Question 1

The nature of closing varies from state to state.

Accepted Answer

The process and regulations surrounding real estate transactions, including closing procedures, can vary significantly from one state to another due to differences in state laws and local practices.

Question 2

A valid escrow requires an underlying purchase contract.

Accepted Answer

An escrow arrangement typically involves a contractual agreement that outlines the terms and conditions under which the escrow agent holds and disburses funds or property on behalf of the parties involved, indicating that there must be an underlying purchase contract or agreement that necessitates the use of escrow.

Question 3

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

Accepted Answer

False

Question 4

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

Accepted Answer

An escrow involves a neutral third party holding onto important documents or funds until certain conditions are met, which often includes the seller depositing the deed.

Question 5

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

Accepted Answer

The lender is responsible for preparing and delivering the loan documents to the escrow company, as these documents are necessary to finalize the mortgage process and ensure the legal transfer of property.

Question 6

The escrow agent has discretionary authority on the escrow instructions.

Accepted Answer

The escrow agent does not have discretionary authority on the escrow instructions; they must follow the instructions exactly as agreed upon by the parties involved in the transaction.

Question 7

Escrow instructions need not be in writing to be enforceable.

Accepted Answer

Escrow instructions must be in writing to be enforceable, as they serve as the formal agreement detailing the conditions under which the escrow agent is authorized to disburse funds or transfer title.

Question 8

The seller can serve as the escrow agent.

Accepted Answer

The seller cannot serve as the escrow agent because it would create a conflict of interest. An escrow agent must be a neutral third party to ensure the transaction is conducted fairly and impartially.

Question 9

RESPA is applicable to all loans involving government insurance.

Accepted Answer

RESPA applies to all federally related mortgage loans, including those insured by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the Rural Housing Service (RHS).

Question 10

RESPA is applicable to home improvement loans.

Accepted Answer

RESPA (Real Estate Settlement Procedures Act) applies to federally related mortgage loans, which can include home improvement loans if they are secured by a lien on residential real property.

Question 11

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

Accepted Answer

Under the Real Estate Settlement Procedures Act (RESPA), the good faith estimate must be provided within three business days of receiving the loan application, not one day.

Question 12

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

Accepted Answer

A settlement statement, such as the HUD-1 or Closing Disclosure, follows a specified form to ensure all necessary financial details of a real estate transaction are clearly outlined.

Question 13

HUD is responsible for RESPA forms and procedures.

Accepted Answer

The answer of HUD is responsible for RESPA forms and...

Question 14

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

Accepted Answer

RESPA (Real Estate Settlement Procedures Act) requires lenders to provide good faith estimates of closing costs, but it does not specify percentage ranges for these estimates. Instead, it mandates that the estimates be made in good faith, and certain specified costs cannot exceed the estimate by more than a set tolerance level.

Question 15

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

Accepted Answer

RESPA (Real Estate Settlement Procedures Act) sets limits on the amounts that lenders can require borrowers to put into an escrow account for purposes such as paying taxes and insurance.

Question 16

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

Accepted Answer

In real estate transactions, the buyer and seller can agree on which document, the purchase contract or the escrow instructions, will take precedence in case of any discrepancies between the two. This agreement is typically specified within the contract or escrow instructions themselves.

Question 17

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

Accepted Answer

The escrow agent is responsible for ensuring that all funds are properly accounted for and that all disbursements are made in accordance with the instructions of the parties involved. This includes verifying the validity of check payments to ensure that they are genuine and that the funds are available.

Question 18

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

Accepted Answer

An escrow agent can be held liable for embezzlement by employees under certain circumstances, especially if it involves negligence in supervising employees or failure to implement adequate safeguards against fraud.

Question 19

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

Accepted Answer

An escrow agent's authority is indeed limited to the provisions of the escrow instructions, as these instructions outline the specific duties, conditions, and limitations under which the escrow agent is to operate.

Question 20

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

Accepted Answer

Escrow instructions are indeed a contract that outlines the agreement and conditions between the buyer, seller, and escrow agent, detailing how the transaction should proceed and be finalized.

Quiz 16: Closing the Deal