chapter 10 30 hr broker transition course

Chapter 10 Closing the Transaction : 

Chapter 10 Closing the Transaction Copyright © 2011 by Kaplan, Inc. All rights reserved. Salesperson to Broker Transition Course 30 Hrs

Preclosing Procedures: 

Preclosing Procedures Buyer’s issues - Bring Necessary $$$ Check to See if Marketable title Final property inspection Survey Seller’s issues Receive payment Title procedures Deed and Bill of Sale ( Transfer Real and Personal Property) Produce a current abstract of title or title commitment May be required to execute an affidavit of title © 2011 by Kaplan, Inc. Page 202

Broker’s Role at Closing: 

© 2011 by Kaplan, Inc. Broker’s Role at Closing Licensee may still be the person at the closing with the most knowledge about the transaction May also be a part of the brokerage company’s policy to attend the closing as a client service Page 204 Sit Quietly

Conducting the Closing: 

Conducting the Closing Closing statement customarily prepared by the buyer’s lender Typical attendees at face-to-face closing Buyer or the buyer’s duly authorized agent Seller or the seller’s duly authorized agent Real estate agents (both the buyer’s and the seller’s agents) Seller’s and buyer’s attorneys Representatives of the lending institutions involved with the buyer’s new mortgage loan, the buyer’s assumption of the seller’s existing loan, or the seller’s payoff of an existing loan Representative of the title insurance company © 2011 by Kaplan, Inc. Page 204

Seller Documents for Closing : 

Seller Documents for Closing Deed conveying the property to the buyer Title evidence Letter or mortgage reduction certificate from the lender stating the exact principal remaining (if the buyer assumes the seller’s loan) Affidavits of title (if required) Payoff statement (if the seller’s loan is to be paid off) Bill of sale Survey Transfer tax declarations Paid water bill Other instruments or documents necessary to clear the title or to complete the transaction © 2011 by Kaplan, Inc. Page 205

Buyer Documents at Closing: 

Buyer Documents at Closing Balance of the cash needed to complete the purchase Loan documents (if the buyer secures a new loan) Proof of hazard insurance and flood insurance (if required) Other necessary documents, such as inspection reports required by the lender © 2011 by Kaplan, Inc. Page 205

Closing Agent or Closing Officer: 

Closing Agent or Closing Officer Conducts the proceedings at a closing and calculates the division of income and expenses between the parties Can be the buyer’s or the seller’s attorney, a representative of the lender, or a representative of the title company When the parties are satisfied that everything is in order, the exchange is made Internal Revenue Service reporting requirements © 2011 by Kaplan, Inc. Page 205

Mortgage Disclosure Improvement Act: 

Mortgage Disclosure Improvement Act Prevent consumers from receiving an enticing low rate at the initial application and then learning at settlement that the lender is charging more in fees Three business days from application to provide the truth-in-lending statement (TIL) APR%) and good-faith estimate (GFE) Seven business days before the signing of loan documents, after the borrower receives the final truth-in-lending statement and good-faith estimate Three business days to wait for closing if the annual percentage rate (APR) has changed more than 0.125 percent from the original or most recent TIL and GFE © 2011 by Kaplan, Inc. Page 205

Real Estate Settlement Procedures Act (RESPA): 

Real Estate Settlement Procedures Act (RESPA) Requires certain disclosures about the mortgage and the settlement process Prohibits certain practices, such as kickbacks and referral fees, that can increase settlement costs for home buyers Mandatory use of the new Good Faith Estimate (GFE) and the modified HUD-1 form Permits controlled business arrangement (CBA) under specific conditions Applies to all residential transaction that are financed w=by a federally “related” loan © 2011 by Kaplan, Inc. Page 207

RESPA Disclosure Requirements: 

RESPA Disclosure Requirements Special Information Booklet Good-Faith Estimate of Settlement Costs Page 210-212 Uniform Settlement Statement (HUD-1) Pages 214-216 Mortgage Servicing Disclosure Statement © 2011 by Kaplan, Inc. Page 209 If these change than a new one may be requires

Preparation of Closing Documents: 

Preparation of Closing Documents Closing statement―accounting of the parties’ debits and credits Broker’s commission Attorney’s fees Recording expenses Transfer tax Title expenses Loan fees Tax reserves and insurance reserves Appraisal fees Survey fees Additional fees © 2011 by Kaplan, Inc. Page 217

Accounting for Expenses: 

Accounting for Expenses Prorations Accrued items ( owed by seller will be paid later by Buyer Prepaid items ( paid in advance by seller and so buy reimburses seller( Prorating © 2011 by Kaplan, Inc. Page 220 Rule: Day of closing is a day of Income for Seller and a day of Expense for the Seller.

Chapter 10 Closing the Transaction Review Quiz: 

Chapter 10 Closing the Transaction Review Quiz © 2011 by Kaplan, Inc. Pages 223-224