Listing Appointment Checklist - McKissock Learning

Chapter 14 Summary

Closing Statements

Texas Real Estate Principles 2

The Real Estate Settlement Procedures Act (RESPA) was created to ensure that the buyer and seller in a residential real estate transaction involving a new first mortgage loan have knowledge of all settlement costs. RESPA requires that the parties receive the correct figures pertaining to their closing costs. The Act is administered by the Consumer Financial Protection Bureau (CFPB). Effective October 1, 2015, the real estate industry has new requirements as specified in the TILA/RESPA Integrated Disclosure (TRID) Rule. According to the TRID rule: Lenders must give a copy of the booklet, "Your home loan toolkit" to every person at the time of application for

a loan. Lenders must provide a Loan Estimate of settlement costs at the time of loan application or within three

business days of application. A Closing Disclosure, a form designed to detail all financial particulars of a transaction, must be delivered to

the borrower at least three days before closing. The actual time frame is based on the method of delivery. The settlement agent must also provide the seller with the Closing Disclosure, which may be done at consummation. Closings that must comply with TRID include: Any closed end-loan secured by real property, including unimproved property. Closings that do not require compliance include: Reverse mortgages Home equity loans Loans secured by mobile homes or other dwellings that are not real property, if the dwelling is not attached to real estate. Loans made by persons who are not considered "creditors" because they make five or fewer mortgages per year. Certain no-interest loans secured by subordinate liens made for the purpose of down payment, or similar home buyer assistance, property rehabilitation, energy efficiency, or foreclosure avoidance or prevention. A real estate firm may offer a computerized loan origination system (CLO) that: Provides a prospective borrower information about mortgage loan products Prequalifies a borrower Initiates a loan application process for a fee The Closing Disclosure (settlement statement) has a list of the debits and credits for both the buyer and the seller. A debit is money that the buyer or seller needs to pay at closing. A credit is money that the buyer or seller receives at closing, either because it was already paid, it's being reimbursed or there is a promise to pay.

1

Chapter 14 Summary

Closing Statements

Texas Real Estate Principles 2

Items that the buyer usually pay include: Mortgage recording fees Title insurance Appraisal fees Credit fees Survey Loan origination Attorney fees Homeowner's insurance Reserves deposited with the lender, such as insurance, taxes, assessments Private Mortgage Insurance (PMI), if applicable The buyer's debits include: Contract sales price Other expenses, such as loan origination fee, closing fee, recording fee, attorney fees Buyer's Credits include: Earnest money or deposit Loan amount Items that the seller usually pay include: Broker commission Title fees, such as for clearing the title Fees for preparing the deed Attorney fees Seller's Debits: Loan balance Unpaid items due from seller Other expenses, such as closing fees and document preparation Seller's Credits: Contract sales price Items paid for in advance Some expenses paid at closing must be prorated or divided proportionately between the buyer and the seller. The most common items that fall into this category include: Taxes Insurance Mortgage interest Utilities

2

Chapter 14 Summary

Closing Statements

Texas Real Estate Principles 2 The Loan Estimate and Closing Disclosure forms provide a means for borrowers to comparison shop more effectively for competing loan offers. The new forms clearly break down the costs of the loan, such as the interest rate, mortgage insurance costs, and closing costs. For closed-end credit transactions secured by real property (other than reverse mortgages), the creditor is required to provide the consumer with good-faith estimates of credit costs and transaction terms on the Loan Estimate form. This form integrates and replaces the RESPA GFE and the initial TIL for these transactions. For loans that require a Loan Estimate and that proceed to closing, creditors must provide a closing disclosure reflecting the actual terms of the transaction called the Closing Disclosure. The form integrates and replaces the HUD-1 and the final TIL disclosure for these transactions. The creditor is generally required to ensure that the consumer receives the Closing Disclosure no later than three business days before consummation of the loan.

3

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download