Which of the following is TRUE of real estate closings in Pennsylvania?

Chapter 21- Book Quiz (plus)

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Professional Development
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Foretta Byles
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20 questions
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1.
MULTIPLE CHOICE QUESTION
3 mins • 1 pt
Closings are generally conducted by real estate salespersons.
The seller pays the brokers’ fee.
The buyer usually receives the rents for the day of closing.
The buyer pays for title evidence.
Answer explanation
The answer is the buyer pays for title evidence. Both the buyer and the buyer's lender want assurance that title to the property being conveyed complies with terms of the transfer. Buyers are responsible for determining that they are receiving good title to the property. Title evidence, such as an abstract of title our title insurance, is normally a charge paid by the buyer. (p. 416-417)
2.
MULTIPLE CHOICE QUESTION
3 mins • 1 pt
Real estate firms are often affiliated with title insurance companies or mortgage brokers. These business arrangements are permitted by RESPA as long as
the companies make a written disclosure of their relationship with one another.
consumers are unaware of these arrangements.
consumers are required to use the services of the affiliated companies.
the companies pay referral fees between them.
Answer explanation
The answer is the companies make a written disclosure of their relationship with one another. RESPA permits an affiliated business arrangement (AfBA) as long as a consumer is clearly informed of the relationship among the service providers, that participation is not required, that other providers are available, and that the only thing of value received by one business entity from others, in addition to permitted payments for services provided, is a return on ownership interest or franchise relationship. Umm(p. 421-422)
3.
MULTIPLE CHOICE QUESTION
3 mins • 1 pt
Which property does Consumer Financial Protection Bureau require that the closing disclosure be used?
loan for agricultural purposes
construction loans
installment contract
federally related loan for a single family-home
Answer explanation
The answer is federally related loan for a single family-home. RESP a regulations apply to first-lien residential mortgage loans made to finance the purchases of one- to four-family homes, cooperatives, and condominiums, for either investment or occupancy, as well as second or subordinate liens for home equity loans when a purchase is financed by a federally related mortgage loan. (p. 420)
4.
MULTIPLE CHOICE QUESTION
3 mins • 1 pt
Which of the following would a lender generally require to be produced at the closing?
market value appraisal
credit report
application
title insurance policy
Answer explanation
The answer is title insurance policy. The application, credit report, and appraisal are required by a lender before committing funds for the loan. The lender will require a title insurance policy at closing in order to protect their interest in the property. (p. 419)
5.
MULTIPLE CHOICE QUESTION
3 mins • 1 pt
The earnest money on deposit with the broker is a
debit to the buyer.
credit to the seller.
credit to the buyer.
balancing factor.
Answer explanation
The answer is credit to the buyer. The earnest money belongs to the buyer; at closing, it is a credit to the buyer. (p. 433)
6.
MULTIPLE CHOICE QUESTION
3 mins • 1 pt
The loan estimate and closing disclosure must be used to illustrate all settlement charges for
transactions financed by VA and FHA loans only.
all transactions involving commercial property.
every real estate transaction.
residential transactions financed by federally related mortgage loans.
Answer explanation
The answer is residential transactions financed by federally related mortgage loans. RESPA requirements apply when a purchase is financed by a federally related mortgage loan. The regulations apply to 1st lien residential mortgage loans made to finance the purchase of one- to four-family homes, cooperatives, and condominiums for either investment or occupancy. (p. 420)
7.
MULTIPLE CHOICE QUESTION
3 mins • 1 pt
The process by which expenses are handled at the settlement of a real estate transaction so that both the buyer and the seller pay their respective portions of the debits is called
proration.
assessment.
reconciliation.
balancing.
Answer explanation
The answer is proration. Prorations are a division of financial responsibility between the buyer and the seller for such items as loan interest, taxes, rents, fuel, and utility bills and are necessary to ensure that expenses are divided fairly between the seller and the buyer. (p. 435)
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