Deck 16: Settlement Procedures

Question 1

RESPA requires disclosure of estimated closing costs for residential loans at which of the following times?

A) Any time prior to actual closing
B) Within three days of loan application
C) Only if requested by the borrower
D) Within three days of loan application and again one day prior to closing if the borrower request it

Answer 1

Within three days of loan application and again one day prior to closing if the borrower request it

Question 2

A mortgagee's title policy protects which of the following against an adverse claim of title?

A) Borrower
B) Trustee
C) Real Estate agent
D) Lender

Answer 2

Lender

Question 3

Which of the following is a prohibited practice as defined by RESPA requirements?

A) A listing broker splits the real estate commission with a selling broker
B) A lender refuses to accept an insurance company for coverage even though requested by the borrower
C) A seller requires the use of a specific title company as a condition of the sale
D) A selling broker provides the buyer/borrower with assistance in obtaining a loan in return for a fee

Answer 3

A seller requires the use of a specific title company as a condition of the sale

Question 4

In closing a real estate transaction, instructions on how the proceeds of a loan are to be disbursed are issued by the

A) Closing agent
B) Seller's agent
C) Lender
D) Trustee's Attorney

Question 5

After initial closing deposits have been made, RESPA limits the continuing escrow or reserve account cushion held by lenders on residential loans to which of the following?

A) Not more than is reasonable and customary
B) Not more than one sixth of the annual recurring charges
C) Not more than one twelfth of the annual recurring charges
D) No restrictions apply after the initial deposits have been made

Question 6

The Truth-in-Lending Act allows certain transactions to be rescinded by consumers; Transactions exempt from this right of rescission include which of the following residential mortgage transactions?

A) Cash out refinance
B) Reverse Annuity Mortgage
C) Purchase Money Mortgage
D) Home Equity Line of Credit

Question 7

The underlying purpose of RESPA requirements is to:

A) require disclosures that give a buyer/borrower sufficient information to make informed decisions
B) increase federal control over real estate deals
C) introduce complex questions that necessitate employing legal counsel
D) limit costs of closing a real estate transaction

Question 8

Real estate settlement procedures for residential loans, including the required settlement statement, are regulated by the

A) Office of Thrift Supervision
B) Fannie Mae-Freddie Mac
C) Department of Housing and Urban Development
D) Federal Reserve Bank

Question 9

The variance 3/7/3 Rule requires a seven business day waiting period once the initial disclosure is provided before closing a home loan if the Good Faith Estimate turns out to be off by more than the variance percentages established by which of the following new legislative actions?

A) Mortgage Disclosure Improvement Act of 2008
B) American Recovery and Reinvestment Act of 2009
C) The Frank-Dodd Act of 2011
D) The Community Reinvestment Act

Question 10

All of the following charges involved with the settlement of a residential mortgage loan must be paid at time of closing EXCEPT:

A) Prepaid principal
B) Property taxes
C) Hazard insurance premium
D) Prepaid interest

Question 11

In a settlement procedure, prepaid interest is required for the time period from September 21 (date of closing) through September 30. What amount of prepaid interest is due for a loan of $200,000 at 5% interest? (Banker's year is 360 Days)

A) $250.00
B) $277.78
C) $246.57
D) 208.33

Question 12

The primary purpose of the Truth-in-Lending Act is to

A) require full disclosure of the amount of the promissory note
B) provide meaningful information to borrowers on the cost of consumer credit
C) discourage excessive loan costs for consumers
D) establish limits on the total charges a lender can assess for a loan