Exam 16: Closing the Deal

RESPA applies to:

A seller has prepaid both taxes and insurance on property about to be transferred. The taxes are $12,000 per year, and the insurance premiums are $2,400 per year. The seller prepaid both in January for the entire year through December 31. The closing on the property will take place on March 15, and the parties wish to know what formulas can be used to prorate these prepaids. Explain the results to them under both the 360-day-year and the 365-day-year formulas.

Builders are prohibited from referring home buyers to certain lenders and title companies under RESPA.

Ann Nielson is closing on her purchase of a townhome. Her annual property taxes are $3,600. The taxes are due on April 30^th of each year. Ann is closing on July 15^th. Her first full payment on her mortgage will be on September 1^st. What is the maximum amount that Ann can be required to pay into escrow for the taxes?

An escrow agent's authority is limited to the provisions of the escrow instructions.

Litigation by homebuilders against the federal government focuses on rules related to volume discounts.

The good faith estimate under RESPA must be given within one day of loan application.

Sal Simpson and Jeff Gibbons entered into a contract for Gibbons to sell his property to Simpson. The closing date was to be January 13, 2021. They also opened an escrow for closing and put the closing date as January 13, 2021. The contract provided that if the closing did not occur by January 13, 2021, either side could terminate the agreement. The property did not close on January 13, 2021, so Gibbons sent a letter to Simpson canceling the transaction. The escrow agent received all the necessary funds and documents by January 14, 2021 and went ahead and closed on the sale. Gibbons wants his property back. Which of the following is correct?

Which of the following is not in the closing cost estimate?

State laws dictate who has the authority to serve as the closing agent for real estate transactions.

The good faith estimate of closing costs:

The YSP need not be disclosed unless the borrower wishes to shop around on the mortgage terms.

The maximum amount that a lender can require for tax deposits in escrow is six months.

Which of the following is not furnished by the seller?

There is no specified form to be followed for the settlement statement.

RESPA is applicable to home improvement loans.

Escrow instructions are a contract between buyer, seller and escrow agent.

Thomas Gilbert is an employee at Hazard Escrow. Ralph Dinkins, an attorney, has been using Hazard for closings on a large number of properties he has been selling to limited partnerships he has created. Because he has been using different names for selling the property, the notarized acknowledgments on the deeds were a problem. Dinkins has been giving Gilbert $750 per closing to notarize the signatures. Dinkins' limited partnerships turn out to be frauds. The limited partners wish to recover from Hazard Escrow.

​Thompson Developers, Inc. was selling a piece of undeveloped land to Williamson Builders. Third Escrow, Inc. was the escrow agent for the transaction. The escrow instructions required Thompson to remove all mechanics' liens before closing. When Third Escrow ran the title search, it discovered 3 mechanics' liens for $129; $250 and $79 respectively. Thompson assures Third it will pay the lien holders. Can Third Escrow close based on the assurances?

What agency is responsible for enforcement of RESPA?