Unit 14 Exam
If a buyer and a seller were to close on August 17, which of the following items would the title company prorate? A) Rents B) None of these C) Origination fees D) Escrow fees
A) Rents
At the closing of a real estate transaction, the person performing the settlement gave the buyer a credit for certain accrued items. These items were A) bills relating to the property that the buyer must pay. B) all of the seller's real estate bills. C) all of the buyer's real estate bills. D) bills relating to the property that had already been paid by the seller.
A) bills relating to the property that the buyer must pay.
Fees charged by participants in an affiliated business arrangement (ABA) to meet RESPA requirements must be reasonably related to the value of the services provided and A) may not be fees exchanged among the affiliated companies simply for referring business to one another. B) may include fees exchanged among the affiliated companies for referring business to one another, providing such fees are not excessive. C) require no additional disclosure as to the ownership relationship between the providers. D) may include fees exchanged among the affiliated companies for referring business to one another.
A) may not be fees exchanged among the affiliated companies simply for referring business to one another.
The process by which expenses are divided at settlement of a real estate transaction so that both the buyer and the seller pay their respective portions of property charges is called A) proration. B) balancing. C) assessment. D) reconciliation.
A) proration.
The Real Estate Settlement Procedures Act (RESPA) is a federal statute administered by A) the Consumer Financial Protection Bureau (CFPB). B) the Federal Trade Commission (FTC). C) the Department of Veterans Affairs (VA). D) the Office of the U.S. Attorney General.
A) the Consumer Financial Protection Bureau (CFPB).
Which item would a lender generally require at the closing? A) Credit report B) Title insurance commitment C) Market value appraisal D) Application
B) Title insurance commitment
The document that provides the borrower with general information about settlement costs, RESPA provisions, and what happens at settlement is A) What You Should Know About RESPA. B) Your Home Loan Toolkit. C) the Loan Estimate form. D) the Closing Disclosure form
B) Your Home Loan Toolkit.
The first title search shows the status of the seller's title on that date. The second search is made after closing and is called A) a close down. B) a bring down C) a take down. D) a wrap up.
B) a bring down
A survey indicates the location of all improvements located on the premises plus A) the identity of the property owner. B) any existing easements and encroachments. C) any existing liens. D) the status of property taxes.
B) any existing easements and encroachments.
All of these items are usually prorated at closing EXCEPT A) rents collected in advance. B) appraisal fees. C) unpaid general real estate taxes. D) prepaid general real estate taxes.
B) appraisal fees.
The Real Estate Settlement Procedures Act (RESPA) permits an affiliated business arrangement (ABA) A) as long as a consumer is informed that the possibility of such a relationship may be possible. B) as long as a consumer is clearly informed of the relationship among the service providers. C) and requires no disclosure to the consumer except that an ABA exists without identifying the participants. D) and requires no written disclosure, provided that fees charged by the participants are not excessive and are for services typically performed.
B) as long as a consumer is clearly informed of the relationship among the service providers.
It is customary for the cost of a survey to be A) paid one-half by the seller and one-half by the buyer. B) paid by the buyer. C) paid by the seller. D) negotiated in the contract.
B) paid by the buyer.
In some parts of the country, the closing process involves the parties in the transaction sitting around a table and exchanging copies of documents, a process called A) table papers. B) passing papers. C) closing the table. D) exchanging papers.
B) passing papers.
The Closing Disclosure must be used to illustrate all settlement charges for A) every real estate transaction. B) residential transactions financed by federally related mortgage loans. C) all transactions involving commercial property. D) transactions financed by VA and FHA loans only.
B) residential transactions financed by federally related mortgage loans.
The Real Estate Settlement Procedures Act prohibits A) escrow officers from failing to identify whether the seller is not a U.S. citizen. B) sellers from requiring buyers to buy title insurance from a particular company. C) property flipping. D) buyers from disclosing information relating to race or color.
B) sellers from requiring buyers to buy title insurance from a particular company.
The closing statement used for MOST residential closings is A) the Loan Affidavit. B) the Closing Disclosure. C) the Loan Estimate. D) the Certification of Settlement.
B) the Closing Disclosure.
Legal title ALWAYS passes from the seller to the buyer A) on the date of execution of the deed. B) when the deed is delivered and accepted. C) when the deed is placed in escrow. D) when the closing statement has been signed.
B) when the deed is delivered and accepted.
TRID requires that an informational booklet prepared by the CFPB be given to the borrower at the time of application or provided A) prior to closing. B) within three days of loan application. C) prior to signing loan documents. D) within seven days of loan application.
B) within three days of loan application.
A buyer purchases a home in an area where closings are traditionally conducted in escrow. Which item would a buyer deposit with the escrow agent before the closing date? A) Title evidence B) Estoppel certificate C) Cash needed to complete the purchase D) Deed to the property
C) Cash needed to complete the purchase
Expenses to be prorated (such as water bills and unpaid property taxes) that are owed by the seller but will be paid late by the buyer are called A) accelerated items. B) prepaid items. C) accrued items. D) allocated items.
C) accrued items.
The Real Estate Settlement Procedures Act prohibits A) redlining. B) escrow officers from recording customers' Social Security numbers without a valid purpose. C) lenders from requiring excessive escrow account deposits. D) escrow officers from failing to disclose the actual identity of the buyers or sellers in a real estate transaction.
C) lenders from requiring excessive escrow account deposits.
In some parts of the country, closing is called A) settlement and closing. B) transfer and closing. C) settlement and transfer. D) table transfer.
C) settlement and transfer.
A couple listed their home for $237,000. They accepted an offer of $230,000 from a buyer who is obtaining financing with a $46,000 down payment. The seller has agreed to pay the agent a commission of 5.5%, which would be A) $13,035. B) $10,120. C) $11,500. D) $12,650.
D) $12,650.
Buyers purchasing a home for $230,000 are obtaining a mortgage loan in the amount of $184,000, paying a 1.25% loan origination fee and a 1% loan discount fee. Based on this information, the total amount the buyer will pay at closing for the loan origination fee is A) $2,875. B) $4,140. C) $1,840. D) $2,300.
D) $2,300. ($184,000 × 1.25% = $2,300)
What information is included in the Loan Estimate form? A) Interest rate B) Monthly payment amount C) Total closing costs D) All of these
D) All of these
To which of the following do RESPA regulations apply? A) Agricultural purchases B) Seller-financed purchases C) Purchases of more than 25 acres D) One-to-four-family residential unit purchases
D) One-to-four-family residential unit purchases
The purpose of an affidavit of title is to A) protect the buyer from any encumbrances that were placed on the property by the seller's grantor. B) verify that the real estate broker representing the property seller has not placed a lien on the property to insure payment of the sales commission. C) protect the buyer from an incorrect title search by the title insurance company. D) give the title insurance company a basis on which to sue the seller should the statements in the affidavit be incorrect.
D) give the title insurance company a basis on which to sue the seller should the statements in the affidavit be incorrect.
The federal law that regulates the mortgage and settlement process is A) the Equal Credit Opportunity Act (ECOA). B) the Housing for Older Persons Act (HOPA). C) the Fair Housing Act (FHA). D) the Real Estate Settlement Procedures Act (RESPA).
D) the Real Estate Settlement Procedures Act (RESPA).
The title insurance company may be able to sue the sellers on the basis of any false or incorrect statements provided by the seller in A) the certificate of title. B) the title verification certificate. C) the title search certificate. D) the affidavit of title.
D) the affidavit of title.
A security deposit made by a tenant to cover the last month's rent of the lease or the cost of repairing damage caused by the tenant is generally A) held in escrow until the tenant's lease expires or the tenant vacates the premises. B) retained by the seller. C) returned to the tenant at closing. D) transferred by the seller to the buyer.
D) transferred by the seller to the buyer.
