unit 14
debit
A _____ is a charge- an amount that a party owes and must pay at closing. / is an amount to be paid by the buyer or the seller
mortgage servicing transfer statement
A ______ statement is required if the lender intends to sell or assign the right to service the loan to another loan servicer.
face to face closing
A _______ closing the parties may meet for the first and only time. Those attending a closing may include: buyer, seller, real estate professional, seller and buyers attorney's, county recorder, representative of the title insurance company
escrow procedure
After the sales contract is signed, the buyer and seller execute escrow instructions to the escrow agent. Once the escrow instructions are received by the escrow agent, they can be changed only at the written direction of both buyer and seller. The real estate professional who is holding the earnest money turns it over to the escrow agent, who deposits it in a special trust or escrow account.
Affidavit of Title
As part of the later search, the seller may be required to execute an ______, a sworn statement in which the seller assures the title insurance company (and the buyer) that no other defects in the title have occurred since the date of the title examination (judgements, bankruptcies, divorce etc.
settlement and transfer
Closing is known by different names in different areas. In some areas, for instance, closing is called ______
real estate professional's role at closing
Depending on local practice, the real estate professional's role at closing can vary from simply collecting the commission to conducting the proceedings.
loan fees
For a new loan, the lender generally charges an origination fee and could possibly charge discount points, particularly if the borrow wants a below-market interest rate
0.125%
Generally, if the APR increases more than _____ from that stated in the Closing Disclosure, the creditor must provide a new disclosure with a revised APR and wait an additional three business days before closing the loan.
escrow closing
In an ______ closing, a third party coordinates the closing activities on behalf of the buyer and the seller
closing escrow
In other regions, the buyer and the seller never meet; the paperwork is handled by an escrow agent in a process known as ______
passing papers
In some parts of the country, the parties to a transaction sit around a table and exchange copies of documents as they are executed, a process known as _______.
section 8 prohibits kickbacks section 9 prohibits the home seller from requiring that the buyer purchase title insurance section 10 prohibits the lender from requiring excessive escrow account deposits for such items as taxes and hazard insurance
RESPA prohibits certain practices that increase the cost of settlement services: (3)
RESPA requirements
RESPA prohibits the lender from requiring the borrower to deposit funds in an escrow account for taxes and insurance that exceed certain limits, thus preventing the lender from taking advantage of the borrower
Your Home Loan Toolkit
The CFPB developed an information booklet called ______, which must be provided by a creditor to a mortgage application as part of the loan application process, although other real estate professionals, such as brokers, are encouraged to make the booklet available to prospective buyers. ____ replaced the previously mandated Settlement Cost Booklet
Closing Disclosure
The ____ form itemizes all charges that are normally paid by a borrower and a seller in connection with settlement, whether required by the lender or another party, or paid by the lender or any other person.
title
The ____ or opinion of ____ discloses all liens, encumbrances, easements, conditions, and restrictions on the property.
Loan Estimate
The _____ form replaces the initial Truth in Lending Statement (TIL) and the Good Faith Estimate (GFE). This form highlights the information that historically has been the most important to consumers.
Real Estate Settlement Procedures Act (RESPA)
The _____ is a federal law that requires certain disclosures about the mortgage and settlement process and prohibits certain practices that increase the cost of settlement services, such as kickbacks or referral fees.
closing statement
The _____ is an accounting of the parties' debits and credits.
exchange
The _____ is made when the parties are satisfied that everything is in order.
seller this is recording expenses
The _____ usually pays for any recording charges (filing fees) necessary to clear all defects and furnish the purchaser with a marketable title.
the TILA-RESPA Integrated Disclosure Rule
The ______ (also called the know before you owe) replaces the four previous disclosure forms with two new forms: the Loan Estimate and the Closing Disclosure
Mortgage Disclosure Improvement Act (MDIA)
The ______ has changed how buyers, sellers lenders, mortgage brokers, title agents, and real estate professionals prepare for closing.
closing agent
The _______ may be a representative of the title company or lender, the real estate professional representing one of the parties, or the buyer's or seller's attorney. This person orders and reviews the title insurance policy or title certificate, survey, property insurance policy, and other items.
TILA-RESPA Integrated Disclosure Rule (TRID)
The consumer financial protection bureau (CFPB) issued the _________ to implement provisions of the Dodd-Frank Act intended to combine and clarify financing disclosures to consumers.
payoff statement
The exact amount required to pay the existing loan is provided in a current ______ from the lender, effective the date of closing.
Mortgage Disclosure Improvement Act (MDIA)
The intent of this law is to prevent the consumer from receiving an enticingly low interest rate at the initial loan application and then learning at settlement that the lender is charging more in fees.
seller's concerns
The seller's main interest is to receive payment for the property, so the seller will want assurance that the buyer has obtained the necessary financing and will have sufficient funds to complete the sale.
opinion of title
When an abstract of title is used, the purchaser's attorney examines it and issues an ________.
prorations
_____ are necessary to ensure that expenses and credits are divided fairly between the seller and the buyer.
prepaid items
______ are expenses to be prorated (such as fuel oil in a tank) that have been prepaid by the seller but not fully used up, so they become credits to the seller. / seller credits.
Accured items
_______ are expenses to be prorated (such as water bills and interest on an assumed mortgage) that are owed by the seller but will be paid after the sale by the buyer. / buyer credits
credit
a ____ is an amount entered in a person's favor- an amount that has already been paid, an amount being reimbursed, or an amount the buyer promises to pay in form of a loan.
Internal Revenue Service (IRS) on Form 1099-S.
certain real estate closings must be reported to the ______. The affected properties include a sale or exchange of: land, an inherently permanent structure, a condominium unit and its appurtenant fixtures, and shares in a cooperative housing corporation
appraisal fee appraisal
either the seller or the purchaser pays the _____ fee, depending on who orders the ______. it is customary for the lender to require an ______, in which case, the buyer usually bears the cost, although this is always a negotiable item.
accounting for expense
expenses paid out of the closing proceeds are debited only to the party making the payment. an expense like escrow fee may be shared by the buyer or seller, in that case each party is debited for that individual's share of the expense.
-the seller owns the property on the day of closing, and prorations or apportionments are usually made up to and including the day of closing. -mortgage interest, general real estate taxes, water taxes, insurance premiums, and similar expenses are usually computed by using 360 days in a year and 30 days in a month -on almost every mortgage loan, the interest is paid in arrears -accrued or prepaid general real estate taxes are usually prorated at closing -special assessments for municipal improvements such as sewers, water mains or streets are usually paid in annual installments over several years, with annual interest charged on the outstanding balance of future payments. -rent is usually adjusted on the basis of the actual number of days in the month of closing
general rules for prorating: (6)
additional fees
if the borrower's loan is insured by FHA, the borrower owes a lump sum for payment of the mortgage insurance premium (MIP) if it is not financed as part of the loan. the borrower of a VA-guaranteed loan pays a funding fee directly to the Department of Veterans Affair at closing if a conventional loan carries private mortgage insurance (PMI), the buyer prepays one year's mortgage insurance premium at closing.
title expenses
in most areas the seller is required to furnish evidence of good title and pay for the title search. if the buyer's attorney inspects the evidence or if the buyer purchases title insurance policies, the buyer is charged for the expense.
escrow account or impound account
most mortgage lenders require that borrowers provide funds to pay future real estate taxes and insurance premiums. These funds are held in an ____ or _____.
survey fee survey
the purchaser who obtains new mortgage financing customarily pays a ____ fee. The sales contact may require that the seller furnish a _____
Affiliated Business Arrangement
to streamline the settlement process, a real estate firm, title insurance company, mortgage broker, home inspection company, or even a moving company may agree to offer a package of services to consumers, a system known as an _____
Lender's interest in closing
whether a buyer obtains new financing or assumes the seller's existing loan, the lender wants to protect its security interest in the property and ensure that its mortgage lien has priority over other liens.
