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KES RE Closing

KES Closing the transaction

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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