Unit 14: Closing the Real Estate Transaction

Question 1

_______ (settlement and transfer) is the point at which ownership of a property is transferred in exchange for the selling price.

Answer 1

Closing

Question 2

To complete a transaction, the buyer requires the ______; title ________; results of necessary ___________; an _________ of title from the seller and, where applicable, documents showing the removal of prior ____________; the ____ from the seller; and the _____, if a tenant resides on the premises.

Answer 2

survey; evidence; inspections; affidavit; encumbrances; deed; lease

Question 3

The buyer will expect to make a successful final ________ __________ (walk-through) and to receive a closing statement showing the ______ and ____________ of funds.

Answer 3

property inspection, amount, distribution

Question 4

To complete the transaction, the seller will need the ______ _________ from the seller’s lender noting the amount owed; evidence that the buyer has the necessary _____; and a _______ _________ showing the distribution of funds.

Answer 4

payoff statement, funds, closing statement

Question 5

The lender will want assurance that its ____ ______ will have priority and will want the buyer to obtain a mortgagee’s _____ _________ policy.

Answer 5

lien rights, title insurance

Question 6

The Internal Revenue Service (IRS) may require completion and submission of the Form ____-_ statement of income to the seller showing the seller’s ______ ________ number.

Answer 6

1099-S, Social Security

Question 7

Form 1099-S is filed by a _______ _____ or the mortgage lender, with the real estate professionals or the _______ being ultimately liable for the filing.

Answer 7

closing agent, parties

Question 8

Depending on state law and local custom, closing may take place at a face-to-face meeting of the parties at the _____ company, _____ company, _______ office, or _________ office, or the parties may execute documents __________ and never meet.

Answer 8

escrow, title, lender’s, attorney’s, separately

Question 9

An ______ ______/_____ is a disinterested third party authorized to coordinate the closing activities.

Answer 9

escrow holder/agent

Question 10

The ____ ______ __________ __________ Act (RESPA) is a federal law enacted to protect consumers in the settlement process by requiring ________ and ______ information about the actual _____ of a transaction, eliminating _________ and other referral fees, prohibiting the seller from requiring the buyer to buy title insurance from a __________ company, and prohibiting lenders from requiring excessive ______ _______ deposits.

Answer 10

Real Estate Settlement Procedures, accurate and timely, costs, kickbacks, particular, escrow account

Question 11

RESPA does not apply to a transaction financed solely by a ________-_____ mortgage taken back by a seller, ___________ contracts (contract for deed), or a buyer’s __________ of a seller’s existing loan.

Answer 11

purchase-money, installment contracts, assumption

Question 12

The CFPB has produced ____ ____ ____ _______, a booklet that must be provided by a lender to every person from whom they receive or for whom they prepare a loan application (except for ___________).

Answer 12

Your Home Loan Toolkit, refinancing

Question 13

The ____ _________ form must be provided to the borrower no later than three business days after receiving a loan application. The _______ __________ given to the borrower and the seller itemizes all charges to be paid in connection with closing.

Answer 13

Loan Estimate, Closing Disclosure

Question 14

The Loan Estimate and Closing Disclosure forms developed by the CFPB are required for transactions originating on or after _______ _, ____.

Answer 14

October 3, 2015

Question 15

__________ ________ ____________ (ABA) that make use of companies with a shared ownership require notice to clients.

Answer 15

Affiliated business arrangements

Question 16

A ________ _________ ________ statement must be given by the lender to the borrower if the lender intends to sell or assign the servicing rights to the borrower’s loan.

Answer 16

mortgage servicing transfer

Question 17

A _______ _________ involves an accounting of the amounts paid by or received by the parties.

Answer 17

closing statement

Question 18

Certain charges are prorated, divided between the buyer and the seller, in one of two ways:

Answer 18

360 or 365 day year

Question 19

In most states, the charges are prorated as of the _______ date, with the ______ being responsible for the date of closing.

Answer 19

closing, seller

Question 20

Common inspections include (5):

Answer 20

termite, radon, water and septic systems, structural inspections, or required repairs

Question 21

Although practices vary from state to state, most require that the seller produce a current ________ of title or title __________ from a title insurance company

Answer 21

abstract, commitment

Question 22

When an abstract of title is used, the purchaser’s ________ examines it and issues an opinion of title.

Answer 22

attorney, opinion

Question 23

An Attorney’s Opinion (doc) is NOT a _________ of title

Answer 23

guarantee

Question 24

If the buyer assumes the seller’s existing mortgage loan, usually the lender is required to provide the buyer with a ________ _________ certificate, which certifies the amount owed on the mortgage loan, the interest rate, and the date and amount of the last interest payment.

Answer 24

mortgage reduction

Question 25

The seller may be required to execute an _________ of title, a sworn statement in which the seller assures the title insurance company (and the buyer) that no other _______ in the title have occurred since the date of the title examination

Answer 25

affidavit, defects

Question 26

In order to ensure that the buyer takes good and marketable title at closing, lenders generally require that the buyer obtain a mortgagee's _____ _________ policy.

Answer 26

title insurance

Question 27

Certain real estate closings must be reported to the Internal Revenue Service (IRS) on Form 1099-S. The affected properties include a sale or exchange of (4):

Answer 27

1. land (improved or unimproved), including air space; 2. an inherently permanent structure, including any residential, commercial, or industrial building; 3. a condominium unit and its appurtenant fixtures and common elements (including land); or 4. shares in a cooperative housing corporation.

Question 28

Information to be reported on Form 1099-S includes the _____ price, the amount of ________ ___ reimbursement credited to the seller, and the seller's ______ ________ number.

Answer 28

sales, property tax, Social Security

Question 29

T/F? As part of the title company's preclosing title search, the sellers may be required to execute an affidavit of title.

Answer 29

True

Question 30

T/F? Lenders generally require that a buyer obtain a mortgagee's title insurance policy to ensure that the buyer takes good and marketable title at closing.

Answer 30

True

Question 31

T/F? RESPA regulations apply to any residential mortgage loan made to finance the purchase of a one- to four-family home or to refinance an existing mortgage.

Answer 31

False (not required for refi)

Question 32

All the proration calculations here are computed by carrying the division to _____ decimal places and then rounding to the nearest ____ only after the final proration figure is determined.

Answer 32

three, cent

Question 33

T/F? Accrued items are expenses to be prorated (such as water and other utility bills) that are owed by the seller but will be paid later by the buyer.

Answer 33

True

Question 34

T/F? 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 and are credits to the buyer.

Answer 34

False. Such prepaid items are a credit to the seller and a debit to the buyer.

Question 35

Legal title ALWAYS passes from the seller to the buyer when the deed is _________ and ________.

Answer 35

delivered and accepted.

Question 36

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 _______ ______.

Answer 36

accrued items.

Question 37

Under the TILA-RESPA Integrated Disclosure Rule (TRID), a lender must extend the closing how many days if the annual percentage rate (APR) has changed more than 0.125% before closing?

Answer 37

Three business days