unit 10

Question 1

Earnest money is reflected on the Closing Disclosure as

Answer 1

a credit to the buyer.

Question 2

Which of the following would be considered “prepaid” items that a buyer should compensate a seller for at closing?

Answer 2

Annual homeowners association dues; lawn service contract

Question 3

The document that provides borrowers with general information about the application and closing process, and worksheets and checklists to aid the buyer is

Answer 3

the bookletYour Home Loan Toolkit: A Step-By-Step Guide.

Question 4

What is a CBA?

Answer 4

A controlled business arrangement

Question 5

What are accrued items at closing?

Answer 5

Expenses that are owed by the seller but will later be paid by the buyer

Question 6

A transaction is to be closed in escrow. The seller should expect to deposit all of the following items with the escrow agent before the closing dateEXCEPT

a. deed to the property.
b. new hazard insurance policy.
c. payoff letter.
d. title evidence.

Answer 6

b. new hazard insurance policy.

Question 7

In the sale of rental properties, how are staff wages prorated?

Answer 7

Unpaid wages are prorated if the sale closes between payment dates.

Question 8

The disbursement of funds, including payment for the property to the seller, is performed in

Answer 8

the closing process.

Question 9

A real estate sales contract has been negotiated between the Smiths and the Rays. The transaction is ready to close. Who is considered a disinterested (neutral) third party who can coordinate the closing activities without the parties’ being present?

Answer 9

Escrow agent

Question 10

Security deposits should be listed on a closing statement as a credit to

Answer 10

the buyer.

Question 11

When Thomas inspects the Closing Disclosure before closing on the new home he is purchasing, he notes that the sales price of the property is listed as

Answer 11

a credit to the seller and a debit to the buyer.

Question 12

At closing, the buyer’s earnest money is

Answer 12

a credit to the buyer.

Question 13

What are the two events that typically take place at a closing?

Answer 13

The closing of the sale and the consummation of the buyer’s loan

Question 14

Sally’s real estate broker is checking the closing cost figures on the Closing Disclosure before delivering it to Sally to review before closing. Among other things, the broker is checking to see that unpaid accrued real estate taxes are

Answer 14

a credit to the buyer and a debit to the seller.

Question 15

Buyer Barbara is purchasing a home from seller Sandra. Barbara’s lender offers discount points to buy down the interest rate. Who is always responsible for payment of the discount points?

Answer 15

It’s negotiable.

Question 16

Buyer John wants to ensure that seller Linda can deliver good title at closing. Review of which of the following documents isNOTpart of the process?

a. The sellers deed
b. The commitment for title insurance
c. The survey
d. The inspection report

Answer 16

d. The inspection report

Question 17

Which statementBESTrepresents the provisions of the TILA-RESPA Integrated Disclosure (TRID) Rule?

a. If the seller is paying for the owner’s title policy, he may require the buyer to use a specific title company.
b. The Closing Disclosure must be provided to the buyer three days before closing.
c. The required settlement cost booklet lists dollar estimates of closing costs the buyer is likely to pay.
d. A mortgage lender may pay a fee to a real estate agent who brings in a loan applicant.

Answer 17

b. The Closing Disclosure must be provided to the buyer three days before closing.

Question 18

Buyer Betty is assuming seller Sal’s existing mortgage. The unpaid principal balance of the assumed loan shows as

Answer 18

both a credit to the buyer and a debit to the seller.

Question 19

Buyer Benjamin is getting a new loan to finance the purchase of a home from seller Susan; Ace Real Estate Brokerage is the intermediary. The lender charging a 1% loan origination fee. Who is responsible for payment of the fee?

Answer 19

Benjamin

Question 20

At closing, the payoff on an existing mortgage is

Answer 20

a debit to the seller

Question 21

Because home loans are applied for at one point but may not actually close until weeks or months later, the fees for some items may change up or down in the interim. However, some fees have “zero tolerance” for change. Those fees include

Answer 21

discount points and origination fees.

Question 22

Agent Allen wants to ensure that the sale of seller Louise’s house to buyer Bennie will close without a problem. Which of the following isNOTan issue for Louise?

a. That Bennie has been approved for financing
b. That Bennie will lease the property at closing to tenants
c. That all the repairs to the property required in the contract are completed
d. That Bennie has enough money to complete the sale

Answer 22

b. That Bennie will lease the property at closing to tenants

Question 23

When must the Closing Disclosure be provided to the borrower-buyer?

Answer 23

Three days before consummation of the loan

Question 24

The Real Estate Settlement Procedures Act isNOTa factor in

a. loans for business, commercial, or agricultural purposes.
b. loans insured by FHA or guaranteed by the VA.
c. loans that are federally related.
d. loans intended to be sold on the secondary market to Fannie Mae, Ginnie Mae, or Freddie Mac.

Answer 24

a. loans for business, commercial, or agricultural purposes.

Question 25

Which of the following would a lender generallyNOTrequire to be produced at or before the closing?

a. Title insurance policy
b. Survey
c. Homestead declaration
d. Appraisal

Answer 25

c. Homestead declaration

Question 26

Brad is selling his home to Sally with a closing date of January 31. Brad’s taxes for the last year were $3,756.75. How much is Sally’s share of the taxes, using a 360-day-year statutory proration?

Answer 26

$3,443.69

Question 27

What attorneys are permitted to attend real estate closings?

a. The attorney for the title company (“closing attorney”)
b. The attorney for the seller
c. The attorney for the buyer
d. All of these

Answer 27

d. All of these

Question 28

Taxes for the current year are prorated

Answer 28

through the closing date.

Question 29

The Real Estate Settlement Procedures Act (RESPA) was enacted to

Answer 29

protect consumers from abusive lending practices.

Question 30

Who pays the appraisal fee on the property?

Answer 30

Usually the buyer pays for the appraisal, but that payment can be the subject of negotiation between the buyer and the seller.

Question 31

The purpose of the Real Estate Settlement Procedures Act (RESPA) is to

Answer 31

protect consumers from abusive lending practices.

Question 32

Attorney’s fees for the preparation of the deed of trust are paid by

Answer 32

the buyer.

Question 33

After a sales contract has been signed by all parties, TREC rules require the broker to have the earnest money deposited by the end of

Answer 33

the second business day.

Question 34

Who owns the home on the day of closing?

Answer 34

The seller owns the home until the end of day and is responsible for all expenses until the end of the day.

Question 35

Under The TILA-RESPA Integrated Disclosure Rule, who must prepare the Closing Disclosure?

Answer 35

The lender or the closing agent

Question 36

The sales price of the property is which of the following?

Answer 36

A debit to the buyer and a credit to the seller

Question 37

Len and Mary are preparing to go to closing at the title company. Their real estate broker mentioned the “good funds rule.” How does that relate to their closing?

Answer 37

They must take a cashier’s check, certified check, or wired funds to closing if the amount due at closing is $1,500 or more.