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AZK RE L-13 C-17 Closing - 1

  1. Buyer and buyer's lender must be sure that (2)
    • - seller can deliver the title
    • - property is now in the same condition
  2. Buyer's issues involves examination of (4)
    • 1) Result of any inspections
    • 2) Survey
    • 3) Title evidence
    •    3.1) Opinion of Title
    •    3.2) Payoff Statement
    •    3.3) Mortgage Reduction Certificate
    •    3.4) Affidavit of Title
    • 4) Any lease
  3. Abstract of Title
    • - or Title Commitment
    • - summary report of Title Search
    • - it is produced by seller from a title insurance company
  4. who does examine Title Commitment?
    how?
    • - Closing Agent
    • - 2 searches of the public records are made 
    •    1) shows the status the title on that date
    •    2) " bring down" - made after the closing and before any new documents are filed
  5. Opinion of Title
    - is
    - issued by
    - discloses
    • - statement of the quality of the title
    • - issued by purchaser’s attorney based on Abstract Title
    • - discloses liens, encumbrances, easements, restrictions
  6. Payoff Statement 
    from
    provides
    • - from a lender
    • - provides exact amount required to pay the existing loan
  7. Release Deed
    - certificate of satisfaction
  8. Mortgage Reduction Certificate
    when
    provided by
    • - if buyer assumes the seller's existing mortgage loan
    • - provided by lender to the buyer
  9. Affidavit of Title
    - seller assures the Title Insurance Company and buyer that no other defect in the title since the date of the title examination
  10. If RE transactions ate closed through an escrow do we need Affidavit of Title?
    - NO need to execute the Affidavit of title
  11. Seller's issues
    • - seller will want assurance that the buyer 
    •     - has obtained the necessary financing
    •     - will have sufficient funds to complete the sale
  12. Lender interest in closing
    • - to protect its security interest in the property 
    • - ensure that it's mortgage lien has priority over other liens
  13. Conducting the closing (2)
    • 1) Face to face closing
    • 2) Closing in Escrow
  14. in Escrow Closing Seller Deposits (5)
    • 1) Deed
    • 2) Title Evidence
    •    - Abstract and attorney's Opinion of Title 
    •    - Certificate of Title
    •    - Title Insurance 
    •    - Torrens Certificate
    • 3) Existing Hazard Insurance Policies
    • 4.1) Letter from the lender stating the exact principal remaining 
    •    - if the buyer is assuming the seller's loan
    • 4.2) Payroll statement 
    •    - if the seller’s loan is to be paid off
    • 5) Affidavits of title (if required)
  15. Title Evidence (5)
    • 1) Abstract
    •    - produced by seller from a title insurance company
    • 2) Opinion of Title
    •    - statement of quality of title issues by attorney based on abstract
    • 3) Certificate of Title
    •    - statement of opinion of the title's status
    • 4) Title Insurance 
    •    - contract under which the policyholder is protected from losses
    • 5) Torrens Certificate
    •    - legal registration system used to verify ownership (not in CT)
    •    - without the need for a search of the public records
  16. in Escrow Closing buyer Deposits (3)
    • 1) Balance of the cash needed to complete the purchase
    • 2) loan documents (If the buyer secures a new loan)
    • 3) Proof of Hazard Insurance
  17. Escrow Agent has the authority to
    • - examine the Title Evidence
    • - in case of
    •      - title discloses liens
    •            - or
    •      - if seller cannot clear the title
  18. MDIA
    • - Mortgage Disclosure Improvement Act
    • - has changed how buyer, seller and other professionals prepare for a closing
  19. CFPB
    • - Consumer Financial Protection Bureau (CFPB)
    • - TILA-RESPA integrated disclosure rule (TRID)
  20. RESPA regulations apply to a (2)
    • - Real Estate Settlement Procedures Act 
    • - first-lien Residential Mortgage Loan of a 1 to 4 family home, cooperative or condominium
    • - second or subordinate liens for home equity loans when a purchaser is financed by a federally related mortgage loan
  21. RESPA does not apply to the following (7)
    • 1) Loans on large properties (more than 25 acres)
    • 2) loans for business or agricultural purposes
    • 3) construction loans or other temporary financing
    • 4) vacant land
    • 5) transaction financed solely by a purchase-money mortgage taken back by the seller
    • 6) installment contract (contract for deed)
    • 7) buyer's assumption of the seller's existing low
  22. RESPA prohibits (3)
    • 1) Section 8
    •    - kickbacks and fee splitting for referral of Settlement Services
    • 2) Section 9
    •    - home seller from requiring that the buyer purchase title insurance from a practical company
    • 3) Section 10
    •    - lender from requiring excessive escrow account deposits for such items as taxes and Hazard insurance
  23. ABA
    • - Affiliated Business Arrangement
    • - package of service to consumers
  24. RESPA permits ABA
    b/w who?
    when? (3)
    • - between a real estate brokerage and a mortgage company when
    •    1) There is an 1% or more common ownership between the companies
    •    2) Participation is not required 
    •    3) Other providers are available
  25. Mortgage Servicing Transfer Statement
    • RESPA requirement
    • - required if lender intents to sell or assign the right to service to another loan service
    • - loan must notify the borrower 15 days before the date of the loan transfer
  26. TRID
    • - “know before you owe"
    • 2 new forms:
    •    1) Loan Estimate
    •    2) Closing Disclosure
  27. Loan Estimate Form
    • - required by TRID
    • - must be provided to the consumer 3 business days after a loan application is submitted to the lender
  28. what the only fee that the lender may collect before the loan applicant receives the Loan Estimate?
    categories of fee?
    • - Fee for a Credit Report
    • - 3 categories of the fees
    •    1) NO tolerance 
    •        - may not increase before closing
    •    2) 10% tolerance
    •        - cannot increase by more than 10% in any given categories
    •    3) Unlimited tolerance
    •        - are out of the lenders control
  29. Closing Disclosure Form
    - itemizes (перечислять) all charges that are normally paid by a borrower and as seller in connection with settlement
  30. Closing Disclosure Form provides information about
    • - costs of taxes and insurance
    • - how the interest rate and payments may change in the future
  31. when borrower must receive a completed Closing Disclosure?
    at least 3 business days before the closing
  32. when borrower must receive a completed Closing Disclosure if creditor has made a significant change to the loan terms?
    what changes?
    - new 3-day waiting period begins
  33. Your Home Loan Toolkit
    • - information booklet developed by CFPB
    • - must be provided by a creditor to a mortgage applicant
    • - provides the borrower with general information about settlement and how to find the best mortgage
  34. Closing Statement
    - is accounting of the parties’ debits and credits
  35. who is responsible for Recording Expenses?
    seller
  36. who is responsible for Transfer Tax
    - varies according to local practice and the terms of the sales contract
  37. who is responsible for Title Expenses
    seller
  38. Escrow or Impound Accounts
    • - Most mortgage lenders require
    • - Tax and Insurance Reserves
    • - Escrow or Impound Accounts
    • - Borrower starts the account at closing
    • - Buyer receives a credit from the seller at closing for any unpaid taxes
  39. who is responsible for Survey Fee
    purchaser who obtains new mortgage financing
  40. to whom Borrower of a VA-guaranteed loan pays a funding fee?
    directly through the Department of Veteran Affairs at closing
  41. what buyer does if Conventional Loan carried by Private Mortgage Insurance (PMI)?
    - buyer pays 1 year's Mortgage Insurance Premium (MIP) at closing
  42. General rules of proration (7)
    • 1) Day of closing
    •     - included in the proration period

    • 2) Taxes, Insurance premiums
    •     - 360 bays in a year, 30 days in a month

    • 3) Interest is paid in arrears (отставание)
    •    - mortgage payment due on June 1
    •        - includes interest due on May 1
    •    - for buyer who places a new mortgage loan on May 31
    •        - first mortgage payment is not due for another month 

    • 4) Accrued (накопленный) or prepaid general RE taxes are usually prorated at the closing
    •     - in some states RE taxes are paid in advance

    • 5) Municipal improvements (sewers, water mains...)
    •     - paid in annual installment 
    •     - seller normally makes the current payment
    •     - buyer assumes all future payments
    •     - generally, is not prorated

    • 6) Rent
    •     - is usually adjusted on the basis of the actual number of days in the months of closing

    • 7) Security deposit
    •     - generally transferred by the seller to the buyer without prorating
  43. Title Commitment
    • - Abstract of Title
    • - it is produced by seller from a title insurance company
  44. Accrued Items 
    - credit to?
    • - water bill, interest on an assumed mortgage
    • - buyer credit
  45. Prepaid Items
    - credit to?
    • - fuel oil in the tank
    • - seller credits
  46. Banking Year
    • - or Statutory Year
    • - 360 bays in a year, 30 days in a month
  47. Calendar Year
    - 365 bays in a year, 30-31 days in a month
  48. Closing on September 17
    Current RE Taxes       3,600
    Accrued Period          8 months 17 days
    Accrued RE tax          ?
    To compute the proration using the “banking year”
    • Accrued RE tax for 8 months and 17 days is $2,570
    • Credit to the buyer
    • Debit to the seller
  49. Closing on September 17
    Current RE Taxes       3,600
    Accrued Period          8 months 17 days
    Accrued RE tax          ?
    To compute the proration using the “banking year”
    • Accrued RE tax for 8 months and 17 days is $2,564.38
    • Credit to the buyer
    • Debit to the seller
  50. Principal amount of new mortgage
    - credit / debit to?
    - prorated?
    • - credit to buyer
    • - no
  51. Payoff existing mortgage
    - credit / debit to?
    - prorated?
    • - debit to seller
    • - no
  52. Unpaid principal balance if assumed mortgage
    - credit / debit to?
    - prorated?
    • - credit to buyer
    • - debit to seller
    • - no
  53. Accrued interest on existing assumed mortgage
    - credit / debit to?
    - prorated?
    • - credit to buyer
    • - debit to seller
    • - yes
  54. Tenant's security deposit
    - credit / debit to?
    - prorated?
    • - credit to buyer
    • - debit to seller
    • - no
  55. Purchase money mortgage
    - credit / debit to?
    - prorated?
    • - credit to buyer
    • - debit to seller
    • - no
  56. Unpaid water and other utility bills
    - credit / debit to?
    - prorated?
    • - credit to buyer
    • - debit to seller
    • - yes
  57. buyer's earnest money
    - credit / debit to?
    - prorated?
    • - credit to buyer
    • - no
  58. selling price of property
    - credit / debit to?
    - prorated?
    • - debit to buyer
    • - credit to seller
    • - no
  59. fuel oil on hand
    - credit / debit to?
    - prorated?
    • - debit to buyer
    • - credit to seller
    • - yes
  60. prepaid insurance and tax reserve for mortgage assumed by buyer
    - credit / debit to?
    - prorated?
    • - debit to buyer
    • - credit to seller
    • - yes
  61. refund to seller of prepaid water charges and similar utility expenses
    - credit / debit to?
    - prorated?
    • - debit to buyer
    • - credit to seller
    • - yes
  62. prepaid general RE taxes
    - credit / debit to?
    - prorated?
    • - debit to buyer
    • - credit to seller
    • - yes
  63. Interim Interest
    • - charge by a lender when a borrower obtains a new loan
    • - paid in advance
  64. A borrower is closing in a    $114,300
    Interest                             4.75%
    Closing at                          Nov 18
    Interim Interest due at closing  ?
    Seller paid it in advance for entire November (buyer has to pay rest back)

    30 days in Nov – 18 + 1 = 13   days from closing to the end of Nov + day of closing

    • 114,300 x 4.75% = 5,429.25   annual interest
    • 5,429.25 ÷ 360 = 15.081     interest per day
    • 15.081 x 13 = 196.05      Interim Interest due at closing
  65. 6 months billing         480
    Period ending            Oct 31
    Closing on                 Aug 3
    Prepaid Item using 30-days Basis ?
    • 480 ÷ 6 = 80   per month
    • 80 ÷ 30 = 2.667    per day
    • 10/30 – 8/3 = 2/27 = 2 m 27 d
    • 2 x 80 = 160   for 2 months
    • 27 x 2.667 = 2.009   for 27 days
    • 160 + 72.009 = 232.01     prepaid item
    • Credited to the seller
    • Debited to the buyer
  66. 6 months billing         480
    Period ending            Oct 31
    Closing on                 Aug 3
    Prepaid Item using actual days ?
    • 480 ÷ 6 = 80   per month
    • 80 ÷ 31 in Aug = 2.581      per day
    • Aug 4 to Aug 31 = 28     days
    • 28 x 2.581 = 72.268    for 28 days of Aug
    • 2 x 80 = 160.00    for 2 months (Sep and Oct)
    • 72.268 + 160.00 = 232.27    prepaid item (for 2 months and 28 days)
    • Credited to the seller
    • Debited to the buyer
  67. how interest is paid?
    Interest is paid in arrears
  68. how Municipal improvements are paid?
    paid in annual installment
  69. how rent is usually adjusted?
    is usually adjusted on the basis of the actual number of days in the months of closing
  70. - Which charge in Closing Disclosure must be the same or less than the charge on Loan Estimate form?
    - Lender charges for taking and underwriting the loan
Author
flashsmilenet
ID
345608
Card Set
AZK RE L-13 C-17 Closing - 1
Description
AZK RE L-13 C-17 Closing - 2
Updated

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