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Closing
The consummation of the real estate transaction. Where the promises made in the sales contract are fulfilled, the mortgage loan funds are distributed to the buyer for use, and other settlement costs or funds are disbursed.
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Due Diligence Period
Buyer should get pre-approved for a loan, have property investigation, verify homeowners' insurance, obtain appraisal, get a survey, check septic system, ask for repairs/improvements, do a physical inspection after repairs, and decide if they want to terminate the contract. May terminate in writing by 5:00pm of the DDP.
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The broker is held responsible by the NCREC for the accuracy and delivery of the closing statement either at closing or within ___ days after closing.
5
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Settlement Agent
- In NC, the settlement agent has historically been the buyer's attorney because so many of the functions performed at settlement are of a legal nature. Does not have to be an attorney.
- Settlement agent can only disburse funds after recordation of the deed and the deed of trust.
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The federal Real Estate Settlement Procedures Act (RESPA)
- Ensures that customers are provided with important, accurate, and timely information about the actual costs of settling or closing the transaction.
- CLO Regulations
- CBA Disclosure
- Settlement Cost booklet
- Good-faith estimate (GFE)
- Uniform Settlement Statement (HUD-1)
- Prohibition of kickbacks and unearned fees
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RESPA mandates that lenders and settlement agents have the special information booklet, GFE, and HUD-1 at the time of loan application and loan closing or within ____ business days of receiving the loan application.
3
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By law, borrowers have the right to inspect a completed HUD-1 form, to the extent that the figures are available, ___ day before settlement.
1
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Penalties for violating RESPA
- criminal fines up to $10,000
- imprisonment up to one year
- injunctions against illegal activity and orders to compensate victims for illegal profits
- civil lawsuits that may award treble damages plus legal fee reimbursement
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Debit
a charge, an amount that a party owes and must pay at settlement
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Credit
an amount entered in a person's favor, an amount that has already been paid, an amount being reimbursed, or an amount the buyer promises to pay in the form of a loan.
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Principal amount of new mortgage (Credit or Debit)
Credit to buyer
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Payoff of existing mortgage (Credit or Debit)
Debit to seller
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Unpaid principal balance if assumed mortgage (Credit or Debit)
credit to buyer, debit to seller
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Accrued interest on existing assumed mortgage (Credit or Debit)
credit to buyer, debit to seller; prorated
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Tenants' security deposits (Credit or Debit)
credit to buyer, debit to seller
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Purchase-money mortgage (Credit or Debit)
credit to buyer, debit to seller
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Due diligence fee (Credit or Debit)
credit to buyer, debit to seller
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Unpaid real estate tax (Credit or Debit)
credit to buyer, debit to seller; prorated
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Buyer's earnest money (Credit or Debit)
credit to buyer
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Selling price of property (Credit or Debit)
debit to buyer, credit to seller
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Prepaid insurance and tax escrow for mortgage assumed by buyer (Credit or Debit)
debit to buyer, credit to seller
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Refund to seller of prepaid water charges and similar utility expenses (Credit or Debit)
Debit to buyer, credit to seller; prorated
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Prepaid real estate taxes (Credit or Debit)
debit to buyer, credit to seller; prorated
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Excise tax (Credit or Debit)
Debit to seller
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Recording expenses, filing fees (Credit or Debit)
Debit to seller
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Recording charges that arise from the actual transfer of title (Credit or Debit)
debt to buyer
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Bankers year
360 day year/30 day month
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Property survey fee (Credit or Debit)
Debit to buyer
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Title insurance premium (Credit or Debit)
Debit to buyer
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10% tolerance cure by lender (Credit or Debit)
credit to buyer
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Financing documents preparation fee (Credit or Debit)
debit to buyer
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Loan origination fee (Credit or Debit)
debit to buyer
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Homeowner's policy, if new (Credit or Debit)
debit to buyer
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Title examination/attorney fee (Credit or Debit)
debit to buyer
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Loan discount points (Credit or Debit)
debit to buyer
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Expenses for the day of settlement are paid by the ______.
seller.
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