Unit 14

Question 1

TRID requires that all charges normally paid by a borrower and a seller in connection with a real estate closing be

Answer 1

itemized in the Closing Disclosure.

Question 2

At closing, an item prepaid by the seller is

Answer 2

credited to the seller.

Question 3

Certain real estate closings must be reported to the Internal Revenue Service (IRS) on Form 1099-S. The affected properties include sales or exchanges of

Answer 3

land, residential or commercial structures, condominiums, and shares in a cooperative housing corporation.

Question 4

The principal balance on an assumed mortgage loan is entered on the closing statement as

Answer 4

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

Question 5

Information to be reported to the IRS on Form 1099-S does NOT include

Answer 5

the buyer’s Social Security number.

Question 6

In some parts of the country, the closing process involves the parties in the transaction sitting around a table and exchanging copies of documents, a process called

Answer 6

passing papers

Question 7

The Real Estate Settlement Procedures Act (RESPA) does not apply to loans on

Answer 7

properties located on more than 25 acres.

Question 8

The federal law that regulates the mortgage and settlement process is

Answer 8

the Real Estate Settlement Procedures Act (RESPA).

Question 9

The annual real estate taxes on a property amount to $18,000. The seller has paid the taxes in advance for the calendar year. If the closing is set for June 15, which statement is TRUE?

Answer 9

Credit the seller $9,750; debit the buyer $9,750.

Question 10

At closing, the new loan proceeds would be

Answer 10

a credit to the buyer.

Question 11

Real estate property taxes will be prorated at closing and are $6,450 annually. If escrow closes June 15 and taxes for the year have not yet been paid,

Answer 11

the buyer receives a credit of $2,956.30.

Real estate property taxes will be prorated at closing and are $6,450 annually. if escrow closes june 15 and taxes for the year have not yet been paid. Therefore, the correct answer is a) the buyer receives a credit of $2,956.30.

Question 12

The document that provides the borrower with general information about settlement costs, RESPA provisions, and what happens at settlement is

Answer 12

Your Home Loan Toolkit.

Question 13

The purpose of an affidavit of title is to

Answer 13

protect the buyer from any encumbrances that were placed on the property by the seller’s grantor.

Question 14

At the closing of a real estate transaction, the person performing the settlement gave the buyer a credit for certain accrued items. These items were

Answer 14

bills relating to the property that the buyer must pay.

Question 15

How would the buyer’s earnest money deposit be entered on a closing statement in a typical real estate transaction?

Answer 15

Credit to buyer only

Question 16

The Real Estate Settlement Procedures Act (RESPA) is a federal statute administered by

Answer 16

the Consumer Financial Protection Bureau (CFPB).

Question 17

A package of services may be offered to the parties to a real estate transaction as part of

Answer 17

an affiliated business arrangement.

Question 18

A security deposit made by a tenant to cover the last month’s rent of the lease or the cost of repairing damage caused by the tenant is generally

Answer 18

transferred by the seller to the buyer.

Question 19

At closing, the seller would be credited for

Answer 19

the sales price.