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KES RE Closing
KES Closing the transaction
| Term | Definition |
|---|---|
| Accrued items | on closing statement items of expense that are incurred but not yet payable such as interest on mortgage loan |
| Affiliated business arrangement | (ABA) practice of one company offering a package of services to consumers |
| Closing | Conclusion of transaction. When title is transferred in exchange for payment. |
| Closing statement | an accounting of the parties debits and credits |
| Credit | amount entered in party's favor (amounts already paid, reimbursements, amounts to be paid to party) |
| Debit | is a charge - amount a party owes |
| Escrow account | trust account established to hold funds for the principle. In RE established by escrow agent to hold funds pending disbursements. |
| Escrow closings | a third party coordinates the closing activities on behalf of the buyer and seller. |
| Good Faith Estimate | (GFE) lenders are required to clearly disclose on form provided by HUD key loan terms and closing costs. final costs cannot vary greatly from the GFE |
| Impound accounts | an account the mortgage lender may require the borrower to have for funds needed for future RE taxes and insurance premiums |
| Mortgage Disclosure Improvement Act | (MDIA) changed how buyers, sellers, lenders, title agents, mortgage brokers, and RE professionals prep for closing |
| Mortgage servicing transfer Statement | required if lender intends to sell loan. borrower must be notified 15 days before effective date of transfer. includes name and addr of new servicer, phone, date when accepting payments |
| Prepaid Items | on closing statement items that have been paid in advance by seller (property taxes, .) |
| Prorations | Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at closing |
| Real Estate Settlement Procedures Act | (RESPA) fed law that requires disclosures about mortgage and settlement process. also prohibits some practices like kick backs and referral fees, |
| Settlement Statement (HUD1) | RESPA requires settlement statement itemizing all charges paid by borrower and seller in connection of settlement |
| Survey | verifies legal description of property. indicates improvements, easements, encroachments on property. |
| Two steps in closing | Sales contract is fulfilled, mortgage fundamental are distributed to buyer |
| title or opinion of title discloses | liens, encumbrances, easements, conditions, and restrictions |
| pay off statement | a statement that contains the exact amount needed to pay off the existing loan. notes unpaid principle and interest due, date of proposed payment, cost of release deed (cert of sat) |
| release deed | certificate of satisfaction |
| Bring down | second search of public records. happens after closing, but before new documents are recorded. |
| Affidavit of title | sworn statement statement by seller. assures buyer, title insurer, that no defects of title have occurred since last title exam. |
| IRS reporting requirments | land, structures,condo units (appurtenant fixtures, common elements), co-op shares |
| another word for closing | settlement and transfer |
| passing papers | exchanging docs as they are signed |
| escrow procedures Seller deposits | deed, title evidence (title insurance, opinion of title, ..), hazard insurance, mortgage reduction cert, affidavit of title, payoff statement, |
| escrow procedures Buyer deposits | balance of cash needed, loan docs, proof of hazard insurance, other needed docs (inspection rpts, ...) |
| RESPA does not apply to | loans for 25+ acres, loans for business/agra, construction loans, Vacant land (unless dwelling place w/n 2 yrs), financed by take back by seller, installment contract, buyers assumption. |
| RESPA section 8 | prohibits kickbacks, fee splitting for referrals. finess of 10,000 & 1yr |
| RESPA section 9 | prohibits Seller requiring buyer purchase title insurance from specific company |
| RESPA section 10 | prohibits lender from requiring excessive ESCROW deposits for hazard insurance, title insurance |
| POC | Paid outside closing. charges prior to closing |
| RESPA protections | CLO regs, CBA disclosures, settlement cost booklet, GFE, HUD-1, prohibits kickbacks and unearned fees. |
| CLO | computer loan origionations |
| CBA | Controlled business arrangement |
| HUD-1 | Settlement Statement |
| intent of Mortgage Disclosure Improvement Act | to prevent consumer from receiving an enticing low interest rate at initial loan app only to discover at settlement lender is charging more in fees |
| lender's deadlines. | (3 7 3) 3 bds from app TIL and GFE, 7 bds before signing provide final TIL and GFE, 3 bd's must pass if APR changes > 0.125%.from original TIL GFE |
| TIL | Truth in lending statement |
| MDIA | Mortgage Disclosure Improvement Act |
| ABA | Affiliated business arrangement |
| PITI | principle interest taxes insurance |
| Accrued items are | buyer credits |
| Prepaid items are | Seller credits |
| If the buyer owes the seller | It's a debit to the buyer and a credit to the seller |
| Sales price | Debit buyer, credit seller |
| Tenants sec deposit | Credit buyer, debit seller |
| Fuel oil in tank | Debit buyer, credit seller |
| Prorated water bill | Credit to buyer, debit to seller |
| Unearned rents | Credit to buyer, debit to seller |
| Tax reserve account | Debit buyer, credit, seller |
| Loan pay off, unpaid interest is | Debit to seller only |
| On assumption of mortgage interest proration is | Debit to seller, credit to buyer |
Created by:
KimSchroeder
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