Unit 21 - Closing the Real Estate Transaction Flashcards
On a closing statement, an amount charged; an amount the party must pay at settlement.
debit
On a closing statement, an amount entered in a person’s favor—an amount the party has paid or an amount received from another party.
credit
Shared expenses, either prepaid or paid in arrears, that are divided equitably between buyer and seller
at settlement.
prorations
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.
accrued items
On a closing statement, (1) expenses paid before they are due, such as hazard insurance or rent; (2) a lump-sum payment to set up a reserve account, such as deposits of taxes and insurance to set up the borrower’s mortgage loan escrow account.
prepaid item AKA
prepaids
The point at which the borrower becomes obligated on the loan (when they are given the BCD 3 days prior to settlement)
consummation
A form required (as
of 2015) in most residential mortgage transactions provided to a buyer prior to closing that includes details about settlement costs, such as loan and closing costs
Buyer Closing Disclosure (BCD)
A type of settlement
statement that may be used in residential transactions that are governed by TRID regulations.
Seller Closing Disclosure (SCD)
Fees that may not increase before closing
No tolerance fees
Fees that cannot increase by more than 10%
10% tolerance fees
Fees for services that are out of the lender’s control
Unlimited tolerance fees
An individual or firm that handles the facilitation of closings
settlement service provider
The consummation of a real estate transaction; seller delivers clear title and buyer delivers payment of the purchase price; occurs at the recordation of the deed per the standard residential sales contract.
closing
An engineers test to determine the ability of the ground to absorb and drain water; used to determine suitability and location of septic system
Soil suitability test AKA
perc test
The final inspection of the
property by the buyer prior to closing to assure that the
seller has vacated, made required repairs satisfactorily, and delivered the property in the condition it was in at contract.
walk-through inspection
A form that summarizes the
flows of money owed by the seller and buyer (or credited to the seller or buyer) at the closing of the transaction
settlement statement
The process of adjusting and prorating credits, debits, and closing expenses to conclude a real estate transaction; referred to as closing.
settlement
Person who conducts the proceedings at a closing and calculates the division of income and expenses between the parties.
settlement agent
The rules which implement and interpret the Real Estate Settlement Procedures Act (RESPA) of 1974.
Regulation X
A fee, usually expressed as
a percentage of the loan amount, paid by a lender to a mortgage broker for making a loan at an above-market interest rate with little or no origination fee. The lender will receive an increased profit due to the higher interest rate, thus allowing the compensation of the mortgage broker
without an origination fee.
yield spread premium
Legislation passed in
2010, primarily affecting financial institutions and their consumers in an effort to prevent a recurrence of events that caused the economic recession and the mortgage market meltdown during the mid-2000s.
Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank)
Federal law that ensures that residential buyers and sellers receive full disclosure of all settlement charges when a 1—4 family unit residence is financed by federally-related
first mortgage loans. The Act mandates a HUD booklet about closing costs, a loan estimate of closing costs, and a standardized closing statement. The Act, known as Regulation X, also prohibits kickbacks from lenders
Real Estate Settlement Procedures Act (RESPA)
A loan estimate that must be provided to the borrower within 3 days after applying for a loan.
Good Faith Estimate (GFE)
A type of settlement statement, replaced with the Closing Disclosure form in
many residential transactions since October 2015
HUD-1 Settlement Statement
