Unit 17 Closings Flashcards Preview

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Flashcards in Unit 17 Closings Deck (21)
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1
Q

Define accrued items

A

On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property. 339

2
Q

Define affiliated business arrangement (ABA)

A

Practice of one company offering a package of services to consumers. 323

3
Q

Define closing

A

An event where promises made in a sales contract are fulfilled and mortgage loan funds (if any) are distributed to the buyer. 316

4
Q

Define closing statement

A

A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made, and all cash paid out in the transaction. 336

5
Q

Define credit

A

On a closing statement, an amount entered in a person’s favor—either an amount the party has paid or an amount for which the party must be reimbursed. 336

6
Q

Define debit

A

On a closing statement, an amount charged; that is, an amount that the debited party must pay. 336

7
Q

Define escrow account

A

The trust account established by a real estate professional under the provisions of the license law for the purpose of holding funds on behalf of the real estate professional’s principal or some other person until the consummation or termination of a transaction; trust account established by an escrow agent to hold funds pending distribution at the closing of a transaction. (Kyle 527)

8
Q

Define escrow closing

A

Occurs when a disinterested third party is authorized to act as escrow agent (escrow holder) and to coordinate the closing activities on behalf of the buyer and the seller. 321 (Kyle 527)

9
Q

Define Good Faith Estimate (GFE)

A

An estimate of all closing fees that was formerly provided to a borrower within three days of the loan application as was required by the Real Estate Settlement Procedures Act (RESPA).

10
Q

Define impound accounts

A

An account that the mortgage lender may require a borrower to have to accumulate funds to pay future real estate taxes and insurance premiums. 337

11
Q

Define delivery and acceptance

A

When the title to property is delivered by the grantor and accepted by the grantee. 137

12
Q

Define Mortgage Disclosure Improvement Act (MDIA)

A

Enacted in July 2008 as an amendment to the Truth in Lending Act (TILA) to require mortgage loan cost disclosures to consumers. Early disclosure (a good-faith estimate) of mortgage loan cost must be provided within three business days of receiving a consumer’s application for a mortgage loan; a creditor must wait seven business days after providing the early disclosures before closing the loan; and a creditor must provide new disclosures and wait an additional three business days before closing the loan, if a change occurs that makes the annual percentage rate quoted in the early disclosure inaccurate beyond a specified tolerance. 335 (Kyle 534)

13
Q

Define mortgage servicing transfer statement

A

Disclosure required by the lender if the lender intends to sell or assign the right to service the loan to another loan servicer. The loan servicer must notify the borrower 15 days before the effective date of the loan transfer, including in the notice the name and address of the new servicer, toll-free telephone numbers, and the date the new servicer will begin accepting payments. 324 (Kyle 534-535)

14
Q

Define prepaid items

A

On a closing statement, items that have been paid in advance by the seller, such as fuel costs and some real estate taxes, for which the seller must be reimbursed by the buyer. 339 (Kyle 537)

15
Q

Define prorations

A

Expenses, either prepaid or paid in arrears, that are divided or distributed between the buyer and the seller at the closing. 338 (Kyle 538)

16
Q

Define Settlement Statement (HUD-1)

A

The special HUD form, recently replaced by a new form created by the Consumer Financial Protection Bureau, that itemized all charges to be paid by a borrower and a seller in connection with the settlement of a real estate transaction. Also called the HUD-1 form. (Kyle 540)

17
Q

Define: passing papers

A

When parties to a transaction sit around a table and exchange copies of documents as the documents are executed. 320 (Kyle 536)

18
Q

Define reduction certificate (payoff statement)

A

The document signed by a lender indicating the amount required to pay a loan balance in full and satisfy the debt; used in the settlement process to protect both the seller’s and the buyer’s interests. 318

19
Q

Define statutory year

A

A year composed of 12 months, with each month consisting of 30 days, for a total of 360 days in the year. Also called a banker’s year. 339, 473 (Kyle 541)

20
Q

Accrued items are

A

Buyer Credits

21
Q

Prepaid items are

A

Seller credits