CH 12 -

Total loan costs are $4,000. The services the buyer cannot shop for total $500. Loan origination fees are $1,200. What is the estimated cost of services the buyer can shop for?

$2,300

The settlement date is December 15th at 9 a.m. Interest on the loan for the first full month is $400 (Dollars). How much is the prepaid interest from December 15th to January 1st?

$219.30

What is a borrower's monthly housing payment if we assume the following: $2,560 in principal and interest, $420 in taxes, and $110 in insurance?

$3,090

f a borrower pays $12,690 in interest annually, how much is paid per diem?

$35.25

If a borrower pays $12,690 in interest annually, how much is paid per diem?

$35.25 ($12,690/360 bus days)

Which form does the IRS require settlement agents to file after closing?

1099-S

If the closing is set for December 18th, how many days of rent will be credited towards the seller?

18 days

How often are real estate settlement dates delayed?

25% of the time

Under RESPA, how many days does the borrower have to review the Closing Disclosure?

3 business days

To find the amount of interest paid per diem, you must divide the annual interest by...?

360 days

Amalia wants to borrow money to buy a home. She has gathered four Loan Estimates from four lenders. The Loan Estimates provide TIPs of 63.5%, 87.2%, 53.4%, and 60.5%. Assuming all the other loan terms are equal, which loan should she choose?

53.4%

What is a prepayment penalty?

A charge the lender assesses if the buyer pays off all or part of the loan early.

Javier buys Tina's house for $325,000. How would we characterize the $325,000 payment from each person's point of view?

A debit for Javier and a credit for Tina

What is a mechanic's lien?

A restriction tradespeople place on the home when they have not been paid to ensure they will be paid when ownership of the house transfers.

What does a Closing Disclosure primarily include?

An accounting of all money coming in and out of a real estate sales transaction

What is an easement?

An agreement the owner has with another person to allow them access to part of the property.

Under RESPA, after the initial escrow report, lenders must provide borrowers with updated reports on a/an ............. basis.

Annual

How long before settlement must the broker transfer the buyer's earnest money to the attorney?

At least 10 days

When must buyers receive their Closing Disclosures?

At least 3 business days before closing

Which of the following is NOT an example of an encumbrance?

Attorney

Brionna is buying the home with an FHA loan. Which of the following must be repaired before her loan will receive final approval?

Broken hot water heater, door from the garage to the home that doesn't close, broken electrical outlets.

How do title searchers usually search a title?

By consulting an index of the land records to find relevant documents

Which item will the settlement agent most likely adjust to ensure the seller's side of the Closing Disclosure balances properly?

Cash to seller

You are the buyer's broker. At the final walkthrough, you and the buyer notice that the seller has failed to make minor repairs he agreed to. What is your most likely action?

Contact the seller's broker and ask that the seller give concessions to the buyer for the amount required to make the repairs. If this is agreed to, write an addendum to the contract and notify the settlement attorney

You are the buyer's broker and notice an error in how taxes are prorated. What do you do?

Contact the settlement attorney

A bookkeeping entry on the right side of an account, recording the reduction or elimination of an asset or an expense is known as a/an...?

Credit

Hector is buying a house from Rita with a closing in May. Settlement Agent Samantha learns that property taxes were paid in September for the upcoming tax-year. How should Samantha treat the taxes on the Closing Disclosure?

Credit the seller and debit the buyer for taxes prorated from closing to the end of the tax year.

Which of the following interests found in a title search is the most likely to affect the marketability of title for a property?

Federal Tax Lien

How many pages is a Closing Disclosure?

Five pages, as required by RESPA

The buyer received her Closing Disclosure on Monday, July 3rd. What is the earliest date the settlement can take place?

Friday, July 7th

What types of inspections is the buyer responsible for during the due diligence period?

General inspection with professional, walk through with broker, survey, and pest.

Jane is buying a house. She asked her attorney Tamara to conduct a title search. Tamara issued an opinion of title concluding the seller has and can convey marketable title. Jane believes Tamara was thorough, but she is concerned about potential unrecorded transfers. What can she do to address her concerns?

Get an owner's title insurance policy

The buyer would like to operate a small hair salon in her new home. What would you check during the due diligence period to be sure this would be allowed?

Homeowners' covenants, zoning, and other local regulations.

Sally submits a loan application to Honest Bank. Over the next few days, she has several phone conversations with Honest Bank about the application. One week after filing her application, she receives a Loan Estimate and a Home Loan Toolkit. Based on RESPA, what has happened?

Honest Bank failed to provide required disclosures within the three-day window

What is owners' title insurance?

Insurance that protects the buyer should something be found defective in the title after settlement.

Which is true about form 1099-S?

It only takes up a third of a page

RESPA requires lenders to provide what disclosure within three days of receiving a loan application?

Loan estimate

What does the buyer want to make sure the seller can convey?

Marketable Title

A mortgage payment made on June 1st will be for the month of...?

May

Bob the buyer, Sally the Seller, and Morty the Mortgage Lender are at the closing on a house sale. No one else is present or expected to come. Who is most likely to be responsible for filing Form 1099-S?

Morty

Technically, RESPA applies to all "federally related mortgage loans." As a practical matter, to what does RESPA apply?

Most sales one-to-four family residences

You are the buyer's broker and notice on the final walkthrough that the hot water heater is broken. The buyer is financing with a conventional loan. What is the best option?

Negotiate with the seller's broker for the seller to offer a concession equal to the value of a new water heater. If agreed to, you would draw up an addendum for signature and forward to the settlement attorney.

What items will the seller's column in the Loan Costs section of the Closing Disclosure usually contain?

None, usually

Generally, how many land record offices will a title searcher have to visit to search a title?

One

Who does title searches in North Carolina?

Only an attorney

The Closing Disclosure sometimes includes a figure representing mortgage interest for the period from the date of closing to the end of the month. What do we call this figure?

Pre-paid interest

On the Closing Disclosure, property taxes, water assessment, homeowner's association fees, and prepaid interest are all amounts that might be subject to what?

Proration

Which aspect of buying real property makes title searches so important?

Real property is expensive

Which of the following must come first at closing?

Signing the loan documents

The buyers' loan estimate form indicates that a rate is locked until 5 p.m. on August 15th. What does this mean?

That the interest rate will not go up or down as long as the transaction closes by August 15th at 5 p.m. and there are no changes in the application

What previously used document do the Closing Disclosures replace?

The HUD-1 statement

Which of the following items on disclosure statements does the seller's broker have direct responsibility for the accuracy of?

The amount of the buyer's closing costs the seller will pay

Which of the following can the buyer's broker rely on when reviewing the Closing Disclosure?

The amount remaining on the sellers mortgage

Who is responsible for information on the settlement statement?

The attorney and both brokers

Who is responsible for telling the settlement attorney the amount of the brokers' compensation?

The brokers

Sally attends a closing for the sale of a house. She brings a check to closing. At the closing, she signs many papers. The settlement agent takes Sally's check and cuts a number of checks to other parties. At the end of the closing, Sally is given a deed, in addition to copies of all the papers she signed. Who is Sally?

The buyer

At a minimum, who must be present at closing?

The buyer and the settlement agent

From the buyer's point of view, which is the most important document at the closing table?

The deed

What documents must the seller sign?

The deed and the authorization for the lender to cancel the lien and close any home equity lines

In most closings, who usually provides the money that makes the closing possible?

The lender

Which participant's interests align most closely with the buyer's at closing?

The lender

Who might need title insurance?

The lender and buyer

What will happen if numbers on the Closing Disclosure change beyond RESPA tolerances between the time the buyer receives the disclosure and closing?

The lender will need to issue a new Closing Disclosure with updated numbers and give the borrower an additional three days to review it before closing can occur.

What happens if the lender is uncomfortable with the results of the attorney's title search?

The lender will not finish processing the loan.

At closing, which must close first: the loan or the property?

The loan

From the seller's point of view, which is the most important document at the closing table?

The net proceeds check

Which of the following takes precedence?

The property tax lien

Bob attends a closing for the sale of a house. At the closing, on Bob's behalf, the settlement agent cuts checks to a real estate agent, a lender, and an attorney. After the settlement agent has paid all the parties that need to be paid, the settlement agent calculates what is left and cuts a check to Bob. Who is Bob?

The seller

Which of the following pays the seller a credit at closing for the remaining days left on their insurance policy?

The seller's insurance company

From the point of view of the buyer and the seller, what may prove to be the most useful document on the closing table?

The settlement agent

Wilbert attends a closing for the sale of a house. Wilbert brings a settlement statement outlining all the funds to be received from and received by the various parties. Wilbert makes sure all the documents are properly completed. Then he issues a series of checks to people in the room. Who is Wilbert?

The settlement agent

Who records the deed?

The settlement attorney

Hansel is buying a house. The Closing Disclosure indicates the cash needed to close from the buyer is $12,443.76. Hansel comes to closing with a check for $12,343.76. What is the most likely result?

The transaction cannot close unless Hansel brings another $100.

You are the buyer's broker and notice on the final walkthrough that the hot water heater is broken. The buyer is financing with an FHA loan. What do you do?

The water heater must be replaced before closing. Delay the closing to allow time for the replacement to be done.

Liza is buying Trevor's house for $200,000. Liza and Trevor meet for the closing. No one else is present. Liza gives Trevor a personal check for $200,000, and Trevor gives Liza a signed deed. They did not use a Closing Disclosure at any time. They shake hands and leave. Which of the following is true?

They did not need a Closing Disclosure because RESPA does not apply to this transaction.

RESPA requires lenders to give the borrower a Closing Disclosure how many days before closing?

Three business days

Why does RESPA require the Loan Estimate to follow a specific format?

To allow borrowers to compare loans easily

What is the broker's role in settlement?

To provide information to the attorney and to review settlement statements with their clients before the meeting

What is settlement?

When the buyer signs papers in the attorney's office.

What does the title system help potential buyers, potential lenders, and the public find out?

Who has interests in a particular property

For the Closing Disclosure to be complete and accurate, the seller's total credits and debits must add up to what amount?

Zero dollars