Unit 14: Closing the Real Estate Transaction Flashcards
_______ (settlement and transfer) is the point at which ownership of a property is transferred in exchange for the selling price.
Closing
To complete a transaction, the buyer requires the ______; title ________; results of necessary ___________; an _________ of title from the seller and, where applicable, documents showing the removal of prior ____________; the ____ from the seller; and the _____, if a tenant resides on the premises.
survey; evidence; inspections; affidavit; encumbrances; deed; lease
The buyer will expect to make a successful final ________ __________ (walk-through) and to receive a closing statement showing the ______ and ____________ of funds.
property inspection, amount, distribution
To complete the transaction, the seller will need the ______ _________ from the seller’s lender noting the amount owed; evidence that the buyer has the necessary _____; and a _______ _________ showing the distribution of funds.
payoff statement, funds, closing statement
The lender will want assurance that its ____ ______ will have priority and will want the buyer to obtain a mortgagee’s _____ _________ policy.
lien rights, title insurance
The Internal Revenue Service (IRS) may require completion and submission of the Form ____-_ statement of income to the seller showing the seller’s ______ ________ number.
1099-S, Social Security
Form 1099-S is filed by a _______ _____ or the mortgage lender, with the real estate professionals or the _______ being ultimately liable for the filing.
closing agent, parties
Depending on state law and local custom, closing may take place at a face-to-face meeting of the parties at the _____ company, _____ company, _______ office, or _________ office, or the parties may execute documents __________ and never meet.
escrow, title, lender’s, attorney’s, separately
An ______ ______/_____ is a disinterested third party authorized to coordinate the closing activities.
escrow holder/agent
The ____ ______ __________ __________ Act (RESPA) is a federal law enacted to protect consumers in the settlement process by requiring ________ and ______ information about the actual _____ of a transaction, eliminating _________ and other referral fees, prohibiting the seller from requiring the buyer to buy title insurance from a __________ company, and prohibiting lenders from requiring excessive ______ _______ deposits.
Real Estate Settlement Procedures, accurate and timely, costs, kickbacks, particular, escrow account
RESPA does not apply to a transaction financed solely by a ________-_____ mortgage taken back by a seller, ___________ contracts (contract for deed), or a buyer’s __________ of a seller’s existing loan.
purchase-money, installment contracts, assumption
The CFPB has produced ____ ____ ____ _______, a booklet that must be provided by a lender to every person from whom they receive or for whom they prepare a loan application (except for ___________).
Your Home Loan Toolkit, refinancing
The ____ _________ form must be provided to the borrower no later than three business days after receiving a loan application. The _______ __________ given to the borrower and the seller itemizes all charges to be paid in connection with closing.
Loan Estimate, Closing Disclosure
The Loan Estimate and Closing Disclosure forms developed by the CFPB are required for transactions originating on or after _______ _, ____.
October 3, 2015
__________ ________ ____________ (ABA) that make use of companies with a shared ownership require notice to clients.
Affiliated business arrangements
A ________ _________ ________ statement must be given by the lender to the borrower if the lender intends to sell or assign the servicing rights to the borrower’s loan.
mortgage servicing transfer
A _______ _________ involves an accounting of the amounts paid by or received by the parties.
closing statement
Certain charges are prorated, divided between the buyer and the seller, in one of two ways:
360 or 365 day year
In most states, the charges are prorated as of the _______ date, with the ______ being responsible for the date of closing.
closing, seller
Common inspections include (5):
termite, radon, water and septic systems, structural inspections, or required repairs
Although practices vary from state to state, most require that the seller produce a current ________ of title or title __________ from a title insurance company
abstract, commitment
When an abstract of title is used, the purchaser’s ________ examines it and issues an opinion of title.
attorney, opinion
An Attorney’s Opinion (doc) is NOT a _________ of title
guarantee
If the buyer assumes the seller’s existing mortgage loan, usually the lender is required to provide the buyer with a ________ _________ certificate, which certifies the amount owed on the mortgage loan, the interest rate, and the date and amount of the last interest payment.
mortgage reduction
The seller may be required to execute an _________ of title, a sworn statement in which the seller assures the title insurance company (and the buyer) that no other _______ in the title have occurred since the date of the title examination
affidavit, defects
In order to ensure that the buyer takes good and marketable title at closing, lenders generally require that the buyer obtain a mortgagee’s _____ _________ policy.
title insurance
Certain real estate closings must be reported to the Internal Revenue Service (IRS) on Form 1099-S. The affected properties include a sale or exchange of (4):
- land (improved or unimproved), including air space;
- an inherently permanent structure, including any residential, commercial, or industrial building;
- a condominium unit and its appurtenant fixtures and common elements (including land); or
- shares in a cooperative housing corporation.
Information to be reported on Form 1099-S includes the _____ price, the amount of ________ ___ reimbursement credited to the seller, and the seller’s ______ ________ number.
sales, property tax, Social Security
T/F? As part of the title company’s preclosing title search, the sellers may be required to execute an affidavit of title.
True
T/F? Lenders generally require that a buyer obtain a mortgagee’s title insurance policy to ensure that the buyer takes good and marketable title at closing.
True
T/F? RESPA regulations apply to any residential mortgage loan made to finance the purchase of a one- to four-family home or to refinance an existing mortgage.
False (not required for refi)
All the proration calculations here are computed by carrying the division to _____ decimal places and then rounding to the nearest ____ only after the final proration figure is determined.
three, cent
T/F? Accrued items are expenses to be prorated (such as water and other utility bills) that are owed by the seller but will be paid later by the buyer.
True
T/F? Prepaid items are expenses to be prorated (such as fuel oil in a tank) that have been prepaid by the seller but NOT fully used up and are credits to the buyer.
False. Such prepaid items are a credit to the seller and a debit to the buyer.
Legal title ALWAYS passes from the seller to the buyer when the deed is _________ and ________.
delivered and accepted.
Expenses to be prorated (such as water bills and unpaid property taxes) that are owed by the seller but will be paid late by the buyer are called _______ ______.
accrued items.
Under the TILA-RESPA Integrated Disclosure Rule (TRID), a lender must extend the closing how many days if the annual percentage rate (APR) has changed more than 0.125% before closing?
Three business days
