Unit 10 - Transaction Process and Closing (Questions)

What is a sworn statement in which the sellers assure the title insurance company that no other defects in the title have occurred since the date of the title examination? A) Guarantee of Seller's Title B) T-47 C) Affidavit of title D) Residential Real Property Affidavit

Affidavit of title

When does the "bring down title search" occur? A) When the broker reduces the commission B) After closing and before any new documents are filed C) At closing D) When the mortgage company reduces the interest rate

After closing and before any new documents are filed

Which of the following steps must occur to make an offer a contract? A) Signatures have been received from all parties B) All of these C) Any contingencies must be agreed upon D) Changes agreed upon

All of these

What is a credit? A) An amount being reimbursed B) Funds paid by a party at closing C) When the seller nets a positive amount at closing D) An amount that a party owes and must pay at closing

An amount being reimbursed

Which of the following are fees a lender is allowed to collect prior to giving an applicant a good-faith estimate? A) Appraisal fees B) Interest rate lock fees C) Closing fees D) Lender inspection report fees

Appraisal fees

A closing agent must prepare which of the following documents? A) Appraisal and inspection report B) Deed and Closing Disclosure C) Loan Estimate and title policy D) Property evaluation report and credit report

Deed and Closing Disclosure

An appraisal to determine the market value of a residential property is usually based on the cost approach. True False

False

It is the seller's responsibility to prepare the Closing Disclosure prior to the closing. True False

False

RESPA rules apply to loans on properties of 100 acres and more. True False

False

The IRS capital gain limit on the sale of a home is $250,000 for a couple. True False

False

The Uniform Residential Appraisal Report lists all assets and liabilities of the borrower in order to determine the applicant's net worth. True False

False

Which of the following items would be prorated at closing? A) Warranty deed fees B) Furnace fuel bills C) Option fees D) Provisional fees

Furnace fuel bills

Which of the following should an agent do after an offer becomes a contract? A) Disclose the terms of the contract to any other buyer thinking of submitting a backup offer B) All of these C) Give copies of all documents signed to both the buyer and seller D) Request payment

Give copies of all documents signed to both the buyer and seller

Which of the following fees would most likely be prorated at closing? A) Loan discount fees B) Homeowners association fees C) Attorney fees D) Title insurance fees

Homeowners association fees

Which of the following items are typically prorated at closing? A) Loan interest on an assumed loan B) Earnest money C) All of these D) Commission fees

Loan interest on an assumed loan

Section 9 of RESPA prohibits sellers from doing which of the following? A) Selling the property to different buyers without terminating the first contract B) Misrepresenting the property C) All of these D) Requiring buyers to purchase title insurance from a particular company

Requiring buyers to purchase title insurance from a particular company

Which of the following is TRUE about the good-faith estimate of settlement costs? A) The language in the estimate can be of the lender's choice as long as the content is legally congruent. B) The estimate must be at least five pages in length. C) There is no requirement to use a good-faith estimate whenever the transaction involves government financing. D) The estimate must contain the exact language specified by the CFPB.

The estimate must contain the exact language specified by the CFPB.

The Consumer Financial Protection Bureau requires which of the following? A) The lender must limit loan application fees not to exceed 1% of the loan amount. B) The lender must not discriminate against a borrower's familial status. C) The lender must provide the borrower the Loan Estimate within three business days of application. D) The lender must have given the borrower notice of final loan approval within 21 days or refund the borrower the loan application fee.

The lender must provide the borrower the Loan Estimate within three business days of application.

Which of the following is part of the use test used to exclude any capital gain from the sale of a home? A) The seller owned the property for at least two years. B) The prescribed period for living in the home must be continuous. C) The seller lived in the home as her main home for at least two years. D) The prescribed period for owning the property need not be continuous.

The seller lived in the home as her main home for at least two years.

How are "special assessment taxes" usually prorated at closing? A) The seller makes the current payment and the buyer assumes all future payments. B) The buyer is required to pay the entire amount. C) The seller is required to pay the entire amount. D) Neither party is required to pay; special assessments are covered under the title insurance policy.

The seller makes the current payment and the buyer assumes all future payments.

When prorating taxes, which of the following is used if the current real estate tax cannot be determined definitely? A) The taxes will be based on the buyer's after tax income. B) The taxes will be based on the last obtainable tax bill. C) The taxes will be based on a 2.34% per dollar of taxable value and reported using the mill rate. D) The taxes will be based on the median average tax rates of properties in the surrounding area.

The taxes will be based on the last obtainable tax bill.

How many business days after the borrower receives the Closing Disclosure must the borrower wait before signing the loan documents? A) One day B) Seven days C) Five days D) Three days

Three days

After a lender completes a loan package, it is submitted to an underwriter. True False

True

An appraisal is needed to ensure that the property being used as collateral for a loan is adequate for a recovery of a lender's investment in case of default. True False

True

RESPA prohibits the payment of kickbacks, or unearned fees, in any real estate settlement service. True False

True

The Consumer Financial Protection Bureau (CFPB) requires lenders to provide the Loan Estimate to an applicant three days from application. True False

True

The acronym CLO stands for A) capitol lender offer. B) computerized loan offer. C) computerized lending offer. D) computerized loan origination.

computerized loan origination.

An amount that has already been paid or an amount being reimbursed is called a A) credit. B) debit. C) pre-payment amount. D) closing reimbursement.

credit

Which of the following fees would most likely be prorated at closing? A) Discount points B) Taxes C) Home warranty premiums D) Buy-down fees

Taxes

A buyer is charged an additional loan origination fee on the Closing Disclosure that was not disclosed on the Loan Estimate. Which of the following is TRUE? A) That fee would not be allowed. B) The closing may be delayed. C) The fee requires that the Loan Estimate be reissued and triggers a new three-day waiting period before closing. D) The additional fee may not be more than a 10% increase from what was stated in the original estimate.

The fee requires that the Loan Estimate be reissued and triggers a new three-day waiting period before closing.

Which of the following needs to be filed by the buyer? A) Transfer of cable B) All of these C) A change of address D) Transfer of security systems

All of these

What is needed to ensure that the property being used as collateral for the loan is adequate for a recovery of their investment in case of default? A) An audit B) An appraisal C) An inspection D) A credit report

An appraisal

When does a title company start the title work? A) At the time the seller's broker instructs them to do so. B) At the time the contract is sent to the title company. C) At the time the contract is executed. D) At the time the listing agreement is executed.

At the time the contract is sent to the title company.

Most closings involve the division of financial responsibility between the buyer and seller for which of the following items? A) Mediation fees B) Credit life insurance C) Condominium fees D) Cable bill

Condominium fees

Loans are not approved for applicants with credit scores lower than 600. True False

False

Due to the Taxpayer Relief Act of 1997, it may not be necessary to file which of the following on a capital gain on residential property? A) Form 1099-S B) None of these C) Form W2 D) Form 1099-TR

Form 1099-S

Section 8 of RESPA prohibits which of the following actions? A) Unconscionable actions B) Kickbacks C) Misrepresentation D) Fraud

Kickbacks

Which of the following items is not prorated at closing? A) Loan amount B) General real estate taxes C) Water taxes D) Mortgage interest on an assumed mortgage

Loan amount

To which of the following do RESPA regulations apply? A) Purchases of more than 25 acres B) Seller-financed purchases C) One-to-four-family purchases D) Agricultural purchases

One-to-four-family purchases

Which law requires certain disclosures about the mortgage and settlement process and prohibits certain practices that increase the costs of settlement services? A) Deceptive Trade Practices Act B) Real Estate Settlement Procedures Act C) Mortgage Reduction Act D) Truth in Lending Act

Real Estate Settlement Procedures Act

If a buyer and seller were to close on August 17, which of the following items would the title company prorate? A) Rents B) Escrow fees C) Origination fees D) None of these

Rents

What type of valuation method is typically used to appraise residential property? A) Cost approach B) Income approach C) Loan to value approach D) Sales comparison approach

Sales comparison approach

In an escrow closing, which of the following items is typically deposited by the buyer? A) The title policy B) All of these C) The balance of the cash needed to complete the purchase D) Proof of residency in Texas

The balance of the cash needed to complete the purchase

Where would earnest money never be held? A) The broker's personal or business account B) The title officer C) None of these D) The title attorney

The broker's personal or business account

The Real Estate Settlement Procedures Act prohibits all of the following EXCEPT A) fee-splitting for referrals of settlement services. B) referral fees to out-of-state brokers. C) unearned fees for services not actually performed. D) kickbacks.

referral fees to out-of-state brokers.