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Buyers Jim and Jan are closing on a home later this month. They have the right to review the completed settlement statement how long before closing?

3 days

Money the buyer or seller needs to pay at closing is

A debit

Confirm Receipt

A place for the borrowers to sign confirming receipt of the Closing Disclosure document. Signing the document does not indicate acceptance of the loan.

Integrated Disclosure (TRID)

According to the TRID rule: Lenders must give a copy of the booklet, "Your home loan toolkit" to every person at the time of application for a loan. Lenders must provide a Loan Estimate of settlement costs at the time of loan application or within three business days of application. A Closing Disclosure, a form designed to detail all financial particulars of a transaction, must be delivered to the borrower at least three days before closing. The actual time frame is based on the method of delivery. The settlement agent must also provide the seller with the Closing Disclosure, which may be done at consummation. As before, RESPA prohibits kickbacks or unearned fees paid to lender for referring customers to insurance agencies, etc. R E S P A K (a memory tool to help you remember that RESPA prohibits KICKBACKS to real estate licensees.)

What is the latest date that a settlement agent is allowed to provide the seller with the Closing Disclosure?

At consummation of the mortgage

When must the Closing Disclosure be delivered to the buyer?

At least three business days prior to closing

Closing Disclosure - Page 1

At the top of the first page of the form are three sections: Closing information - Includes date issued, closing date, disbursement date, settlement agent, file number, property address, and sale price Transaction information - Includes names and addresses for both the borrowers and sellers and the lender's name Loan information - Includes the loan term, purpose of the loan, product type, loan type and loan ID number

What are three things the seller usually pays at closing?

Broker commissionTitle fees, such as for clearing the titleFees for preparing the deed

What does page 3 of the Closing Disclosure contain?

Calculations of the amount of cash the buyer needs to bring to closing and summaries of all the transactions for both the buyer and the seller

Calculating Cash to Close

Closing costs are only part of the cash a borrower needs to bring to closing. The third section on the second half of column 2 deals with calculating the costs to close. This calculation includes the total costs from section J above, closing costs paid from the loan account, down payment, deposits, funds for borrower, seller credits, adjustments, and other credits.

What is the definition of consummation of the loan?

Consummation is defined under Regulation Z as the time that a consumer becomes contractually obligated on a credit transaction

List three items that a buyer usually pays at closing.

Credit fees Loan origination Homeowner's insurance

On the comparison chart of closing statement items, how are collection account fees debited or credited?

Debit to both buyer and seller

Loan Calculations

Details the total amount of all payments on the loan, the dollar amount of the finance charges over the life of the loan, the amount financed, the annual percentage rate (APR), and the total interest percentage (TIP)

Contact Information

Gives firm names, addresses, license numbers, contact names, email addresses, and phone numbers for persons involved in the transaction.

Which of the following statements is TRUE?

If the creditor provides a corrected disclosure, it may also be required to provide the consumer with an additional three-business-day waiting period prior to consummation.

Loan Estimate

Is a detailed breakdown of the cost of the loan, must be delivered within three business days of loan application. Signature of the applicant(s) is permitted but not required. If a mortgage broker receives a consumer's application, either the creditor or the mortgage broker may provide a consumer with the Loan Estimate. If the Loan Estimate is not provided to the consumer in person, the consumer is considered to have received the Loan Estimate three business days after it is delivered or placed in the mail.

Loan Disclosures.

It covers: Assumption - Indicates whether or not the lender will allow a loan assumption on a future sale or transfer Demand feature - Indicates whether or not the loan has a demand feature, which would allow the lender to require early repayment Late payment - States what late fee the lender will charge Negative amortization - Indicates whether or not the loan has a negative amortization feature, which could result in the loan amount becoming larger than the original loan amount, resulting in a decrease of the equity the borrower has in the property Partial payments - Indicates whether or not the lender would accept partial payments on the loan Security interest - Lists the address of the property securing the loan Escrow account - Breaks down what is and what is not included in the escrow account

Closing Disclosure Delivery Requirements

It must be delivered at least three days prior to closing. Having their final loan terms and costs available three days prior to closing enables consumers to review their final loan costs and terms and ask questions prior to coming to the closing table. It provides time for the consumer to get answers to any questions and possibly negotiate any changes that occurred. The creditor is generally responsible for insuring that the Closing Disclosure is delivered to the buyer no later than three business days before consummation. The creditor may contract with a settlement agent to provide the Closing Disclosure on behalf of the creditor. Important definitions to consider for complying with delivery of the Closing Disclosure include: Business day means all calendar days except Sundays and legal public holidays specified in 5 U.S.C. 6103, or the observed legal holiday. For example, if Fourth of July falls on Sunday, the observed holiday is Monday. Consummation is defined under Regulation Z as the time that a consumer becomes contractually obligated on a credit transaction.

Loan Costs

Loan Costs The first section deals in column 1 with the loan costs: A. Origination charges - Items such as points, application fee, and underwriting fee B. Services the borrower did not shop for - These are items the lender requires for the loan, such as appraisals and credit reports. C. Services the borrower did shop for - These are items the borrower can get on his own, such as pest inspections, survey fees, and title insurance. D. The total of the costs of A, B, and C above

From the seller's point of view, what do credits represent?

More money at closing

When does a loan application exist?

Once consumer has submitted 6 items (3 pertaining to customer and 3 pertaining to property) to the lender. Those items are: NameBorrower's IncomeBorrower's Social Security numberProperty addressEstimated value of propertyAmount of mortgage loan sought by the consumer

What does it mean when the borrower signs the Loan Estimate?

Only that the borrower has received a copy of the form. It does not mean that the borrower has accepted the loan.

Other Costs

Other Costs The next section at the top of column 2 deals with other costs: E. Taxes and other government fees - Items such as recording fees and transfer taxes F. Prepaids - These are items paid for in advance, such as homeowner's insurance and property taxes. G. Initial escrow payment at closing - An escrow account is an account where money is held for certain payments until they are paid out - typically for insurance and taxes. The lender gives the borrower a statement that tells how much money it requires the borrower to put into the account each month. H. Other costs not covered elsewhere on the disclosure - Items such as HOA fees, home warranty fees, home inspection fees, and real estate commission I. The total of the costs of E, F, G, and H above

Other Disclosures

States other important information for the borrower to know including whether or not the borrower would have any protection from liability for the unpaid balance in the event of a foreclosure

If an item is paid for in advance by the seller, how will it be handled on the settlement statement?

The buyer will receive a debit and the seller will receive a credit.

What does page 2 of the Closing Disclosure show?

The details of the closing costs

Real Estate Settlement Procedures Act (RESPA)

The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.

What type of information is found in the Loan Calculations section on page 5 of the Closing Disclosure?

The total amount of all payments on the loan, the dollar amount of the finance charges over the life of the loan, the amount financed, the annual percentage rate (APR), and the total interest percentage (TIP)

What do you call those items that the seller has incurred but have not been paid and how will they be handled on the settlement statement?

These items are paid in arrears. The buyer will get a credit and the seller will get a debit.

When is the creditor required to provide the borrowers with a Loan Estimate?

Within three business days of the receipt of the consumer's loan application

For purposes of the TRID rule, a business day is a

day on which the creditor's offices are open to the public for carrying out substantially all of its business functions.

For items paid in advance,

the buyer will receive a debit and the seller will receive a credit.