Principles of Real Estate II: Ch. 9

The amount Due from Seller at Closing is the sum of:

- Any Excess Deposit; - Closing Costs Paid at Closing by the Seller; - Existing Loan(s) Assumed or Taken Subject to by the consumer; - Payoff of First Mortgage Loan; - Payoff of Second Mortgage Loan; - Payment of other seller obligations; - Seller Credit; -Adjustments; and -Adjustments for Items Unpaid by Seller due to the consumer pursuant to the terms of the real estate sale contract.

If the loan is an ARM, the Adjustable Interest Rate Table (AIR) will be completed with the:

- Index + Margin - Initial Interest Rate - Minimum/Maximum Interest Rate - Change Frequency - Limits on Interest Rate Changes

Loan Information includes

- Loan Term - Purpose - Product - Loan Type -the creditor's loan identification number -mortgage insurance case number.

Closing Information includes the following information:

-Date Issued - the date the Closing Disclosure is delivered to the consumer; -The Closing Date; -The Disbursement Date; -The name of the Settlement Agent, -File #, the settlement agent's file number; -The Property address or location; and -Sale Price, Appraised Property Value, or Estimated Property Value. The Appraised Property Value of the property securing the loan is used for transactions without a seller, like refinancing. The Estimated Prop. Value of the property securing the loan is used if the creditor has not obtained an appraisal for transactions without a seller.

The amount Due from Borrower at Closing is the sum of:

-Sale Price of Property; -Sale Price of Any Personal Property Included in Sale; Closing Costs Paid at Closing; -Other consumer charges; -Adjustments; and -Adjustments for Items Paid by the Seller in Advance, pursuant to the terms of the real estate sale contract.

The amount Due to Seller at Closing is the sum of:

-The Sale Price of the Property; -Sale Price of Any Personal Property Included in Sale; -Adjustments; and - Adjustments for Items Paid by Seller in Advance due to the seller.

Loan Estimate

A 3-page document given to a borrower by a lender no later than 3 business days after loan application that shows the estimated costs for a specific mortgage loan.

Closing Disclosure

A 5-page document given to a borrower by a lender no later than 3 business days before closing of a real estate transaction that shows the borrower's loan and transaction costs.`

Title Insurance Policy

A contract between the title company and the insured. The title insurance company agrees to compensate or reimburse the insured against losses sustained as a result of defects in title, other than those exceptions listed in the policy.

Earnest Money

A deposit given by the buyer to the escrow agent for contract performance

Title Commitment

A statement of the condition of the title at a moment of time

Property Inspection Report

A valuable tool for buyers, upon which they can make an informed determination about the condition of a property before purchasing it.

Unless the buyer waives the home inspection _______________, the property will be inspected. A) Contingency B) Rights C) Escrow D) Optional

A) Contingency

The ________ combines the elements of the Good Faith Estimate form and the initial Truth in Lending disclosure. A) Loan Estimate B) Controlled Business Arrangement C) Closing Disclosure D) None

A) Loan Estimate

The loan amount will be found in the _______________ section of the Loan Estimate. A) Loan Terms B) Closing Costs Detail C) Costs at Closing D) Projected Payments

A) Loan Terms

The Closing Disclosure should match up with the _______________ contract. A) Sales B) Loan C) Option D) Executory

A) Sales

The _______________ section has costs associated with the loan that the buyer may not choose the provider of the services. A) Services You Cannot Shop For B) Origination Charges C) Other Costs D) Services You Can Shop For

A) Services You Cannot Shop For

Appraisal

An appraiser's opinion of value

Survey

An instrument used to determine whether or not the information in the sales contract concerning the property's boundaries is accurate

Calculating Cash to Close _________________. A) Is unknown to the buyer until closing B) Is a summation of sections A, B, C, E, F, G, and H C) Is a summation of sections A, B, and C only D) Is a summation of sections E, F, G and H only

B) Is a summation of sections A, B, C, E, F, G, and H

According to TREC Property Inspection Report (REI 7-5), the inspector is looking at the following systems: structural systems, electrical systems, HVAC systems, plumbing systems, appliances, and _______________. A) Pool B) Optional Systems C) Appraisal D) Refrigerator

B) Optional Systems

Under _______________ rules, residential closings must be performed using the Closing Disclosure. A) TREC B) RESPA C) CFPB D) SML

B) RESPA

The buyer can accept the property condition _______________ or request that the seller make specific repairs. A) cleaned B) as-is C) remodeled D) sanitized

B) as-is

Pending lawsuits that can affect property title are called _______________. A) Deed Restriction B) Liens C) Lis Pendens D) Title Commitments

C) Lis Pendens

One to three days before the closing, a buyer's agent will recommend that the buyer do a final _______________ of the property. A) Appraisal B) Survey C) Walk-through D) Inspection

C) Walk-through

Annual Percentage Rate (APR)

Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan.

T or F: A seller may require a purchaser to use a specific title insurance provider when the purchaser is paying for the title insurance.

False

T or F: Mortgage loan originators must provide a copy of Your home loan toolkit: A step-by-step guide no later than 7 days after the lender receives the loan application.

False

T or F: Signing the Loan Estimate locks the borrower into the loan described in the LE form.

False

T or F: The Real Estate Settlement and Procedures Act is administered by HUD.

False

Your Home Loan Toolkit

Informational booklet provided to mortgage applicants with general information about closing and a detailed description of the Loan Disclosure form.

The Adjustable Interest Rate (AIR) Table

Is included when the loan's interest rate may increase after consummation

Annual Escrow Account Statement

Must be submitted to the borrower *WITHIN 30 CALENDAR DAYS of THE COMPLETION OF THE COMPUTATION YEAR*. (The escrow analysis must be completed before this) Must include: - Account history - Projections for next year - Current mortgage payment and portion going to escrow - Amount of last year's monthly mortgage payment and portion that went to escrow - Total amount paid into escrow in past year - Amount paid from account for taxes, insurance premiums, and other charges - Balance at end of period - Explanation of surplus, shortage, deficiency is being handled - Reasons why the estimated low balance was not reached

Escrow Agent

Responsible for ensuring that the closing follows the terms agreed to by the parties in the sales contract. Also called the settlement agent.

RESPA

The Real Estate Settlement Procedures Act regulates closing on one to four family residential property with federally related residential mortgage loans.

T or F: RESPA Section 10 allows a lender to collect a cushion for the escrow account of amount up to 1/6 of the total disbursement for the year.

True

T or F: RESPA is applicable to all federally-related residential mortgage loans.

True

T or F: RESPA section 8 requires the lender to disclose a controlled business arrangement.

True

T or F: The Dodd - Frank Wall Street Reforms and Consumer Protection Act directed the CFPB to integrate the mortgage loan disclosures under TILA and RESPA.

True

If a lender has either an affiliate relationship or a direct ownership interest of more than one percent in a provider of settlement services and they directly refer business to the provider it is per Regulation X a ______________________. a) controlled business arrangement b) kickback c) legal incentive d) monopoly

a) controlled business arrangement

Prepaids

are items to be paid by the consumer in advance of the first scheduled payment of the loan. Each item must include the applicable time period covered by the amount to be paid by the consumer and the total amount to be paid. Ex) -Homeowner's Insurance Premium, -Mortgage Insurance Premium, -Prepaid Interest, and -Property Taxes

The title commitment must be delivered by the title company within ____ days of its receipt of the contract. a) 30 b) 20 c) 3 d) 90

b) 20

All of the following are part of the section called Due From Borrower at Closing on page 3 of the Closing Disclosure except: a) Sales Price of any Personal Property b) Seller's Loan Payoff c) Closing Costs Paid at Closing d) Sales Price of the Property

b) Seller's Loan Payoff

Which of the following items is NOT covered by a title policy? a) A lien filed against the title because a previous owner failed to pay b) Survivorship rights of a policyholder's spouse c) A charge by a property owners or condominium association d) Legal descriptions on property use that were not disclosed in the title policy

b) Survivorship rights of a policyholder's spouse

An agent should always refrain from expressing an opinion on which of the following? a) The Qualoity of title b) The sufficiency of title c) The adequacy of a survey d) Any of the above

d) Any of the above

The borrower receives a credit on the disclosure for which of the following: a) Pre-paid Property Taxes b) Seller's Loan Payoff c) The Sales Price d) Loan Amount

d) Loan Amount

The seller is debited at closing for: a) Pre-paid Taxes b) The Sales Price of the Property c) Pre-paid HOA Fees d) Pay-off of the First Mortgage

d) Pay-off of the First Mortgage

The seller receives a credit at closing for all of the following except: a) A Balance in the Seller's Reserve Account b) The Sales Price of the Property c) The Sales Price of any Personal Property d) Unpaid property taxes

d) Unpaid property taxes

Adjustable Payment (AP) Table

is included when the periodic principal and interest payment may change after consummation, but not because of a change to the interest rate, or the loan is considered to be a Seasonal Payment product.

Excess Deposit

is the amount of any deposit made by the borrower that has been disbursed to the seller prior to closing.

Total Interest Percentage (TIP)

the total amount of interest that the consumer will pay over the loan term, expressed as a percentage of the loan amount. For example, if the Loan Amount is $100,000 and the total amount of interest that the consumer will pay over the Loan Term is $50,000, then the TIP is 50%.

Seller Credits

the total amount that the seller will pay for items included in the Loan Costs and Other Costs tables, to the extent known, disclosed as a negative number.