rep ch 12

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lsantiago29
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123294
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rep ch 12
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2011-12-12 23:37:44
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rep ch 12
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  1. 1. Brown paid $355.20 for a two-year fire insurance policy that was issued June 1, 2001. As of August 15, 2002, what is the prorated value of the unused portion?
    A. $214.60
    B. $140.60
    C. $177.60
    D. $162.80
    • Question #1
    • Answer: B
    • Explanation: A two-year policy at $355.20 is equal to $14.80 per month. As of August 15, 2002, there are nine and a half months left on the policy. $14.80 mutiplied by 9.5 is $140.60, which is the prorated value of the unused portion of the policy.
  2. 2. A deed, note, bond, or money held by a third party until certain conditions are satisfied is known as:
    A. escrow
    B. surety
    C. security
    D. bailment
    • Question #2
    • Answer: A
    • Explanation: Escrow is an arrangement where the parties to a transaction have a neutral third party hold funds and documents until certain conditions in the transaction are satisfied.
  3. 3. Of the following items, which would be least likely to appear on a closing statement as a debit to the buyer?
    A. Interest on an assumed loan
    B. Prorated taxes
    C. Prorated insurance premiums
    D. FHA discount points
    • Question #3
    • Answer: A
    • Explanation: Because loan interest is paid in arrears, any interest due on an assumed loan is the seller's responsibility. Interest would therefore be listed as a credit to the buyer.
  4. 4. Which of the following is not prohibited by RESPA?
    A. A buyer designating the lender
    B. Kickbacks
    C. Unearned fees
    D. A seller designating the title insurance company
    • Question #4
    • Answer: A
    • Explanation: Buyers are permitted to designate the lenders of their choice. However, a seller may not designate the title insurance company used. Kickback and unearned fees are prohibited.
  5. 5. Under RESPA, a lender is permitted to charge for all but which of the following services?
    A. Loan documents
    B. Uniform Settlement/Disclosure Statements
    C. Credit reports
    D. Appraisals
    • Question #5
    • Answer: B
    • Explanation: A lender may not charge a fee for any service related to RESPA-required disclosures.
  6. 6. For which of the following loans are impound accounts required?
    A. VA
    B. FHA
    C. Cal-Vet
    D. All of the above
    • Question #6
    • Answer: D
    • Explanation: All of these loans require impound accounts.
  7. 7. On a buyer's closing statement, which of the following would appear as a debit?
    A. Interest owed on an assumed loan
    B. Unpaid property taxes
    C. Documentary transfer tax
    D. Purchase price
    • Question #7
    • Answer: D
    • Explanation: The purchase price will always be entered as a debit to the buyer.
  8. 8. When an escrow agent is handling an escrow for both parties in a transaction, she is acting as an:
    A. advocate
    B. independent contractor
    C. employee
    D. agent
    • Question #8
    • Answer: D
    • Explanation: The escrow officer is a dual agent and owes duties to both the buyer and the seller.
  9. 9. In real estate finance, the term "Beneficiary Statement" refers to:
    A. escrow instructions written after a party has died or become incapacitated
    B. a loan request from the holder of a life estate
    C. the amount needed to pay off a loan
    D. the interest paid on a short-term loan
    • Question #9
    • Answer: C
    • Explanation: A beneficiary statement is a statement from the lender with information as to a loan's remaining principal balance.
  10. 10. RESPA requires that a lender mail or deliver the Uniform Settlement Statement to the borrower no later than:
    A. the day before closing
    B. on or before the day of closing
    C. within three days of closing
    D. within ten days of closing
    • Question #10
    • Answer: B
    • Explanation: Unless the borrower waives this right in writing, the lender must provide the borrower with a copy of the Uniform Settlement Statement either at or before settlement (closing). Upon request, the borrower may inspect the settlement statement one business day before closing.
  11. 11. In a sale of real property, the primary reason for using an escrow is to:
    A. ensure that the sale's conditions and terms are met before the transaction is closed
    B. provide a witness to the transaction
    C. keep proper records of the transaction
    D. settle any disputes that might arise between the parties
    • Question #11
    • Answer: A
    • Explanation: The purpose of escrow is to ensure that all the details and conditions of the sale agreement are met before the transaction closes.
  12. 12. Broker Betty refers all of her clients to a particular title insurance company, who in turn pays her $20 per referral. Under RESPA, this is permitted:
    A. as a matter of practice
    B. as long as the broker discloses this fact to both buyer and seller
    C. as long as the buyer and seller consent
    D. under no circumstances
    • Question #12
    • Answer: D
    • Explanation: RESPA forbids kickbacks and referral fees.
  13. 13. The primary purpose of RESPA is to:
    A. give buyers the chance to shop around for settlement services
    B. give buyers the chance to shop around for brokerage services
    C. standardize settlement procedures
    D. standardize settlement costs
    • Question #13
    • Answer: A
    • Explanation: RESPA requires lenders to provide certain information to prospective buyers, including a good faith estimate of the costs of settlement services. The buyers can use the estimates to shop around for services.
  14. 14. If a real estate broker is not licensed as an escrow agent, he may:
    A. never act as an escrow agent
    B. handle escrows only for properties in which he has a personal interest
    C. handle escrows for transactions in which he is acting as the broker
    D. handle act as an escrow agent in any real property transactin
    • Question #14
    • Answer: C
    • Explanation: A real estate broker is exempt from the escrow agent licensing requirement when handling escrow for a transaction in which he is also acting as the broker.
  15. 15. In real estate finance, the term "impounds" refers to:
    A. penalties
    B. attachments
    C. escrow fees
    D. reserves
    • Answer: D
    • Explanation: Impounds, or reserves, are funds collected by the lender for the purpose of paying recurring costs such as taxes and insurance.

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