Section 13 - 14 : Closing the transaction, Compliance with Federal Regulations

In addition to distributing the policies and procedures manual to firm members, what else can supervising brokers do to aid in compliance with federal regulations?

Audit their licensees' work for compliance.

At closing, who pays for and receives clear title for the property being purchased?

Buyer

Before closing, who should get an appraisal of the property if the transaction's being financed?

Buyer

Who at the closing table examines all documents for buyers or sellers and represents their best interests?

Buyer's or seller's attorney

Which act was the first to prohibit any exceptions for discrimination based on race or color?

Civil Rights Act of 1866

Rhonda and Jade both consider themselves to be African-American, although Rhonda has much darker skin and hair than Jade. When Rhonda went to the Valley Falls apartment manager's office to request a rental application, she was told there were no vacancies. Jade went in a day later and received an application. This may be discrimination based on_______.

Color

Jill needs to pay the web developer who created a new website for her brokerage, but her checking account is low, so she floats herself a loan from earnest money kept in the brokerage's escrow account to pay the developer. Which answer correctly identifies the violation(s) Jill has committed?

Commingling and conversion

One of the following licensee's actions would constitute commingling. Which is it?

Cynthia deposited her client's earnest money check into the firm's operating account.

Which agency enforces Title II under the Americans with Disabilities Act of 1990, when it relates to state and local public housing, housing assistance, and housing referrals?

Department of Housing and Urban Development

Which of these statements about earnest money is true?

Disbursal of earnest money depends on the terms of the contract.

To provide sellers with assurance they won't back out of the sale, buyers may offer a financial deposit that will be kept in escrow until the conditions are met at closing. What's this deposit called?

Earnest money

Which of the following is an effective risk management action for brokerages?

Establishing and enforcing policies and procedures

Which agency enforces fair housing law?

FHEO

What's the most common indicator of illegal property flipping?

Falsely inflated appraisal

Frances collected an earnest money check from her client, but didn't have an opportunity to deliver it to the escrow agent before close of business on Friday. For safekeeping, she deposited it into her personal checking account over the weekend and wrote the escrow agent a new check on Monday morning. Which of these statements is true?

Frances is guilty of commingling.

Sam is a licensee who believes strongly in adhering to fair housing laws. When his broker asks him to "just lighten up a little" and work with a client who's refusing to sell to a certain buyer because of her religion, what's the potential consequence to Sam of sticking to his beliefs?

He may have to deal with ridicule or disdain from his broker.

Your client, Risa, is about to attend her first closing. Which of these activities can she expect to occur on the day of closing?

Her loan funds will be transferred.

Susie has opted out of opening an escrow account with her mortgage lender, which means she has a lower monthly payment. She still needs to save up, though, to make sure she can pay for taxes and ______.

Insurance

The CFPB uses education to accomplish its mission, such as the ______ publications.

Know Before You Owe

Who usually represents the lender at a closing?

Lender's attorney

Leo's client is looking for a property with at least 2,500 finished square feet. Leo finds a 2,200- square-foot property with all the other features the client is looking for, and purposely doesn't mention the square footage to his client. His client agrees to look at the property, falls in love with it, and wants to make an offer, but does not realize it doesn't contain his desired square footage. Which of these statements accurately represents Leo's level of misrepresentation in this situation?

Leo knew about the square footage and intentionally didn't mention it. He's guilty of intentional misrepresentation.

Marcus, a listing agent, told a potential buyer that his seller client's property had no flooding issues, though the seller had mentioned water in the basement a few years back when there was a particularly heavy rainy season. Which of these statements is true?

Marcus committed intentional misrepresentation because he knew his statement was false.

Which of these is an example of conversion of funds?

Monica used funds from the firm's trust account to pay her firm's rent.

Which HUD program is responsible for developing and enforcing federal fair housing policies and laws?

Office of Fair Housing and Equal Opportunity

Which HUD program is responsible for protecting individuals against discrimination in housing based membership in a protected class?

Office of Fair Housing and Equal Opportunity

What is the length of the statute of limitations to file a fair housing complaint with HUD?

One year

On a closing statement, ______ goes in the seller's credit column and the buyer's debit column.

Prepaids

What's a typical prepaid item that goes into a seller's credit column and a buyer's debit column on a closing statement?

Property taxes

What are the three primary acts that impact mortgage loan disclosure?

RESPA, TILA, and Dodd-Frank

What is the name of the set of regulations used to enforce the Equal Credit Opportunity Act?

Regulation B

Jen is the supervising broker for Tri-City Realtors. More than one of her agents has failed to comply with a federal regulation. What can Jen do to reduce the risk of her agents violating federal regulations?

Require licensee training.

Greta is working with agent Brandon to sell some property. Nelson represents the buyer, Rigby. Of these four parties, who will pay the earnest money?

Rigby

Elizabeth is financing a new home. She submitted her loan application on Monday, August 3. She's set to close on Thursday, September 21. By what date must her lender provide the Closing Disclosure?

September 18

When homebuyers agree to open an escrow account for their mortgage, the mortgage lender uses that money to pay ______.

Taxes and insurance

Trinity has applied for a home equity line of credit to perform some upgrades on her home. Within what timeframe must her lender provide the Closing Disclosure?

The Closing Disclosure isn't required for a HELOC.

Which of these statements accurately describes finance- and housing-related legislation?

The Fair Housing Act of 1968 prohibited discrimination in the sale, rental, and financing of housing based on race, color, religion, or national origin.

Who closes on the cooperative brokerage agreement?

The agents for the buyer and seller

Prior to closing, who should review the Loan Estimate?

The buyer

Which of the following actions occurs prior to closing?

The buyer obtains a binder for insurance coverage on the new home.

Debra's listing agent, Raj, just called to tell her that he'd received an offer on her house and an earnest money check for $4,500. "I'm on my way over to go through the offer with you. I think you'll like it!" Debra's excited, and she knows exactly what she wants to spend that $4,500 on. What's wrong with Debra's thought process?

The earnest money doesn't belong to Debra. It will be held in an escrow account.

Who usually pays the broker commission?

The seller

Who's responsible for paying for recording documents to clear all defects from the title?

The seller

How will the buyer or seller know where and when the closing is being held?

Their agents will inform them of the date once it's set.

Annie and George have been saving and are finally ready to purchase their first home for their family (including their two toddlers). They want to make an offer on a sweet little bungalow in a quiet neighborhood. If the sellers are represented by a real estate licensee, which situation would be a violation of fair housing laws?

Their offer is rejected because the seller knows the neighbors don't like children.

Who delivers the evidence of a clear title at the closing?

Title insurance representative

What is the purpose of the Truth in Lending Act?

To better educate consumers about the cost of credit or obtaining a loan

What's the purpose of a chain of title?

To establish history of past ownership

What's another name for an escrow account?

Trust account

Tracy often mishandles her buyer clients' funds, and one is suing her. Through which of the following concepts may her broker also be held responsible for her actions?

Vicarious liability

Xavier deposited a $3,000 earnest money check into his personal account for safekeeping while he was on vacation. The balance in his account when he left on vacation was $4,200, and when he returned, it was $2,800. He withdrew enough funds from his savings account to cover the earnest money check and delivered the funds to the escrow agent. Which statement best represents Xavier's issue?

Xavier is guilty of commingling and conversion.