Preclosing

Question 1

The entity that receives a borrower’s loan payment is called

(a) The investor
(b) The servicer
(c) The note owner
(d) An investment firm

Answer 1

(b) The servicer

Question 2

A lender’s lien is removed from title through the

(a) Demand
(b) Offset
(c) Reconveyance
(d) MERS

Answer 2

(c) Reconveyance

Question 3

The first installment of the property tax bill is delinquent if not paid by

(a) November 1
(b) December 10
(c) December 31
(d) None of the above

Answer 3

(b) December 10

Question 4

A judgment

(a) Is valid for 10 years
(b) Can be renewed for another 10 years
(c) Both a and b
(d) Neither a nor b

Answer 4

(c) Both a and b

Question 5

If loans are recorded against the title that have actually been paid off the escrow holder

(a) Must contact the seller to go to court to have the lien removed
(b) Must contact the beneficiary and have the trustee reconvey the lien
(c) Can close escrow anyway with a statement from the seller
(d) Can close escrow anyway with a letter from the lender

Answer 5

(b) Must contact the beneficiary and have the trustee reconvey the lien

Question 6

After the borrower’s initial TIL disclosure, prior to closing a new TIL disclosure may be required if the final interest rate is

(a) .125% greater than the original rate disclosed
(b) .25% or greater than the originally disclosed interest rate
(c) .125% greater or less than the originally disclosed interest rate
(d) .25% greater or less than the originally disclosed interest rate

Answer 6

(c) .125% greater or less than the originally disclosed interest rate

Question 7

A bank-owned foreclosed property is commonly called

(a) BOP (Bank Owned Property)
(b) BOR (Beneficiary Owned Real-Estate)
(c) FBB (Foreclosed by Bank)
(d) REO (Real Estate Owned)

Answer 7

(d) REO (Real Estate Owned)

Question 8

The following are among typical documents to review or actions required during auditing prior to escrow closing except

(a) Hazard insurance
(b) Pest control report
(c) Commission instructions
(d) All the above

Answer 8

(d) All the above

Question 9

In Northern California, unilateral escrow instructions are based on the completion of items to be provided or performed by the parties, referred to as

(a) Ratification
(b) Satisfaction
(c) Origination
(d) Anticipation

Answer 9

(a) Ratification

Question 10

Occasionally, a party other than the principal who has a financial interest in the transaction may execute a third-party instruction to the escrow holder. Typical third-party instructions include all the following except

(a) Commission instructions to the brokers
(b) Lenders’ instructions
(c) Interspousal transfer for consideration
(d) Release of judgments

Answer 10

(d) Release of judgments

Question 11

The state/county transfer tax in California is

(a) $0.55 per $500 of value of cash and new loans in the transaction
(b) $1.10 per $500 of value of cash and new loans in the transaction
(c) $.075 per $500 of value of cash and new loans in the transaction
(d) $1.20 per $1,000 of value of cash and new loans in the transaction

Answer 11

(a) $0.55 per $500 of value of cash and new loans in the transaction

Question 12

A legal term that refers to a deed of trust that is recordable in any county in California as authorized by California Civil Code Section 2952 containing all the standard provisions normally used in actual transactions but which do not appear in the deed of trust delivered to a borrower is

(a) Financial deed of trust
(b) Factual deed of trust
(c) Fictitious deed of trust
(d) Final deed of trust

Answer 12

(c) Fictitious deed of trust

Question 13

In the event a seller’s lender discovers title has been transferred in a transaction in which the buyer has “taken title subject to” the seller’s loan without having been informed

(a) The lender requires the former seller to buy back the property
(b) The lender will sue the buyer
(c) The lender will sue the escrow holder
(d) The lender may call the loan “due and payable

Answer 13

(d) The lender may call the loan “due and payable

Question 14

The county requires a statement regarding transfer of title to be filed as follows

(a) The buyer must file a Preliminary Change of Ownership Statement (PCOR)
(b) The seller must file a Change of Ownership Statement (COS)
(c) Both a and b
(d) Neither a nor

Answer 14

(c) Both a and b

The buyer will also be required to complete the county’s Preliminary Change of Ownership Report (PCOR) (Figure 9.1). The escrow holder will conduct the PCOR process. California Revenue and Taxation Code Section 480 requires that whenever there is a change in ownership of real property, the property owner must actually file a Change in Ownership Statement (COS), which is different from the PCOR.

Question 15

Prior to closing the grant deed will be reviewed for accuracy by

(a) The Escrow Officer
(b) The Title Officer
(c) The County Assessor
(d) The County Tax Collector

Answer 15

(b) The Title Officer

Question 16

Last-minute issues prior to closing usually involve lenders’ requirements such as

(a) Hazard insurance documents not received
(b) Incorrect insurance coverage
(c) Missing documents which the buyer was to return to the lender with signed loan documents
(d) All the above

Answer 16

(d) All the above

Question 17

Funds delivered to escrow in the form of a personal check drawn on an out of state bank

(a) Are good the next business day
(b) Must be held by escrow for three business days before disbursement
(c) Must be held for five business days before disbursement
(d) Must be held for seven business days before disbursement

Answer 17

(c) Must be held for five business days before disbursement

Question 18

The escrow holder may be forwarded to the title company, if necessary, to pay any buyer’s liens of record if the escrow company is not part of the title company, which usually requires

(a) A sub-escrow fee to be charged
(b) An ancillary-escrow fee be charged
(c) A supplement escrow fee to be charged
(d) A title-escrow fee to be charged

Answer 18

(a) A sub-escrow fee to be charged

Some of the buyer’s deposit may have been forwarded to the title company, if necessary, to pay any buyer’s liens of record and to pay for a sub-escrow if the escrow company is not part of the title company. (If the title company and escrow company are related, no sub-escrow fee is charged.)

Question 19

The entity that receives the borrower’s payments is called the

(a) loan servicer.
(b) loan processor.
(c) Freddie Mac.
(d) investment servicer.

Answer 19

(a) loan servicer.

Question 20

Many originating lenders today use the services of MERS, which stands for

(a) Mortgage Escrow Registration System.
(b) Mortgage Escrow Recording System.
(c) Mortgage Electronic Registration System.
(d) Mortgage Electronic Recording System.

Answer 20

(c) Mortgage Electronic Registration System.

Question 21

The primary benefit of MERS to the escrow holder is that

(a) it allows for more rapid loan payoff.
(b) it eliminates closing delays.
(c) it eliminates the questions as to who owns or services the loan.
(d) all of these.

Answer 21

(d) all of these.

Question 22

Property taxes in California are based on a fiscal year beginning

(a) July 1.
(b) June 30.
(c) March 1.
(d) January 1.

Answer 22

(a) July 1.

Question 23

The first half of California property taxes is due

(a) December 1 and delinquent if not paid by February 1.
(b) November 1 and delinquent if not paid by December 10.
(c) July 1 and delinquent if not paid by September 1.
(d) November 10 and delinquent if not paid by December 1.

Answer 23

(b) November 1 and delinquent if not paid by December 10.

Question 24

Claimants under a mechanic’s lien are divided into which four groups under the law?

(a) Contractors, subcontractors, laborers, and materialmen.
(b) Contractors, homeowners, lenders, and materialmen.
(c) Contractors, homeowners, laborers, and materialmen.
(d) Subcontractors, vendors, laborers, and materialmen.

Answer 24

(a) Contractors, subcontractors, laborers, and materialmen.

Question 25

Under the federal truth-in-lending (TIL) disclosure laws, if a borrower’s interest rate increases by 0.125% or greater than first disclosed before the close of escrow,

(a) a new TIL is sent to the borrower and escrow may not close for seven days.
(b) escrow may not close until the borrower receives a new TIL.
(c) escrow may close regardless.
(d) escrow may not close for three days after receipt of the new TIL.

Answer 25

(d) escrow may not close for three days after receipt of the new TIL.

Question 26

The escrow holder must retain general escrow instructions under the law for

(a) one year.
(b) three years.
(c) five years.
(d) seven years.

Answer 26

(c) five years.

Question 27

The Preliminary Change of Ownership Report
(a) provides the assessor with information necessary to value the property for tax purposes.

(b) assists in determining whether the transfer of property might be eligible for one of the many change in ownership exclusions that would avoid the need to reassess the property.
(c) both a and b.
(d) neither a nor b.

Answer 27

(c) both a and b.

Question 28

The value initially established by the PCOR is called the

(a) base year value.
(b) baseline value.
(c) basic year value.
(d) factored basic year value.

Answer 28

(a) base year value.