Exam 16: Closing the Deal

Using the following chart, determine whether the RESPA provisions on closing cost variations have been violated. CATEGORY GFE ESTIMATE ACTUAL CLOSING AMOUNT Recording fees \ 45.00 \ 60.00 YSP \ 1,875.00 \ 1,975.00 Title company (selected by buyers) \ 625.00 \ 800.00 Loan origination fees (selected by buyers) \ 575.00 \ 700.00 Homeowner insurance \ 1,200.00 \ 1,600.00 Stamp tax \ 5.00 \ 7.00 Copy and delivery fees of escrow agent \ 10.00 \ 15.00

The USA Patriot Act:

The seller can serve as the escrow agent.

Explain why RESPA was passed.

Private suits by home buyers are used to enforce the RESPA protections for home buyers.

The nature of closing varies from state to state.

RESPA limits amounts that lenders can hold in the escrow account for service of loans.

HUD is responsible for RESPA forms and procedures.

Martin Kiefaber sold his Arlington, Virginia, home on November 19, 2009. The buyers' real estate agent, Steven Thorman, who was affiliated with RE/MAX Allegiance, assisted the buyers in acquiring a home warranty in connection with that transaction. The buyers requested that Kiefaber cover the cost of the home warranty. Kiefaber agreed and bought a $399 policy from HMS National, Inc. that covered the home's appliances for one year. After Kiefaber funded the warranty, HMS paid RE/MAX $60 in connection with Thorman's involvement in the transaction. Kiefaber alleges that the $60 payment to RE/MAX was an illegal kickback for a referral in violation of the Real Estate Settlement Procedures Act. Is he correct?

First United American Title is the escrow agent for the closing of a sale of property between Georgia Pines and Alexander Pope. Georgia is carrying the financing for Pope, and Pope has given Georgia a mortgage. First United American failed to record the mortgage even though the escrow instructions specified that it be recorded. Pope has defaulted on the loan, and Georgia has discovered there is no mortgage. First United American:

The Patriot Act applies to escrow agents and closing.

RESPA applies only to FHA mortgage loan closings.

Yield spread premiums are illegal under RESPA.

When can an escrow agent transfer title and deliver funds?

Describe the requirement changes to RESPA following the 2008 market collapse.

On loans that are locked in at an interest rate, there is zero tolerance for errors in disclosures on the GFE.

The buyer is not entitled to a copy of the settlement statement.

Buyers and sellers can create a valid escrow by executing a "Purchase Agreement and Escrow Instructions."

A valid escrow requires an underlying purchase contract.

The buyer and seller can agree as to whether the purchase contract or the escrow instructions will be controlling.