SU # 34__RESPA and Fair Financing Laws Flashcards
What does RESPA require lenders to give to borrowers?
The correct figures pertaining to their closing costs.
RESPA does not apply to what kinds of loans?
Reverse mortgages
Home equity loans
Loans secured by mobile homes or other dwellings that are not real property, if the dwelling is not attached to real estate.
Loans made by persons who are not considered “creditors” because they make five or fewer mortgages
per year.
Certain no-interest loans secured by subordinate liens made for the purpose of down payment, or similar home buyer assistance, property rehabilitation, energy efficiency, or foreclosure avoidance or prevention.
What is the basic purpose of Truth in Lending- Regulation Z?
Give buyers information about the true cost of obtaining credit, so that borrowers can compare the costs of various lenders.
What does ECOA prohibit?
Discrimination against applicants on the basis of race, color, religion, national origin, sex, marital status, age or dependency on public assistance.
Regulation Z applies to which of these situations?
$35,000 farm loan
$50,000 restaurant loan
$75,000 condominium loan
$85,000 warehouse loan
$75,000 condominium loan
What is the purpose of RESPA?
The Act is designed so title companies can compare service fees.
That home buyers understand their purchase contract.
That home buyers receive the correct figures pertaining to their closing costs.
The Act is designed so lenders can compare companies’ mortgage fees.
That home buyers receive the correct figures pertaining to their closing costs.
To which of the following transactions does RESPA NOT apply?
Seller-financed loans
Residential property
First or second mortgage loans
A loan that is insured by a federal agency
Seller-financed loans
Which statement is true about accepting referral fees?
It is common business practice.
It could be a law violation.
It is forbidden under all circumstances.
It is permissible in amounts under $50.
It could be a law violation.
Which document is required by RESPA to detail the costs that the buyer and seller will pay at closing?
Summary of Accounts
Estimate Monthly Payments
HUD-1
Closing Disclosure
Closing Disclosure
Which of the following is exempt from RESPA?
Condominium purchase
Federally-insured loan
Loan involving a second mortgage
All cash sale
All cash sale
What is the title of the booklet that lenders must give to every person at the time of application for a loan?
“Your loan, your home”
“Your home loan toolkit”
“Your mortgage home loan”
“Protect your investment”
“Your home loan toolkit”
During a loan interview, a lender always asks borrowers what church they attend. What law, if any, does this action violate?
RESPA
FDIC
ECOA
No laws are broken.
ECOA
The purpose of the closing event is to
a. confirm that the buyer has fulfilled all contract requirements prior to title transfer immediately after closing.
b. ensure that the seller has marketable title before monies are transferred.
c. conclude the process for loan approval.
d. exchange legal title for the sale price.
d. exchange legal title for the sale price.
A buyer’s financing arrangements are often concluded at closing, because
a. lenders do not fund loans unless title is being transferred.
b. the lender wants to ensure proper handling of the collateral for the loan.
c. the loan term must coincide with title transfer.
d. the deed will be held as collateral for the loan.
b. the lender wants to ensure proper handling of the collateral for the loan.
The Real Estate Settlement Procedures Act prescribes closing procedures that must be followed whenever
a. a first, second, or third mortgage lien is involved.
b. the loan is to be sold to the FNMA.
c. the buyer pays all cash for the property.
d. the property is a residential complex in excess of four units.
b. the loan is to be sold to the FNMA.
A sale contract stipulates that a buyer is to pay the seller’s title insurance expenses. This practice is not customary in the area. In this case,
a. the buyer and seller must amend the contract before
closing.
b. the contract is voidable, since the seller must pay the expense.
c. the buyer may pay or not pay the expense, at his or her option.
d. the buyer must pay the expense.
d. the buyer must pay the expense.
A prorated expense on the settlement statement is
a. a debit to the buyer and seller
b. a credit to the buyer and seller
c. a debit and credit to the buyer and seller
d. a debit to one party and a credit to the other
d. a debit to one party and a credit to the other
The amount a buyer owes at closing is equal to
a. the excess of the buyer’s debits over the buyer’s credits.
b. the excess of the buyer’s credits over the buyer’s debits.
c. the excess of the seller’s debits over the seller’s credits
d. the excess of the seller’s credits over the seller’s debits.
a. the excess of the buyer’s debits over the buyer’s credits.
Which of the following are examples of closing items not prorated between buyer and seller?
a. Taxes and rents
b. Inspection fees
c. Utilities and hazard insurance
d. Condominium assessments and special assessment payments
b. Inspection fees
Which of the following items are paid in arrears?
a. Taxes and insurance
b. Rents and interest
c. Taxes and interest
d. Rents and insurance
c. Taxes and interest
Which of the following items are paid in advance?
a. Taxes and insurance
b. Rents and interest
c. Insurance and interest
d. Rents and insurance
d. Rents and insurance
If a sale contract indicates that the day of closing is “the seller’s day,” this means that
a. the seller must pay prorated expenses inclusive of the day of closing.
b. the seller does not own the property on the day of closing.
c. the seller may elect the proration method on the day of closing.
d. the seller must pay the buyer’s portion of prorated expenses instead of the seller’s portion
a. the seller must pay prorated expenses inclusive of the day of closing.
Documentary stamps are used to
a. document the procedures employed to close a transaction.
b. document the payment of a transfer tax.
c. certify that a transaction was recorded.
d. mail closing documents to principal parties after closing
b. document the payment of a transfer tax.
What is the Internal Revenue Service’s Form 1099-S?
a. The buyer’s and seller’s capital gain form
b. A form that summarizes and reports transaction data from a closing
c. A form brokers must submit if the buyer or seller is a foreigner
d. A lender’s tax form showing that a loan was funded for a buyer
b. A form that summarizes and reports transaction data from a closing
