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Exam 16: Closing the Deal

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Question 31

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The Patriot Act applies to escrow agents and closing.

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Question 32

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RESPA limits amounts that lenders can hold in the escrow account for service of loans.

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Question 33

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Martin Kiefaber sold his Arlington, Virginia, home on November 19, 2009. The buyers' real estate agent, Steven Thorman, who was affiliated with RE/MAX Allegiance, assisted the buyers in acquiring a home warranty in connection with that transaction. The buyers requested that Kiefaber cover the cost of the home warranty. Kiefaber agreed and bought a $399 policy from HMS National, Inc. that covered the home's appliances for one year. After Kiefaber funded the warranty, HMS paid RE/MAX $60 in connection with Thorman's involvement in the transaction. Kiefaber alleges that the $60 payment to RE/MAX was an illegal kickback for a referral in violation of the Real Estate Settlement Procedures Act. Is he correct?

The seller can serve as the escrow agent.

Buyers and sellers can create a valid escrow by executing a "Purchase Agreement and Escrow Instructions."

When can an escrow agent transfer title and deliver funds?

Explain why RESPA was passed.

The USA Patriot Act:

First United American Title is the escrow agent for the closing of a sale of property between Georgia Pines and Alexander Pope. Georgia is carrying the financing for Pope, and Pope has given Georgia a mortgage. First United American failed to record the mortgage even though the escrow instructions specified that it be recorded. Pope has defaulted on the loan, and Georgia has discovered there is no mortgage. First United American:

Yield spread premiums are illegal under RESPA.

A valid escrow requires an underlying purchase contract.

The buyer is not entitled to a copy of the settlement statement.

RESPA applies only to FHA mortgage loan closings.

Describe the requirement changes to RESPA following the 2008 market collapse.

The nature of closing varies from state to state.

On loans that are locked in at an interest rate, there is zero tolerance for errors in disclosures on the GFE.

Using the following chart, determine whether the RESPA provisions on closing cost variations have been violated. $\begin{array}{|l|l|l|}\hline\text { CATEGORY }& \text {GFE ESTIMATE }& \begin{array}{l} \text {ACTUAL CLOSING }\\\text {AMOUNT}\end{array} \\\hline \text {Recording fees }& \$ 45.00 &\$ 60.00 \\\hline\text { YSP} & \$ 1,875.00 & \$ 1,975.00 \\\hline \begin{array}{l} \text {Title company (selected by} \\\text {buyers)}\end{array} & \$ 625.00 &\$ 800.00 \\\hline \begin{array}{l} \text {Loan origination fees} \\\text {(selected by buyers)}\end{array} & \$ 575.00 &\$ 700.00 \\\hline\text { Homeowner insurance} &\$ 1,200.00 &\$ 1,600.00 \\\hline \text {Stamp tax }& \$ 5.00 & \$ 7.00\\\hline \begin{array}{l} \text {Copy and delivery fees of }\\\text {escrow agent}\end{array} & \$ 10.00 &\$ 15.00 \\\hline\end{array}$

The buyer and seller can agree as to whether the purchase contract or the escrow instructions will be controlling.

Private suits by home buyers are used to enforce the RESPA protections for home buyers.

HUD is responsible for RESPA forms and procedures.