Escrow Accounting Flashcards
In Southern California, if the title company is one other than that of the escrow holder, loan proceeds and the payment of demands will flow through a
(a) Ancillary-escrow by the title company
(b) Supplemental-escrow by the title company
(c) Sub-escrow by the title company
(d) Mini-escrow by the title company
(c) Sub-escrow by the title company
Credits reflected on the closing statement for the seller would include all the following except
(a) The buyer’s loan amount
(b) Taxes prepaid by the seller and for which the buyer is responsible
(c) The seller’s unpaid loan balance to be paid at closing
(d) The seller’s lender’s impound account balance
(c) The seller’s unpaid loan balance to be paid at closing
If the buyer’s lender allows, the escrow holder will be asked to hold funds following the close of escrow for work that the lender allows to be performed after the close of escrow, usually
(a) An amount equal to one-and-one-half times to estimated cost of the work to be performed
(b) An amount equal to twice the estimated cost of the work to be performed
(c) An amount equal to three times the estimated cost of the work to be performed
(d) A bond for the entire loan amount
(a) An amount equal to one-and-one-half times to estimated cost of the work to be performed
The escrow holder will usually allocate or prorate the following fees between both buyer and seller except
(a) Interest on the parties’ loans
(b) Property taxes
(c) Rents
(d) Homeowners’ association
(a) Interest on the parties’ loans
A lien which takes priority over all others on real property is
(a) IRS
(b) Purchase money loans
(c) Judgment
(d) Property tax
(d) Property tax
A list of tax delinquent properties is published on or before June 8 and become tax defaulted on
(a) June 30
(b) July 1
(c) November 1
(d) December 10
(a) June 30
A point of confusion for a buyer, especially a first-time homebuyer, is the fact that after escrow closes the State of California issues an additional tax bill called a
(a) Ancillary tax bill
(b) Post-closing tax bill
(c) Reassessment tax bill
(d) Supplemental tax bill
(d) Supplemental tax bill
An additional tax bill may be issued after escrow closing for new construction with the additional new tax customarily based on
(a) 1% of the market value, usually considered to be the sales price
(b) 1% of the cost of construction
(c) 2% of the market value, usually considered to be the sales price
(d) 2% of the cost of construction
(a) 1% of the market value, usually considered to be the sales price
The amount of exemption for a disabled low-income veteran is
(a) $75,000
(b) $100,000
(c) $150,000
(d) $200,000
(c) $150,000
Taxes which are to be placed into the borrowers’ tax impound account to be held by the mortgage lender refers to taxes
(a) Due and payable now
(b) Which should have been paid previously
(c) Supplemental taxes
(d) Taxes due in the future
(d) Taxes due in the future
The newer escrow professional may become confused as to the difference between the taxes actually due and payable (Installment Due) and the amount required to be placed into the borrowers tax impound account to be held by the mortgage lender (Months Impound).
The former refers to taxes now due and payable or should have already been paid. The latter refers to taxes due in the future.
The documentary transfer tax was originally
(a) A tax shared between the state and the federal government
(b) A state sales tax
(c) A federal stamp tax used to raise revenue for the federal government
(d) None of the above
(c) A federal stamp tax used to raise revenue for the federal government
Sometimes the documentary tax is calculated on less than the full value of the transaction such as in the case of a buyer
(a) A seller carrying back financing
(b) A buyer obtaining a hard money loan for the down payment
(c) A buyer assuming a seller’s existing mortgage loan
(d) A buyer wishing to keep the sales price confidential
(c) A buyer assuming a seller’s existing mortgage loan
California property taxes are paid in two installments, with the first half due
(a) November 1
(b) December 10
(c) February 1
(d) April 10
(a) November 1
The Department of Housing and Urban Development requires closing agents (escrow) to reflect charges on a government form called the
(a) HUD 1
(b) HUD 2009
(c) RESPA 4
(d) GFE
(a) HUD 1
A notation in the closing statement that indicates “P.O.C” means
(a) Posted Outside Closing
(b) Paid Outside Closing
(c) Prepared On Closing
(d) Prepaid Other Charges
(b) Paid Outside Closing
The HUD 1 includes an entry for the value of personal property excluded from the sales price, and includes all the following except
(a) Carpets
(b) Stoves
(c) Manufactured homes
(d) Refrigerators
(c) Manufactured homes
Items that are not being paid directly by the borrower are entered on a separate line on the HUD 1 and include
(a) A credit by the seller for closing costs
(b) An allowance to the borrower for things the borrower will buy separately
(c) A second mortgage the borrower is obtaining
(d) All the above
(d) All the above
A separate entry is made for funds held by a real estate broker who is not the settlement agent
(a) In any amount
(b) Which exceed the fee or commission owed to him or her
(c) Both a and b
(d) Neither a nor b
(b) Which exceed the fee or commission owed to him or her
Mortgage insurance and homeowners’ insurance due at closing are
(a) Entered on the same line
(b) Entered on separate lines
(c) Entered along with reserves
(d) None of the above
(b) Entered on separate lines
The line in which the borrower’s property taxes and insurance impounds are entered is also used to enter
(a) Notary fees
(b) Title insurance
(c) Flood insurance reserves
(d) Escrow closing
(c) Flood insurance reserves
Local transfer taxes and state transfer taxes are entered
(a) On separate lines in the HUD 1
(b) On the same line in the HUD 1
(c) Both along with property taxes and impounds on the same line
(d) Both along with property taxes and impounds separately
(a) On separate lines in the HUD 1
If the total entered on the HUD-1/1A is greater than the total for the Good Faith Estimate column, then the amount of the increase must be entered
(a) As a dollar amount increase in the appropriate line
(b) As a percentage increase in the appropriate line
(c) Both a and b
(d) Neither a nor b
(c) Both a and b
The buyer’s consideration is shown on the closing statement as a
(a) credit.
(b) debit.
(c) debt.
(d) none of these.
(b) debit.
Items prepaid by the buyer or to be advanced to the buyer would be shown as a credit on the buyer’s statement and may include
(a) buyer’s deposit toward the purchase price.
(b) buyer’s new loan.
(c) balance of buyer’s remaining funds to be placed into escrow.
(d) all of these.
(d) all of these.
Debits would reflect the buyer’s
(a) new loan.
(b) appraisal.
(c) escrow and title fees.
(d) both b and c.
(d) both b and c.
If a buyer’s loan payment will include a monthly reserve for hazard insurance, the escrow closing statement shows prepaid and impound insurance covering
(a) 12 months.
(b) 13 months.
(c) 14 months.
(d) 16 months.
(c) 14 months.
Property taxes in California become a lien on the property
(a) at 12:00 pm on January 1.
(b) at 12:00 pm on March 1.
(c) at 12:00 pm on June 30.
(d) at 12:00 pm on July 1.
(a) at 12:00 pm on January 1.
The second half of the property taxes becomes due on
(a) April 10.
(b) February 1.
(c) February 10.
(d) June 30.
(b) February 1.
Documentary transfer taxes are based on
(a) $1.55 per $1,000 of the purchase price.
(b) $1.10 per $500 of the purchase price.
(c) $0.55 per $500 of the cash paid and new loans obtained by the buyer.
(d) 1.25% of the sales price.
(c) $0.55 per $500 of the cash paid and new loans obtained by the buyer.
To find the sales price if the transfer tax is known, divide the transfer tax
(a) by $0.55, and then multiply the result by $500.
(b) by $1.10, and then multiply the result by $1,000.
(c) by $1.10, and then multiply the result by $1,000.
(d) both a and b.
(a) by $0.55, and then multiply the result by $500.
Rental prorations are usually based on
(a) a 30-day month, regardless of the actual number of days in the month.
(b) only the actual number of days in the month.
(c) 365 days a year.
(d) both a and c.
(a) a 30-day month, regardless of the actual number of days in the month.
