Ch 12 Quizzes

Question 1

A(n) _____ is a third party who holds deeds and funds until the closing date.

Answer 1

Escrow agent

Question 2

T/F: Deposits in escrow may be transferred from one party to the other without conditions.

Answer 2

False

A depositor must require that certain events occur before the deposit can be transferred to the other party.

Question 3

T/F: A buyer who works for an escrow agent may act as the escrow agent in his own transaction.

Answer 3

FALSE

A buyer or seller may not act as an escrow agent in his or her own transaction.

Question 4

T/F: An escrow deposit can be revoked

Answer 4

False

A valid escrow must have four basic elements: 
an enforceable contract, 
a neutral escrow agent, 
irrevocable deposits, and 
conditions imposed on those deposits

Question 5

Who do escrow agents owe fiduciary duties to?

Answer 5

both the buyer and seller, as well as any other parties to the escrow (such as a lender).

Question 6

T/F: escrow agents are dual agents

Answer 6

True

Question 7

Escrow agents are licensed through the Department of _____

Answer 7

Business Oversight

Question 8

When may a real estate broker be exempt from the license requirement for escrow agents?

Answer 8

when providing escrow services incidental to a real estate transaction in which he is acting as a real estate agent.

Question 9

All escrow companies must post a ____ bond.

Answer 9

Surety

Question 10

Surety vs fidelity bond

Answer 10

Surety:

Fidelity:

Question 11

Escrow companies must maintain at least $_____ in liquid assets

Answer 11

$25,000

Question 12

Escrow instructions are usually issued ____ the purchase agreement

Answer 12

after

Question 13

If 2 contracts conflict, the court will rely on the provisions of the ____ contract

a) original
b) most recent

Answer 13

B) most recent

Question 14

T/F: Once a depositor puts funds into escrow, he no longer owns those funds.

Answer 14

False

The general rule is that the depositor still owns the deposit, until all escrow conditions have been satisfied.

Question 15

The Uniform Vendor and Purchaser Risk Act states that if possession transferred before the property was destroyed, the buyer must pay the full purchase price.

Answer 15

True

Under the Risk Act, if title or possession were transferred before the loss occurred, then the buyer remains responsible for the purchase price.

Question 16

(T/F) The parties should enter into an interim occupancy agreement if a buyer takes possession before closing

Answer 16

True

An interim occupancy agreement is advisable if a buyer takes possession prior to closing, regardless of how the parties allocate the risk.

Question 17

Under the relation back doctrine, the date of title transfer ‘relates back’ to___, if the seller dies or becomes incompetent

Answer 17

the date of the deposit into escrow

Question 18

An escrow agent will report sales proceeds to the IRS using form ____

Answer 18

1099-S

Question 19

A buyer must withhold 15% of the seller’s net proceeds and send them to the IRS, if the seller is _____

Answer 19

a non-resident alien

Question 20

To terminate a sale that had gone into escrow, both parties would need to cancel ____ and _____

Answer 20

The purchase agreement

The escrow instructions

Question 21

RESPA stands for

Answer 21

Real Estate Settlement & Procedures Act

Question 22

What is another term for RESPA?

Answer 22

Regulation X

Question 23

What provides consumers with the opportunity to shop for their best possible mortgage solution

Answer 23

RESPA

Question 24

Who is responsible for regulating RESPA?

Answer 24

Consumer Financial Protection Bureau (CFPB)

Question 25

What loans are exempt from RESPA? (7 types)

Answer 25

- Loans on property 25 acres or more - Business purpose loans including commercial and agricultural - Temporary (interim) financing such as construction or bridge loans - Vacant land, unless structure is there within 2 years of settlement date - Any assumed mortgage loan where the lender did not have the right to approve a successive borrower on existing loan - Any conversion of a mortgage loan in which the existing terms are modified and a new note is not required (i.e. loan modification) - Loans sold in the secondary market to someone other than FNMA, FHLMC, or other non-federally-regulated entities

Question 26

What disclosures are all the required disclosures with RESPA?

Answer 26

``` (H)ome Ownership Counseling Disclosure (F)orce Place Insurance (F)orced Place Reminder (L)oss Mitigation (A)ffiliated Business Arrangement (A)nnual Escrow (I)nitial Escrow (G)FE (H)UD Settlement Cost Booklet (H)UD-1 & HUD-1A (T)ransfer Statements (MSDS/NTS) ```

Question 27

The initial disclosure of the estimated settlement costs of a mortgage loan, expressed in dollar amounts = ____

Answer 27

GFE

Question 28

Key areas of GFE

Answer 28

``` Purpose Summary of Loan Summary of Settlement Charges Understanding Settlement Charges Instructions ```

Question 29

Any service provided in connection with closing

Answer 29

Settlement service

Question 30

RESPARequirements (5)

Answer 30

``` 1) 2) 3) 4) 5) ```

Question 31

affiliated business arrangement disclosure

Answer 31

_____

Question 32

Impound account

Answer 32

___

Question 33

Before title insurance existed, a buyer protected himself by paying for an abstract of title.

Answer 33

True An abstract of title is a summary of a property's chain of title and any encumbrances found in the public records. This was a predecessor to title insurance.

Question 34

(T/F) A title insurance contract that protects the buyer is known as an owner's policy.

Answer 34

True The owner's policy (which is traditionally a standard coverage policy) is for the protection of the buyer.

Question 35

(T/F) The insurer is always liable for the total amount of the policy holder's losses.

Answer 35

False The insurer is liable for the policy holder's losses, up to the policy amount. If the losses exceed that amount, the insurer does not have further liability.

Question 36

(T/F) Title insurance is paid through annual premiums.

Answer 36

False. Title insurance requires only one premium payment, which is paid at closing.

Question 37

(T/F) An owner's policy lasts as long as the policy holder or her heirs own the property.

Answer 37

True

Question 38

(T/F) A preliminary report is considered to be a reliable, binding representation as to the condition of the title.

Answer 38

False. A preliminary report is only an offer to issue a title insurance policy on the stated terms.

Question 39

(T/F) A standard coverage policy may also be known as an ALTA policy.

Answer 39

False. A standard coverage policy may be known as a CLTA (California Land Title Association) policy.

Question 40

(T/F) Extended coverage, unlike standard coverage, covers matters that would only be discovered upon inspection, such as adverse possession and encroachments.

Answer 40

True. Extended coverage covers adverse possession, encroachments, unrecorded easements, and survey errors.

Question 41

(T/F) Homeowner's coverage is broader than standard coverage, and even includes certain 'post-policy' matters.

Answer 41

True. Homeowner's coverage, which many buyers obtain, covers many of the same problems as an extended policy, including some 'post-policy' matters.

Question 42

(T/F) In California, a title insurer may prepare a preliminary report at no charge.

Answer 42

False