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CHAPTER 10 QUIZ

CHAPTER 10: REAL ESTATE CLOSINGS
CHAPTER 10 QUIZ

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Question 1 of 21

1. Question

1. The Real Estate Settlement Procedures Act (RESPA) applies to the activities of:

Licensed real estate brokers when selling commercial and office buildings
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Licensed securities salespeople when selling limited partnership interests
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Lenders financing the purchase of a borrower’s residence
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Fannie Mae and Freddie Mac when purchasing residential mortgages
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Question 2 of 21

2. Question

2. At the closing, the real estate broker’s commission generally appears as a:

Credit to the seller
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Debit to the seller.
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Credit to the buyer
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Debit to the buyer
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Question 3 of 21

3. Question

3. The Real Estate Settlement Procedures Act (RESPA) provides that:

Sellers and buyers be informed of all settlement costs
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Real estate advertisements must include the annual percentage rate, including all charges
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The borrower must be given an estimate of the closing costs 2 weeks before the time of closing
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Real estate syndicates must comply with the disclosure of "blue sky" laws
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Question 4 of 21

4. Question

4. The process by which expenses are handled at the settlement of a real estate transaction so that both the buyer and the seller pay their respective portions of the debt is called:

Assessment
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Proration
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Balancing
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Reconciliation
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Question 5 of 21

5. Question

5. The Real Estate Settlement Procedures Act requires:

That the closing of a transaction be held within 90 days of the date of the sales contract
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That disclosure be made of all closing costs prior to closing
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The lender to disclose the annual rate
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That lenders follow certain advertising procedures when advertising credit
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Question 6 of 21

6. Question

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

A fee paid by Broker A to Broker B for referring a buyer to Broker A
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A share of the commission paid by a Sponsoring Broker A to her Licensee
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A fee paid by a surveyor to a broker for a lead on a property to be surveyed
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A flower arrangement that a Licensee sends to the buyer as a house warming gift
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Question 7 of 21

7. Question

7. 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:

provisional sale.
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escrow.
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installment sale.
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option.
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Question 8 of 21

8. Question

8. At the closing, Fred’s attorney informed him that he would be giving credit to Teri, the buyer, for certain accrued items. These items represent:

bills related to the real estate that have already been paid by the seller.
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bills related to the real estate that have not been paid as of the time of the closing.
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all of the seller's outstanding bills.
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all of the buyer's outstanding bills.
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Question 9 of 21

9. Question

9. The details of a sales transaction are always governed by:

the wishes of the seller as expressed orally.
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the wishes of the buyer as expressed orally.
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the escrow instructions that both the seller and the buyer sign.
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the terms of the properly executed purchase contract.
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Question 10 of 21

10. Question

10. The condition of the seller’s title is generally determined from a:

title commitment or title insurance policy.
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physical inspection of the property by the buyer.
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closing statement prepared by an escrow agent.
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escrow report prepared by an attorney.
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Question 11 of 21

11. Question

11. The accrued interest on an assumed mortgage loan is entered on the closing statement as a:

credit to the seller and a debit to the buyer.
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debit to the seller and a credit to the buyer.
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credit to both the seller and the buyer.
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debit to both the seller and the buyer.
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Question 12 of 21

12. Question

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

seller must clear the title so that the condition of the title complies with the terms of the contract.
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purchaser must pay the balance of the purchase price to the seller.
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broker must attend the closing in order to receive any commission.
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seller must deliver the deed to the purchaser.
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Question 13 of 21

13. Question

13. The principal balance on an assumed mortgage loan is entered on the closing statement as a:

credit to the seller and a debit to the buyer.
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debit to the seller and a credit to the buyer.
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credit to both the seller and the buyer.
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debit to both the seller and the buyer.
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Question 14 of 21

14. Question

14. The Real Estate Settlement Procedures Act (RESPA) is a regulation of the:

state government.
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federal government.
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Department of Housing and Urban Development.
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Department of Veteran Affairs.
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Question 15 of 21

15. Question

15. Which of the following items is NOT usually prorated between the buyer and seller at closing?

Recording charges
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Real estate taxes
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Rents
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Utility bills
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Question 16 of 21

16. Question

16. The closing statement involves the debits and credits to the parties in the transaction. A debit is a(n):

refund.
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expense.
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adjustment for an expense paid outside of closing.
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proration.
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Question 17 of 21

17. Question

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

item paid in advance.
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item that is unpaid but is due.
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prepaid expense.
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proration.
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Question 18 of 21

18. Question

18. All of the following are required by the Real Estate Settlement Procedures Act EXCEPT:

lenders must provide borrowers with a good faith estimate of closing costs.
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a uniform settlement form must be used at loan closings.
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the borrower may cancel the loan transaction within 5 days after settlement.
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no kickbacks may be paid to any party in connection with a loan transaction.
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Question 19 of 21

19. Question

19. 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:

the broker may charge whatever fee the broker determines is fair for the service.
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the borrower must pay whatever fees are charged for the service.
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the mortgage broker may pay a referral fee for the mortgage loan.
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the broker is required to disclose the existence of other loan products that are not part of the CLO.
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Question 20 of 21

20. Question

20. Real estate firms are often affiliated with title insurance companies or mortgage brokers. These business arrangements are permitted by RESPA as long as:

consumers are unaware of these arrangements.
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consumer are required to use the services of the affiliated companies.
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the companies pay referral fees between them.
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the companies make a written disclosure of their relationship with one another.
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Question 21 of 21

21. Question

21. Which of the following best expresses the statutory method of proration?

Yearly charge / 360 days
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Yearly charge / 365 days(366 in leap year)
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Yearly charge / 12 months
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Yearly charge / 52 weeks
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