COLORADO REAL ESTATE CLOSINGS AND
SETTLEMENT MIDTERM AND FINAL EXAM
QUESTIONS AND 100% CORRECT
You are the buyer's broker attending closing. You discover that your buyer was charged $225
for an appraisal for which the seller had agreed to pay. How should you handle this?
A)
Ignore it because all the paperwork has these numbers on it
B)
Stop the closing and demand all new settlement statements and good funds figures
C)
Suggest that, if your buyer agrees, the seller could give the buyer a personal check for this
amount to settle this unfortunate oversight
D)
Demand that the listing broker pay this amount since the broker should have caught the
error - B- The B is suggest that, if the buyer agrees, the seller could give the buyer a
personal check for this amount to settle this unfortunate oversight. Small corrections in
money are allowed at closing. If the deed or other documents were not correct, they would
have to be corrected before proceeding. In the case of the overlooked appraisal fee, having
the seller give the buyer a check is fine as long as all the parties agree to the solution.
The tax reserve will show as a settlement entry for all of the following loans EXCEPT
A)
Veterans Affairs (VA) loans.
B)
new conventional loans.
C)
seller-carry second loans.
D)
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Wicky
,Federal Housing Administration (FHA) loans. - B- A seller-carry second loan will not
collect for tax reserves, as this is being collected in the first loan. All conventional, FHA, and
VA loans will call for lender reserves to be collected.
The broker's fee is normally shown on the settlement worksheet as
A)
debit seller, credit buyer.
B)
debit seller, credit broker.
C)
debit seller and buyer equally, credit the broker the full amount.
D)
debit seller, single entry because the broker will keep it. - B- The B is debit seller, credit
broker. The broker's fee is usually paid by the seller, thus debit seller, credit broker. This
would be true even in a new loan closing because the broker's fee is not part of the new
loan.
At closing, taxes for special assessments will be
A)
always prorated to the date of closing.
B)
charged to the seller if they are paid off at closing.
C)
charged to the seller if assumed by the buyer.
D)
charged to the seller. - B- The B is charged to the seller if they are paid off at closing.
Special assessment taxes have a special rule: if it is paid at closing, debit seller, unless the
buyer agrees to pay. If buyer assumes the payment, this means the buyer has taken over the
payment agreement. The charge/assessment amount will not show up at closing, so it is not
mentioned.
2
Wicky
, Funds deposited in the broker's escrow account are represented by
A)
a broker credit.
B)
a lender debit.
C)
a broker debit.
D)
a lender credit. - B- The B is a broker debit. Deposit = Debit broker; Checks = Credit
broker.
The seller's subtotal of debits is $132,456.28 and subtotal of credits is $142,333.26. This
means the seller
A)
needs $142,333.26 in cash to close.
B)
needs $132,456.28 in cash to close.
C)
is bringing $9,876.98 to closing.
D)
will receive $9,876.98 at closing. - B- The B is will receive $9,8786.98 at closing.
Because the seller has more credits than debits, the seller receives the difference at closing;
simply subtract.
The broker's fee is normally shown on the settlement worksheet as
3
Wicky
SETTLEMENT MIDTERM AND FINAL EXAM
QUESTIONS AND 100% CORRECT
You are the buyer's broker attending closing. You discover that your buyer was charged $225
for an appraisal for which the seller had agreed to pay. How should you handle this?
A)
Ignore it because all the paperwork has these numbers on it
B)
Stop the closing and demand all new settlement statements and good funds figures
C)
Suggest that, if your buyer agrees, the seller could give the buyer a personal check for this
amount to settle this unfortunate oversight
D)
Demand that the listing broker pay this amount since the broker should have caught the
error - B- The B is suggest that, if the buyer agrees, the seller could give the buyer a
personal check for this amount to settle this unfortunate oversight. Small corrections in
money are allowed at closing. If the deed or other documents were not correct, they would
have to be corrected before proceeding. In the case of the overlooked appraisal fee, having
the seller give the buyer a check is fine as long as all the parties agree to the solution.
The tax reserve will show as a settlement entry for all of the following loans EXCEPT
A)
Veterans Affairs (VA) loans.
B)
new conventional loans.
C)
seller-carry second loans.
D)
1
Wicky
,Federal Housing Administration (FHA) loans. - B- A seller-carry second loan will not
collect for tax reserves, as this is being collected in the first loan. All conventional, FHA, and
VA loans will call for lender reserves to be collected.
The broker's fee is normally shown on the settlement worksheet as
A)
debit seller, credit buyer.
B)
debit seller, credit broker.
C)
debit seller and buyer equally, credit the broker the full amount.
D)
debit seller, single entry because the broker will keep it. - B- The B is debit seller, credit
broker. The broker's fee is usually paid by the seller, thus debit seller, credit broker. This
would be true even in a new loan closing because the broker's fee is not part of the new
loan.
At closing, taxes for special assessments will be
A)
always prorated to the date of closing.
B)
charged to the seller if they are paid off at closing.
C)
charged to the seller if assumed by the buyer.
D)
charged to the seller. - B- The B is charged to the seller if they are paid off at closing.
Special assessment taxes have a special rule: if it is paid at closing, debit seller, unless the
buyer agrees to pay. If buyer assumes the payment, this means the buyer has taken over the
payment agreement. The charge/assessment amount will not show up at closing, so it is not
mentioned.
2
Wicky
, Funds deposited in the broker's escrow account are represented by
A)
a broker credit.
B)
a lender debit.
C)
a broker debit.
D)
a lender credit. - B- The B is a broker debit. Deposit = Debit broker; Checks = Credit
broker.
The seller's subtotal of debits is $132,456.28 and subtotal of credits is $142,333.26. This
means the seller
A)
needs $142,333.26 in cash to close.
B)
needs $132,456.28 in cash to close.
C)
is bringing $9,876.98 to closing.
D)
will receive $9,876.98 at closing. - B- The B is will receive $9,8786.98 at closing.
Because the seller has more credits than debits, the seller receives the difference at closing;
simply subtract.
The broker's fee is normally shown on the settlement worksheet as
3
Wicky
