An example of a kickback that is prohibited by RESPA is:A.

CHAPTER 10: REAL ESTATE CLOSINGS Flashcards

The accrued interest on an assumed mortgage loan is

entered on the closing statement as a:A. credit to the seller

and a debit to the buyer.B. debit to the seller and a credit to the buyer.C. credit to both the seller and the buyer.D. debit to both the seller and the buyer.

• debit to the seller and a credit to the buyer.

An example of a kickback that is prohibited by RESPA is:A.

A fee paid by Broker A to Broker B for referring a buyer to Broker AB. A share of the commission paid by a Sponsoring Broker A to her LicenseeC. A fee paid by a surveyor to a broker for a lead on a property to be surveyedD. A flower arrangement that a Licensee sends to the buyer as a house warming gift

• A fee paid by a surveyor to a broker for a lead on a

property to be surveyed At the closing, the real estate broker's commission

generally appears as a:A. Credit to the sellerB. Debit to the

seller.C. Credit to the buyerD. Debit to the buyer

• Debit to the seller.p202A debit is an amount that a party

owes and must pay at closing. A credit 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 the form of a loan.A debit is an amount to be paid by the buyer or seller,A credit is an amount payable to the buyer or seller.

In a closing statement, an accrued item is a(n):A. item paid

in advance.B. item that is unpaid but is due.C. prepaid expense.D. proration.

• item that is unpaid but is due.

As provided in a valid purchase contract, the real estate transaction must be closed. This means all of the following

EXCEPT that the:A. seller must clear the title so that the

condition of the title complies with the terms of the contract.B. purchaser must pay the balance of the purchase price to the seller.C. broker must attend the closing in order to receive any commission.D. seller must deliver the deed to the purchaser.

• broker must attend the closing in order to receive any

commission.The Real Estate Settlement Procedures Act (RESPA) is a

regulation of the:A. state government.B. federal

government.C. Department of Housing and Urban Development.D. Department of Veteran Affairs.

• Department of Housing and Urban Development.

The condition of the seller's title is generally determined

from a:A. title commitment or title insurance policy.B.

physical inspection of the property by the buyer.C. closing statement prepared by an escrow agent.D. escrow report prepared by an attorney.

• title commitment or title insurance policy.As a first step

toward a new owner's title policy, prior to closing and establishment of the new owner's title, the seller usually is required to produce a current abstract oftitle or title commitment from the title insurance company. When an abstract of title is used, the purchaser's attorney examines it and issues an opinion of title. This opinion, like the title

commitment, is a statement of the status of the seller's title.It discloses all liens, encumbrances, easements, conditions, or restrictions that appear on the record and to which the seller's title is subject.All of the following are required by the Real Estate

Settlement Procedures Act EXCEPT:A.lenders must

provide borrowers with a good faith estimate of closing costs.B.a uniform settlement form must be used at loan closings.C.the borrower may cancel the loan transaction within 5 days after settlement.D.no kickbacks may be paid to any party in connection with a loan transaction.C.the borrower may cancel the loan transaction within 5 days after settlement.

The details of a sales transaction are always governed

by:A. the wishes of the seller as expressed orally.B. the

wishes of the buyer as expressed orally.C. the escrow instructions that both the seller and the buyer sign.D. the terms of the properly executed purchase contract.

• the terms of the properly executed purchase contract.An

executed contract is one in which all parties have fulfilled

their promises: the contract has been performed. This

sometimes can be confused with the word execute, which refers to the act of signing a contract.Services offered by computerized loan origination (CLO) systems are permitted under RESPA as long as certain conditions are met. These conditions include all of the

following EXCEPT:A.the broker may charge whatever fee

the broker determines is fair for the service.B.the borrower must pay whatever fees are charged for the service. C.the mortgage broker may pay a referral fee for the mortgage loan.D.the broker is required to disclose the existence of other loan products that are not part of the CLO.C.the mortgage broker may pay a referral fee for the mortgage loan.Which of the following items is NOT usually prorated between the buyer and seller at closing?A. Recording chargesB. Real estate taxesC. RentsD. Utility bills

• Recording charges

Which of the following best expresses the statutory method of proration?A.Yearly charge / 360 daysB.Yearly charge / 365 days(366 in leap year)C.Yearly charge / 12 monthsD.Yearly charge / 52 weeks A.Yearly charge / 360 daysp206Mortgage interest, general real estate taxes, water taxes, insurance premiums, andsimilar expenses usually are computed by using 360 days in a year and 30 days in a month.

The Real Estate Settlement Procedures Act requires:A.

That the closing of a transaction be held within 90 days of the date of the sales contractB. That disclosure be made of all closing costs prior to closingC. The lender to disclose the annual rateD. That lenders follow certain advertising procedures when advertising credit

• That disclosure be made of all closing costs prior to

closingThe Real Estate Settlement Procedures Act (RESPA) is a federal consumer law that requires certain disclosures about the mortgage and settlement process and prohibits certain practices that increase the costs of settlement services, such as kickbacks and referral fees that can increase settlement costs for home buyers.The Real Estate Settlement Procedures Act (RESPA)

applies to the activities of:A. Licensed real estate brokers

when selling commercial and office buildingsB. Licensed securities salespeople when selling limited partnership interestsC. Lenders financing the purchase of a borrower's residenceD. Fannie Mae and Freddie Mac when purchasing residential mortgages

• Lenders financing the purchase of a borrower's

residenceThe federal Real Estate Settlement Procedures Act (RESPA) applies to any residential real estate transaction involving a new first mortgage loan.RESPA is designed to ensure that buyer and seller are fully informed of all settlement costs.Nick agrees to purchase Greg's property for $285,500. Nick deposits the purchase price with Vera, and Greg deposits a warranty deed for the property with Vera. Vera is instructed to record the deed in Nick's favor when Greg shows good title to the property. Vera is also instructed to pay the purchase price, less some agreed prorations, to Greg when

Nick has received the deed. This transaction is called:A.

provisional sale.B. escrow.C. installment sale.D. option.

• escrow.p193Anescrowis a method of non face-to-face

closing in which a disinterested third party is authorized to act as escrow agent and to coordinate the closing activities.The escrow agent also may be called the escrow holder.The escrow agent may be an attorney, a title company, a trust company, an escrow company, or the escrow department of a lending institution.The closing statement involves the debits and credits to the

parties in the transaction. A debit is a(n):A. refund.B.