Section 4: Closing Preparations and Procedures Flashcards by Greg King

Can a mortgage lender agree to pay for an agents open house signs?

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Can a home inspection company bring flyers and cookies to an open house?

Yes

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Can a Realtor association offer free classes to its members?

Yes

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Can an agent give a client a $1,000 to pay closing fees?

Yes (must be on CD)

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Can a home warranty company give a free warranty to the agent for every five ordered?

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Can a builder require a buyer to use a specific mortgage lender?

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Can a builder offer options only if the buyer uses their attorney?

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Can a home inspector give a $10 Starbucks card to an agent for a referral?

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Can an agent jointly advertise with a mortgage office and recommend clients to them?

Yes

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Can an appraiser and a real estate company share a booth at a trade show?

Yes

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Can a Real Estate Brokerage own an insurance company and a mortgage lending company and refer clients to them?

Yes

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Can a Real Estate Company arrange a home inspection that costs $250 and charge $350?

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Can a Real Estate Company provide free office space to an insurance agent?

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Any cancellation for any reason by the buyer after the due diligence will result in what?

Forfeit of both due diligence and earnest money

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What type of state is NC

Caveat Emptor State (Buyer Beware)

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RESPA violation penalties include all of the following EXCEPT:
a. Imprisonment
b. Criminal fines up to $10,000
c. Injunctions and restitution orders
d. Death penalty

d. Death penalty

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The disclosure timeline:
a. Can be waived
b. Can be waived for a fee
c. Is negotiable
d. Cannot be waived and is non-negotiable

d. Cannot be waived and is non-negotiable

The purpose of the Consumer Financial Protection Bureau (CFPB) includes all of the following EXCEPT:
a. Administer kickbacks
b. Education of consumers
c. Enforcement of consumer protection statutes
d. Elimination of previous duplication and confusion

a. Administer kickbacks

The seller should prepare what documents in preparation for closing:
a. Proof of repairs
b. Property survey
c. Property insurance policy
d. Title insurance policy

a. Proof of repairs

RESPA prohibits:
a. Referral fees between licensees
b. Kickbacks
c. Crediting commissions to clients for payment of costs
d. The receipt of bonuses or additional compensation by a licensee from someone other than a settlement service provider.

b. Kickbacks

In most cases, the closing disclosure will be provided by the lender, but sometimes is may be prepared by the attorney. Who is responsible for compliance:
a. Lender
b. Attorney
c. Buyer’s agent
d. Seller’s agent

a. Lender

Lenders are the responsible party for compliance. (LO: Analyze a loan estimate, learn how to review it with a buyer, understand how lenders deliver closing disclosures under TRID, who is responsible for compliance, what the broker’s responsibilities are, and what changes require a new 3-day review of the closing disclosure)

Lender business days are:
a. Monday through Saturday, including 10 federal holidays
b. Monday through Friday, including 10 federal holidays
c. Monday through Saturday, excluding 10 federal holidays
d. Monday through Friday, excluding 10 federal holidays

c. Monday through Saturday, excluding 10 federal holidays

Lender business days are Monday through Saturday, not including 10 federal holidays, and the borrower can close on the 3rd lender business day after receipt of the Closing Disclosure. (LO: Analyze a loan estimate, learn how to review it with a buyer, understand how lenders deliver closing disclosures under TRID, who is responsible for compliance, what the broker’s responsibilities are, and what changes require a new 3-day review of the closing disclosure)

RESPA applies to:
a. Federally related mortgage loans
b. Cash Transactions
c. Seller carrybacks
d. Commercial transactions

a. Federally related mortgage loans

There is unlimited variation on all of the following EXCEPT:
a. Prepaid interest
b. Escrows and impounds
c. Lender fees
d. Property insurance

c. Lender fees

Lender fees come with zero variation. (LO: Understand how to prepare a client for closing, RESPA, what to expect regarding loan

A buyer is responsible for what documents in preparation for closing: a. Deed b. Lender’s payoff verification c. Financing documents d. Affidavit regarding mechanic’s liens

c. Financing documents

What charges can a lender make prior to the loan estimate: a. Origination fee b. Recording fee c. Credit report fee d. Origination, consultation, and credit report fee

c. Credit report fee Prior to the loan estimate the only charge the lender can make is for a credit report. (LO: Understand how to prepare a client for closing, RESPA, what to expect regarding loans)

A loan estimate is triggered by a loan application. A loan application does not require: a. Legal name and gross income b. SSN and property address c. Estimate of property value and amount of mortgage loan requested d. Estimated time keeping the property and intended use

d. Estimated time keeping the property and intended use

Which of the following is NOT a necessary step in conducting closing: a. Review and sign the documents b. Record and fund the transaction c. Report distributions to the IRS (1099) d. Transfer keys from the seller to the buyer

d. Transfer keys from the seller to the buyer

Clearing title defects and encumbrances includes all of the following EXCEPT: a. Transfer of insurance policy b. Mortgages and deeds of trust c. Affidavits on mechanic’s liens d. Transfer of leases and deposits

a. Transfer of insurance policy

The buyer’s due diligence includes all of the following EXCEPT: a. Restrictive covenants b. Zoning concerns c. Property inspections d. Investigating the seller’s reason for selling

d. Investigating the seller’s reason for selling

Which of the following regarding RESPA is FALSE: a. Enacted in 1974, RESPA is enforced by the CFPB b. 800+ pages long c. Aim is to improve disclosure among parties d. Aim is to enforce kickbacks

d. Aim is to enforce kickbacks

In a delay of settlement: a. A 7-day delay is permitted and the contract is still enforceable b. A 7-day delay is permitted but a new contract must be drafted c. A 30-day delay is permitted and the contract is still enforceable d. A 30-day delay is permitted but a new contract must be drafted

a. A 7-day delay is permitted and the contract is still enforceable

A broker acting as a dual agent: a. May only need one closing disclosure for both the buyer and seller b. Should keep the two closing disclosures separate c. The buyer should be able to see the closing disclosure of the seller d. The seller should be able to see the closing disclosure of the buyer

b. Should keep the two closing disclosures separate

Which of the following is NOT a settlement service provider: a. Title companies b. Mortgage lenders c. Appraisers d. Landscapers

d. Landscapers

North Carolina is a(n): a. Escrow Agent state b. Title Companies state c. Closing Attorney state d. Other

c. Closing Attorney state

Which of the following regarding disclosures for controlled business arrangements is FALSE: a. It is mandatory to disclose the relationship prior to a referral b. There is no obligation to use certain settlement providers c. It is not mandatory to disclose whatever fees are to be charged d. It is mandatory to disclose whatever fees are to be charged

c. It is not mandatory to disclose whatever fees are to be charged

A buyer is responsible for all of the following documents in preparation for closing EXCEPT: a. Title insurance and property insurance policies b. Wood infestation termite report c. Proof of repairs d. Property survey

c. Proof of repairs

According to rule A.0116 (3) funds may be transferred from the brokerage escrow account to the settlement agency (attorney) no more than: a. 1 day prior to the anticipated settlement date b. 5 days prior to the anticipated settlement date c. 7 days prior to the anticipated settlement date d. 10 days prior to the anticipated settlement date

d. 10 days prior to the anticipated settlement date

When selecting insurance, a buyer should be aware of all of the following EXCEPT: a. Flood certifications b. Well and water issues c. FEMA flood plain zones d. CLUE reports

b. Well and water issues Well and water issues should be taken care of during due diligence, not when selecting insurance. (LO: Explain all of the duties of the buyer to get to closing, including due diligence, earnest money, etc)

There is no variation on: a. Lender fees b. Recording fees c. Escrows and impounds d. Prepaid interest

a. Lender fees Lender fees come with zero variation. (LO: Understand how to prepare a client for closing, RESPA, what to expect regarding loans)