Real Estate Practice- Chapter 14

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

$0

How many days after receiving a loan application must the lender provide a Loan Estimate?

3 days!

What is the Real Estate Settlement Procedures Act (RESPA)?

A federal law requiring the disclosure to borrowers of settlement (closing) procedures and costs by means of a pamphlet and forms prescribed by the United States Department of Housing and Urban Development

What is a chain of title?

A history of conveyances and encumbrances affecting the title from the time the original patent was granted, or as far back as records are available Used to determine how the title came to be vested in current owner

What is the abstract of title?

A summary or digest of all transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title, showing continuity of ownership, together with any other elements of record which may impair title

A property is set to close on November 21st. If the seller collected $4,600 in rent on November 1st, how much will the buyer be credited at closing? A. $1,380 (Dollars) B. $3,220 (Dollars) C. $154 (Dollars) D. $4,600 (Dollars)

A. $1,380 (Dollars): Nov 21- Nov 30= 9 days 9/30 days= 0.3...... 0.3 x $4,600= $1,380

What is a borrower's monthly housing payment if we assume the following: $1,560 in principal and interest, $360 in taxes, and $100 in insurance? A. $2,020 (Dollars) B. $1,560 (Dollars) C. $2,000 (Dollars) D. $24,240 (Dollars)

A. $2,020 (Dollars)

If a property closes on January 13th, how many days of interest will the seller be responsible for paying on their existing mortgage? A. 13 days B. 27 days C. 28 days D. 0 days

A. 13 days

Javier buys Tina's house for $325,000. How would we characterize the $325,000 payment from each person's point of view? A. A debit for Javier and a credit for Tina B. A credit for Javier and a debit for Tina C. A credit for both D. A debit for both

A. A debit for Javier and a credit for Tina

Eliot is buying a house. He asks Jenny to perform a title search. Jenny provides Eliot with a report that summarizes all the relevant events and documents she found in the land records. The report concludes, "Based on the evidence in the land records, the seller has and can convey marketable title." What kind of report did Eliot receive? A. An attorney's opinion of title B. A title abstract C. A guarantee of title D. A title insurance policy

A. An attorney's opinion of title Attorney's opinion of title is a written statement by an attorney regarding the identity of all current title owners, lien holders, and possible claimants of a particular land.

Which item in the land records is least likely to render a title unmarketable? A. An easement B. A tax lien C. A mortgage D. A missing certificate of habitability

A. An easement Easements "run with the land". Most buyers will accept an existing easement and not allow it to derail the purchase.

Hector is buying a house from Rita with a closing in May. The settlement agent learns that water charges have accrued, but have not yet been paid. How should Samantha treat the water charges on the Closing Disclosure? A. Credit the buyer and debit the seller for water charges prorated to the date of closing. B. Credit the seller and debit the buyer for water charges prorated to the date of closing. C. Ignore them. No action is required. D. Credit the seller for the water charges.

A. Credit the buyer and debit the seller for water charges prorated to the date of closing.

Hector is buying a house from Rita with a closing in May. The settlement agent learns that city taxes have been paid in full through the date of closing. How should Samantha treat the city taxes on the Closing Disclosure? A. Ignore them. No action is required. B. Credit the seller and debit the buyer for city taxes prorated from closing to the end of the tax year. C. Credit the buyer and debit the seller for city taxes prorated from closing to the end of the year. D. Credit the seller for the water charges.

A. Ignore them. No cation is required

Gretta is reading a loan estimate provided by her lender. She learns that over the life of her loan, she will pay 67% of the borrowed amount as a cost of financing the loan. What does the 67% figure represent? A. The TIP or total interest percentage B. The APR or annual percentage rate C. The interest rate of the loan D. The down payment she must pay

A. The TIP or total interest percentage

At a minimum, who must be present at closing? A. The buyer and the settlement agent B. The buyer and the seller C. The seller and the lender D. The settlement agent and the seller

A. The buyer and the settlement agent The settlement agent will most likely conduct the closing. The buyer must attend the closing to sign off on the closing documents and receive title.

If there is a dispute over title, the courts begin by presuming that the owner of real property can be determined from what? A. The land records B. Affidavits C. Local knowledge D. Testimony

A. The land records

Which of the following pays the seller a credit at closing for the remaining days left on their insurance policy? A. The seller's insurance company B. The buyer C. The seller's attorney D. The seller will not receive a credit from any party

A. The seller's insurance company The insurance company will reimburse the seller at closing for the remaining days left on the insurance policy.

Many people may own an interest in a particular property, including owners, easement holders, lenders, unpaid workers, and tenants. How do we keep track of all these interests? A. The title system B. The court system C. Newspaper records D. Property directories

A. The title system

Which of the following did Congress NOT intend in enacting RESPA? A. To force lenders to provide proprietary information B. To prevent kickbacks that increase the cost of loans and closings C. To prevent service providers from charging unearned fees D. To help borrowers understand and compare loans

A. To force lenders to provide proprietary information

What is proration?

Adjustments of interest, taxes, and insurance, etc. on a pro rata basis as of the closing or agreed upon date

What does a Closing Disclosure primarily include?

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

What is the opinion of title?

An attorney's written evaluation of the condition of the title to a parcel of land after examination of the abstract of title

What is debit?

EXPENSES (money flowing out of the account) That which is due from one person to another

Rent from an income producing property is typically collected...?

In advance for the upcoming month

What is title insurance?

Insurance to protect a real property owner or lender up to a specified amount against certain types of loss Ex. defective or unmarketable title

What controls the definition of marketable title in a real estate transaction?

Local law

What is credit?

Money flowing into the account A bookkeeping entry on the right side of an account, recording the reduction or elimination of an asset or an expense, or the creation of or addition to a liability or item of equity or revenue

Which of the following expenses are typically paid in arrears? A. Mortgage payments B. Property taxes C. Property insurance D. Rent

Mortgage payments are typically paid in-arrears, meaning in the past. For example, a May 1st mortgage payment will be for the month of April. The remaining answer choices are paid in advance.

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

Olivia is buying her first house. She's nervous, and she wants to make sure she understands all the financial details of the closing before she gets there. Which pages of the Closing Disclosure should she consult?

Pages 2 and 3

What is closing?

Process by which all the parties to a real estate transaction conclude the details of a sale or mortgage The process includes the signing and transfer of documents and distribution of funds

What is the relationship between RESPA and the Closing Disclosure?

RESPA requires the lender to give the buyer the Closing Disclosure

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

The deed

What is the primary piece of information the settlement agent must provide on a 1099-S?

The gross proceeds of the sale

In most real estate transactions, which party makes the closing financially feasible?

The lender

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.

What is a marketable title?

Title which a reasonable purchaser, informed as to the facts and their legal importance and acting with reasonable care, would be willing and ought to accept

What is the buyer's primary interest at closing?

To get a signed deed and marketable title

What is the seller's primary interest at closing?

To pay everyone who must be paid to close and collect the net proceeds check

What is the lender's primary interest at closing?

To protect its security interest in the property