NC 302 POST LICENSING MAIN EXAM SCRIPT QUESTIONS
AND ANSWERS SURE A+
✔✔Conducting the closing - ✔✔Review the docs -- AGENT TO REVIEW CLOSING
DISCLOSURE
Sign the docs
Record the transaction
Fund the transaction
Report distributions to IRS (1099)
✔✔Good Funds Act - ✔✔No distributions until recording
Not the same as closing or settlement
Must verify all funds over 5k
✔✔Transfer of Funds - ✔✔Funds may be transferred from the brokerage escrow
account to the settlement agent (attorney) no more than 10 days prior to the anticipated
settlement date
✔✔RESPA - ✔✔Real estate settlement procedures act
Enacted in 1974
800+ pages
Two purposes in mind
DISCLOSURE
ELIMINATE KICKBACKS
Enforced by CFPB
1-4 Residential Property Disclosure (Written to eliminate kickbacks)
RESPA applies to federally related mortgage loans
Does not apply to cash, vacant land, commercial transactions, seller carrybacks
✔✔Initial Application Disclosures: - ✔✔Within 3 days of loan application, borrower gets:
Loan Estimate:
Loan costs
Required APR Info (TILA)
Consumer Settlement Costs Booklet
"Your home loan toolkit"
✔✔Who is responsible for loan estimate: - ✔✔LENDERS are responsible for knowing
which transactions are covered
Real Estate Brokers are NOT liable for the accuracy of a loan estimate but should have
a GENERAL understanding
✔✔An application occurs when: - ✔✔Borrower has provided:
Legal name
Gross income
SSN for credit report
,Property address
Estimate of property value (purchase price on the contract)
Amount of mortgage loan requested
✔✔Prior to the loan estimate, the ONLY charge a lender can make is for a: - ✔✔credit
report
✔✔Permissible Variations: - ✔✔No Variation:
Lender fees
Services chosen by lender
10% variation
Settlement agent fees
Recording fees
Unlimited Variation
Prepaid interest
Property insurance
Escrows & impounds
3rd party services
✔✔Other RESPA Provisions: - ✔✔**Escrow Account Restrictions
Use of a closing disclosure
Kickbacks between settlement service providers
✔✔As far as RESPA is concerned, anything of value to settlement service providers
(does NOT have to be money) - ✔✔Banking services
Open house services
Home warranty
Appraisal company
✔✔RESPA does NOT prohibit of affect: - ✔✔Referral fees between licensees
Crediting commissions to clients for payment of costs
The receipt of bonuses or additional compensation by a licensee from someone other
than a settlement service provider
ALL BONUSES, COMMISSIONS AND REBATES MUST APPEAR ON THE CLOSING
DISCLOSURE
✔✔The nature of affiliated business arrangements (AfBA's)
Mandatory Disclosures for CBA's (Controlled business arrangements - think
relationships between lenders) - ✔✔Disclosure of relationship prior to the referral
Cannot require to use
Must disclose the fees to be charged
✔✔Can't force people to use certain settlement providers
RESPA violation penalties -- - ✔✔Criminal fines up to $10,000
Civil Lawsuits
, Imprisonment
Injunctions & Restitution orders
✔✔CFPB: Consumer Financial Protection Bureau - ✔✔To educate consumers
To enforce consumer protection statues
Eliminate previous duplication
✔✔TRID - ✔✔TILA
RESPA
Integrated
Disclosures
✔✔The biggest impact for brokers: - ✔✔The lender must provide the CD (closing
disclosure to the borrower's at least 3 BUSINESS days prior to settlement
✔✔TRID Timeline Overview: - ✔✔Step 1: Buyer/borrower applies for loan
Step 2: lender must provide loan estimate (LE) within 3 business days
Step 3: 3 business days before settlement: deadline for borrower's receipt of closing
disclosure
Step 4: Settlement conference: borrower's closing disclosure (BCD) and/or Seller's
closing disclosure (SCD)
✔✔What is a lender Business day - ✔✔Sundays and 10 federal public holidays are
excluded. The borrower can close on the 3rd business day following receipt (A business
day is monday - saturday)
✔✔Definition of "RECEIVED" - ✔✔DELIVERED in person:
The CD is "received" on the same day it's provided
If MAILED or delivered ELECTRONICALLY: the CD is "received"
3 business days after delivery
OR
When lender has EVIDENCE of receipt
If the closing disclosure is received by the borrower on Monday, what is the first day on
which they can close? Day Three (Thursday)
✔✔Broker's disclosure timeline: - ✔✔Brokers: the disclosure timeline is not negotiable! -
the timeline cannot be waived
✔✔Two separate closing disclosures -- there are two separate disclosures - ✔✔Buyer's
closing disclosure
Seller's closing disclosure
Purpose is to protect confidentiality of info
Only the buyer's closing disclosure subject to 3 day delivery, not the seller
Delivery must be to buyer. Delivery to agent is insufficient
AND ANSWERS SURE A+
✔✔Conducting the closing - ✔✔Review the docs -- AGENT TO REVIEW CLOSING
DISCLOSURE
Sign the docs
Record the transaction
Fund the transaction
Report distributions to IRS (1099)
✔✔Good Funds Act - ✔✔No distributions until recording
Not the same as closing or settlement
Must verify all funds over 5k
✔✔Transfer of Funds - ✔✔Funds may be transferred from the brokerage escrow
account to the settlement agent (attorney) no more than 10 days prior to the anticipated
settlement date
✔✔RESPA - ✔✔Real estate settlement procedures act
Enacted in 1974
800+ pages
Two purposes in mind
DISCLOSURE
ELIMINATE KICKBACKS
Enforced by CFPB
1-4 Residential Property Disclosure (Written to eliminate kickbacks)
RESPA applies to federally related mortgage loans
Does not apply to cash, vacant land, commercial transactions, seller carrybacks
✔✔Initial Application Disclosures: - ✔✔Within 3 days of loan application, borrower gets:
Loan Estimate:
Loan costs
Required APR Info (TILA)
Consumer Settlement Costs Booklet
"Your home loan toolkit"
✔✔Who is responsible for loan estimate: - ✔✔LENDERS are responsible for knowing
which transactions are covered
Real Estate Brokers are NOT liable for the accuracy of a loan estimate but should have
a GENERAL understanding
✔✔An application occurs when: - ✔✔Borrower has provided:
Legal name
Gross income
SSN for credit report
,Property address
Estimate of property value (purchase price on the contract)
Amount of mortgage loan requested
✔✔Prior to the loan estimate, the ONLY charge a lender can make is for a: - ✔✔credit
report
✔✔Permissible Variations: - ✔✔No Variation:
Lender fees
Services chosen by lender
10% variation
Settlement agent fees
Recording fees
Unlimited Variation
Prepaid interest
Property insurance
Escrows & impounds
3rd party services
✔✔Other RESPA Provisions: - ✔✔**Escrow Account Restrictions
Use of a closing disclosure
Kickbacks between settlement service providers
✔✔As far as RESPA is concerned, anything of value to settlement service providers
(does NOT have to be money) - ✔✔Banking services
Open house services
Home warranty
Appraisal company
✔✔RESPA does NOT prohibit of affect: - ✔✔Referral fees between licensees
Crediting commissions to clients for payment of costs
The receipt of bonuses or additional compensation by a licensee from someone other
than a settlement service provider
ALL BONUSES, COMMISSIONS AND REBATES MUST APPEAR ON THE CLOSING
DISCLOSURE
✔✔The nature of affiliated business arrangements (AfBA's)
Mandatory Disclosures for CBA's (Controlled business arrangements - think
relationships between lenders) - ✔✔Disclosure of relationship prior to the referral
Cannot require to use
Must disclose the fees to be charged
✔✔Can't force people to use certain settlement providers
RESPA violation penalties -- - ✔✔Criminal fines up to $10,000
Civil Lawsuits
, Imprisonment
Injunctions & Restitution orders
✔✔CFPB: Consumer Financial Protection Bureau - ✔✔To educate consumers
To enforce consumer protection statues
Eliminate previous duplication
✔✔TRID - ✔✔TILA
RESPA
Integrated
Disclosures
✔✔The biggest impact for brokers: - ✔✔The lender must provide the CD (closing
disclosure to the borrower's at least 3 BUSINESS days prior to settlement
✔✔TRID Timeline Overview: - ✔✔Step 1: Buyer/borrower applies for loan
Step 2: lender must provide loan estimate (LE) within 3 business days
Step 3: 3 business days before settlement: deadline for borrower's receipt of closing
disclosure
Step 4: Settlement conference: borrower's closing disclosure (BCD) and/or Seller's
closing disclosure (SCD)
✔✔What is a lender Business day - ✔✔Sundays and 10 federal public holidays are
excluded. The borrower can close on the 3rd business day following receipt (A business
day is monday - saturday)
✔✔Definition of "RECEIVED" - ✔✔DELIVERED in person:
The CD is "received" on the same day it's provided
If MAILED or delivered ELECTRONICALLY: the CD is "received"
3 business days after delivery
OR
When lender has EVIDENCE of receipt
If the closing disclosure is received by the borrower on Monday, what is the first day on
which they can close? Day Three (Thursday)
✔✔Broker's disclosure timeline: - ✔✔Brokers: the disclosure timeline is not negotiable! -
the timeline cannot be waived
✔✔Two separate closing disclosures -- there are two separate disclosures - ✔✔Buyer's
closing disclosure
Seller's closing disclosure
Purpose is to protect confidentiality of info
Only the buyer's closing disclosure subject to 3 day delivery, not the seller
Delivery must be to buyer. Delivery to agent is insufficient
