General - Chapter 9 Lesson 4

Question 1

Real Estate Settlement Procedures Act (RESPA)

Answer 1

enacted to ensure that consumers are told the actual costs associated with obtaining a mortgage loan and are protected from predatory lending practices

Question 2

RESPA is administered and enforced by…

Answer 2

Consumer Financial Protection Bureau

Question 3

RESPA applies to…

Answer 3

1-4 family home financed by federally related loan, does not apply to 25+ acres or vacant land unless home built within 2 years, seller financed or commercial

Question 4

RESPA - required use

Answer 4

prohibits required use of specific settlement service providers w/ few exceptions for lenders required to disclose that to the borrower

Question 5

RESPA - referrals

Answer 5

referred service providers must fully disclose relationship at or prior to time of referral (optional)

Question 6

RESPA - kickbacks

Answer 6

settlement service provider cannot pay or accept a fee/kickback

Question 7

RESPA - fee-splitting and unearned fees

Answer 7

prohibits fee-splitting and receiving unearned fees or % of charge made or received for services not actually performed

Question 8

RESPA - title insurance

Answer 8

prohibits seller or other party from requiring homebuyer to use particular title insurance company (able to sue for 3X)

Question 9

RESPA - reserve/impound accounts

Answer 9

lenders cannot require borrowers to deposit excessive amounts in reserve for homeowners insurance and property taxes

Question 10

Both RESPA and TILA require lenders to tell borrowers…

Answer 10

what their loan and settlement costs will be

Question 11

TILA-RESPA Integrated Disclosures (TRID) Rule

Answer 11

requires lenders to provide borrowers with a loan esteem no later than three business days after lender received borrower’s completed loan application

Question 12

Lenders must then give borrowers a closing disclosure at least…

Answer 12

three business days before the loan closes

Question 13

updated closing disclosure would trigger

Answer 13

an additional 3 day waiting period before the loan can close

Question 14

No service provider may charge a fee for the preparation…

Answer 14

of a required disclosure form

Question 15

Closing can only happen when…

Answer 15

all negotiated conditions and contingencies have been met

Question 16

Closing duties include (attorney or settlement officer)

Answer 16

preparing documents and obtaining the required signatures, collecting and disbursing funds to the appropriate parties, and ensuring that documents are recorded in the public record.

Question 17

Written instruction

Answer 17

identify any conditions the buyer and seller must satisfy, who pays for what, deadlines that must be met, how money will be disbursed, and what documents are to be recorded (purchase agreement or separate document)

Question 18

Closing happens…

Answer 18

a day or so after signing closing paperwork

Question 19

Roundtable closing (settlement meeting)

Answer 19

both parties attend a meeting organized and presided over by a settlement officer or attorney and “pass papers.” All parties sign in one meeting

Question 20

Escrow

Answer 20

an arrangement in which money and documents for settlement are held by a neutral third party on behalf of the buyer and seller until the transaction is ready to close

Question 21

Escrow officer

Answer 21

dual agent who represents the interests of both buyer and seller, coordinate communication between the buyer and seller, licensees, and other parties

Question 22

Closing activities:

Answer 22

ordering title reports and securing title insurance, removing all contingencies, preparing settlement statements and other documents

Question 23

Seller is expected to deliver…

Answer 23

marketable title

Question 24

Settlement officer’s first task after escrow is opened is to order a…

Answer 24

preliminary title report

Question 25

Title insurance...

Answer 25

provides the best evidence of marketable title, lenders will require it to protect their interest in the collateral property against later claims.

Question 26

Reapproval doesn't...

Answer 26

guarantee financing

Question 27

Home inspection

Answer 27

must for buyers to ensure that the home they're buying is sound (not required by the lender)

Question 28

payoff demand

Answer 28

shows the exact amount of the loan payoff so the settlement officer's accounting will be correct at closing

Question 29

Satisfaction of mortgage (discharge of mortgage)

Answer 29

should be recorded as evidence that this lien has been released

Question 30

Who schedules, pays for, and attends inspections?

Answer 30

buyer

Question 31

Deed

Answer 31

written document that conveys ownership of real property from seller to the buyer (must include competent grantor, identifiable grantee, legal description, and language that indicates a clear intention to convey title)

Question 32

title is conveyed once...

Answer 32

the deed is delivered to and accepted by the grantee (not required to sign)

Question 33

IRS Form 1099-S

Answer 33

Sale of principal residences above 250k single 500k married

Question 34

FIRPTA Forms

Answer 34

imposes income tax on foreign persons selling their interest in real property

Question 35

Transfer tax

Answer 35

tax on value of real property when its sold

Question 36

settlement statement

Answer 36

an accounting of funds, showing how the buyer and seller are to be credited and debited for their agreed-upon share of closing costs.Se

Question 37

Settlement statment indicates the...

Answer 37

amount the buyer needs to close

Question 38

The lender will usually fund the loan...

Answer 38

by wire

Question 39

Recording

Answer 39

include the deed, the buyer's new mortgage, and seller's existing mortgage payoff, provides notice to third parties for the protection of the owner

Question 40

once closed instructions should address...

Answer 40

how and when the buyer can take possession of the property