Deck 16: Closing the Deal

Question 1

The nature of closing varies from state to state.

Answer 1

True

Question 2

A valid escrow requires an underlying purchase contract.

Answer 2

True

Question 3

As between buyer and seller, the escrow instructions are controlling in the event of a conflict of terms.

Answer 3

False

Question 4

For an escrow to be created, the seller must deposit the deed.

Question 5

The lender is responsible for delivery of loan documents to escrow.

Question 6

The escrow agent has discretionary authority on the escrow instructions.

Question 7

Escrow instructions need not be in writing to be enforceable.

Question 8

The seller can serve as the escrow agent.

Question 9

RESPA is applicable to all loans involving government insurance.

Question 10

RESPA is applicable to home improvement loans.

Question 11

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

Question 12

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

Question 13

HUD is responsible for RESPA forms and procedures.

Question 14

RESPA specifies percentage ranges for total good faith estimates, and estimates exceeding those ranges are violations.

Question 15

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

Question 16

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

Question 17

The escrow agent bears the responsibility for verifying the validity of check payments.

Question 18

An escrow agent cannot be held liable for embezzlement by employees.

Question 19

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

Question 20

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

Question 21

RESPA does not apply to residential refinancings.

Question 22

RESPA prohibits accepting kickbacks for business referrals.

Question 23

Penalties for receiving kickbacks under RESPA is a fine of $20,000, two years in prison, or both.

Question 24

Both the buyer and the seller must sign the escrow instructions for it to be valid.

Question 25

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

Question 26

The Patriot Act applies to escrow agents and closing.

Question 27

Once an escrow is opened, it cannot be cancelled.

Question 28

POC is an acronym for "paid on credit."

Question 29

Yield spread premiums are illegal under RESPA.

Question 30

The Government Mortgage Package is opposed by both industry and consumer groups.

Question 31

Closings on commercial properties are not governed under RESPA rules.

Question 32

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

Question 33

RESPA applies only to FHA mortgage loan closings.

Question 34

There are criminal penalties for violations of RESPA.

Question 35

Under RESPA currently, the RESPA disclosures are substituted for the TILA disclosures.

Question 36

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

Question 37

The better the credit rating of the borrower, the more the mortgage broker can make on placing the mortgage.

Question 38

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

Question 39

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

Question 40

The Uniform Settlement Statement is required for RESPA compliance.

Question 41

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

Question 42

There are no criminal penalties for violations of RESPA deposit requirements.

Question 43

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

Question 44

Buyers are not permitted to use a builder's title company under RESPA.

Question 45

The GFE does not require disclosure of loan cost comparisons.

Question 46

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

Question 47

The Consumer Financial Protection Bureau has taken over HUD's role on RESPA.

Question 48

POC costs need not be listed in the USS.

Question 49

The lender must disclose at the time of a loan application whether the loan may be transferred or assigned.

Question 50

All advance disclosure costs for consumer loans carry a zero tolerance for error.

Question 51

A valid escrow closing must take place in a courthouse.

Question 52

A valid escrow requires the use of an independent party.

Question 53

Federal laws establish those who are qualified to serve as escrow agents.

Question 54

Escrow instructions are an agency agreement.

Question 55

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

Question 56

RESPA:

A) Prohibits developers from owning title companies.
B) Requires advance estimates of settlement service charges.
C) Limits the amounts the seller is required to deposit in escrow.
D) Requires a closing process in some government office.

Question 57

Which of the following is not a duty of the escrow agent?

A) Duty of care
B) Fiduciary duty
C) Duty to follow instructions
D) Duty to withhold when one party objects to closing

Question 58

Which of the following is not furnished by the seller?

A) Keys
B) Tenant list and leases
C) Loan commitment
D) Pest inspection report

Question 59

When can an escrow agent transfer title and deliver funds?

A) Upon lender's direction
B) Upon seller's direction
C) When all contingencies are met
D) When the buyer's money is deposited

Question 60

Which of the following figures need not be given in the good faith estimate?

A) Cost of a service warranty policy paid for by the seller
B) Attorney's fees
C) Title insurance fee
D) Appraisal fee

Question 61

Which is not a requirement for setting up an escrow?

A) Valid and enforceable sales contract
B) Deposit of deed with escrow agent
C) Escrow instructions
D) An attorney for both parties

Question 62

Which document is delivered to escrow by the buyer?

A) Termite report
B) Loan commitment
C) Deed
D) VA forms

Question 63

If a conflict exists between the escrow instructions and the sales contract:

A) The escrow is invalid.
B) The sales contract will control.
C) The escrow instructions will control.
D) No escrow can be set up.

Question 64

The good faith estimate of closing costs:

A) Can be made in percentage figures.
B) Is made by the seller.
C) Is not required in residential refinancings.
D) Must include homeowner insurance costs.

Question 65

Which of the following is not a party to the escrow instructions?

A) Buyer
B) Seller
C) Escrow agent
D) Lender

Question 66

Under RESPA:

A)A broker cannot refer a buyer or seller to an escrow agent.
B)An escrow agent cannot collect a fixed fee for services.
C)A broker cannot accept reduced rent in exchange for referrals to an escrow agent who is his/her landlord.
D)Brokers need not disclose a .25% interest in a referral to a title company.

Question 67

What is/are an escrow agent's responsibility when the buyer fails to deposit funds?

A) Continue reminding the buyer
B) Proceed to closing
C) Terminate the escrow
D) Contact the lender

Question 68

The buyer's information handbook:

A) Contains a lay explanation of charges and the Uniform Settlement Statement.
B) Must be printed by the CFPB.
C) Need not be given in home equity loans.
D) Is the same as the GFE.

Question 69

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

A) Appraisal fee
B) County taxes
C) Pest inspection fee
D) Estimate of utility costs for one year

Question 70

RESPA applies to:

A) All commercial mortgages.
B) All FHA mortgages.
C) All construction loans
D) All loans for construction of apartment buildings.

Question 71

Karen Kimball is a clerk in the Mojave County Clerk's office. She is an excellent worker, and the two major title companies always add $5 for each transaction as a tip for her. These actions:

A) Are a violation of RESPA.
B) Are not a violation because she would do the work anyway.
C) Are not a violation because it did not involve the lender.
D) Are not a violation as long as Karen discloses the fees.

Question 72

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:

A) Is not liable since the mortgage is still valid.
B) Is not liable unless there was negligence .
C) Is liable for the failure to record.
D) Is liable only if the escrow instructions specified that the mortgage be recorded.

Question 73

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.

A)Hazard is liable for the fiduciary breach by Gilbert.
B)Hazard is not liable because notarizing is not an escrow agent's responsibility.
C)Hazard is not liable unless the closings were flawed.
D)Hazard is not liable because Gilbert took money on the side.

Question 74

Cora Roth received her GFE for closing costs of $2,316. When she closes on her new home, the closing costs are $2,398.

A) There is no violation of RESPA because the actual costs were within 10% of the estimate.
B) There is no violation of RESPA because the actual costs were within 5% of the estimate.
C) There is a violation of RESPA because the actual costs were not within 1% of the estimate.
D) There is no way of determining whether there was a violation of RESPA from the facts given.

Question 75

Michael Reaburn sells homeowners' insurance policies. His father is a developer. His father refers all home buyers in his subdivisions to Michael for insurance. Michael then pays his father a commission which he includes as a cost for the escrow company to collect from the buyers at closing.

A)There is no violation of RESPA.
B)Because the fees involve insurance and not mortgage fees, RESPA does not apply.
C)RESPA applies only to escrow agents and mortgage brokers and lenders.
D)The commission and referral set-up is a violation of RESPA.

Question 76

What agency is responsible for enforcement of RESPA?

A) ILSFDA
B) CFPB
C) HUD
D) State regulators responsible for escrow oversights

Question 77

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?

A)$600 or two months' taxes
B)$600 or two months' taxes plus two months or $1,200
C)$1,800
D)$3,600

Question 78

The USA Patriot Act:

A) Does not apply to escrow agents.
B) Applies only to banks acting as escrow agents.
C) Applies to escrow agents and title companies.
D) Only applies to cash transactions.

Question 79

In running a title search, National Escrow discovers that the seller's property does not have a lien release on a mortgage that was paid off ten years ago. The seller furnishes a letter from the lender that states the loan was paid in full. The escrow instructions require National to have all lien releases filed or on record before closing. Because the actual release will take 21 days to process, National closed escrow with only the letter.

A) National has breached its fiduciary duty through its failure to follow the escrow instructions.
B) National is permitted to use discretion in situations such as this.
C) A letter of discharge and lien release are the same thing.
D) National has not breached its fiduciary duty because the issue was immaterial.

Question 80

Which of the following could an escrow agent give to a real estate agent who brought a residential property closing to her agency?

A) Two seats to a Lakers game
B) A subscription to Architectural Digest
C) A thank-you note
D) A $25 Barnes and Noble gift card