Unit 14: Closing the real estate transaction

Question 1

accrued items

Answer 1

on a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.

Question 2

affidavit of title

Answer 2

A written statement, made under oath by a seller or grantor of real property and acknowledged by a notary public, in which grantors (1) identify themselves and indicate marital status, (2) certify that since the examination of the title, on the date of the contract no defects have occurred in the title, and (3) certify that they are in possession of the property (if applicable)

Question 3

affiliated business arrangement (ABA)

Answer 3

Practice of one company offering a package of services to consumers.

Question 4

bring down

Answer 4

A second title search that is made after the closing and before any new documents are filed.

Question 5

closing

Answer 5

An event where promises made in a sales contract are fulfilled and mortgage loan funds (if any) are distributed to the buyer.

Question 6

Closing disclosure

Answer 6

The CFPB from that itemizes all charges that are normally paid by a borrower and a seller in connection with setlement, whether requires by the lender or another party or paid by the lender or any other person.

Question 7

closing escrow

Answer 7

Process of settlement in which the buyer and the seller never meet ; the paperwork is handled by an escrow agent

Question 8

closing statement

Answer 8

A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made, and all cash paid out in the transaction.

Question 9

credit

Answer 9

On a closing statement, an amount entered in a person’s favor – either an amount the party has paid or an amount for which the party must be reimbursed.

Question 10

debit

Answer 10

On a closing statement, an amount charged; that is, an amount that debited party must pay.

Question 11

escrow

Answer 11

The closing of a transaction through a third party called an escrow agent, or escrowee, who receives certain funds and documents to be delivered upon the performance of conditions outlined in the escrow instructions.

Question 12

escrow account

Answer 12

The trust account established by a real estate established by a real estate professional under the provisions of the license law for the purpose of holding funds on behalf of the real estate professional’s principal or some other person until the consummation or termination of a transaction; trust account established by an escrow agent to hold funds pending distribution at the closing of a transaction.

Question 13

escrow closing

Answer 13

Occurs when a disinterested third party is authorized to act as escrow agent (escrow hlder) and to coordinate and losing activities on behalf of the buyer and the seller.

Question 14

escrow instructions

Answer 14

A document that sets forth the duties of the escrow agent, as well as the requirments and obligations of the parties, when a transaction is closed through an escrow.

Question 15

impound accounts

Answer 15

An account that the mortgage lender may require a borrower to have to accumulate funds to pay future real estate taxes and insurance premiums.

Question 16

Loan estimate

Answer 16

A CFPB form that highlights the information that historically has been the most important to consumers. Interest rate, monthly payment, and total closing costs are clearly presented on the first page.

Question 17

Mortgage Disclosure Improvement Act (MDIA)

Answer 17

Enacted in July 2008 as an amendment to the Truth in Lending Act (TILA) to require mortgage loan cost disclosures to consumers. Early disclosure (a good faith estimate) of mortgage loan cost must be provided within three business days of receiving a consumer’s application for a mortgage loan; a creditor must wait seven business days after providing the early disclosures and wait an additional three business days before closing the loan, if a change occurs that makes the annual percentage rate quoted in the early disclosure inaccurate beyond a specified tolerance

Question 18

Mortgage servicing transfer statement

Answer 18

disclosure required by the lender if the lender intends to sell or assign the right to service the loan to another loan servicer. The loan servicer must notify the borrower 15 days before the effective date of the loan transfer, including in the notice the name and address of the new servicer, toll-free telephone numbers, and the date the new servicer will begin accepting payments

Question 19

passing papers

Answer 19

When parties to a transaction sit around a table and exchange copies of documents as the documents are executed.

Question 20

prepaid items

Answer 20

On closing statement, items that have been paid in advance by the seller, which as fuel costs and some real estate taxes, for which the seller must be reimbursed by the buyer.

Question 21

prorations

Answer 21

Expenses, either prepaid or paid in arrears, that are divided or distributed between the buyer and the seller at closing.

Question 22

reduction certificate (payoff statement)

Answer 22

The document signed by a lender indicating the amount requried to pay a loan balance in full and satisfy the debt; used in the settlement process to protect both the seller’s and the buyer’s interests.