 4

lender must use CFPB’s H-25 Closing Disclosure

Question 5

Forms and procedures

Answer 5

lender must provide mandatory: “Your Home Tool Kit” booklet at loan application

Loan Estimate form: 3 business days after loan application

Closing Disclosure: 3 business days before consummation

Terms in both forms must generally be the same

Question 6

Applicable transactions

Answer 6

most closed-end consumer mortgages, including construction loans, loans secured by vacant land, loans to trust

not covered: home equity loans, reverse mortgages, loans on mobile homes, loans by small lenders (no more than 5 loans per year)

Question 7

Amount buyer must produce

Answer 7

excess of buyer’s debits over credits

Question 8

Amount seller must receive

Answer 8

excess of seller credits over debits

Question 9

Buyer’s credits

Answer 9

earnest money

loan amount
seller’s share of prorations buyer will pay

Question 10

Buyer’s debits

Answer 10

purchase price

expenses (per agreement or custom)

buyer’s share of prorations prepaid by seller

Question 11

Seller’s credits

Answer 11

purchase price

buyer’s share of prorated items paid by seller

Question 12

Seller’s debits

Answer 12

expenses (per agreement or custom)

seller’s share of prorated items that the buyer will pay

loan balance and other liens to be paid off