Chapter 2-MCQ-v2

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Questions and Answers

What should be done if a requirement may affect the marketability of the title?

Ignore it and proceed to closing.

Notify the borrower of the requirement.

Wait until after closing to address the requirement.

Contact underwriting to resolve the requirement. (correct)

What is indicated as a best practice about three days prior to closing?

Confirm that all requirements have been met or are on track to be met. (correct)

Complete all paperwork required for the transaction.

Notify all parties about potential delays.

Obtain additional insurance for the property.

What must a payoff statement include to be valid?

The street address and loan number. (correct)

An estimate of future interest rates.

A signature from a notary public.

The borrower's social security number.

Why is it important to update the payoff statement prior to closing?

To account for changes in payment amounts or fees. Signup and view all the answers

What specific claim-related issue is mentioned regarding home equity lines of credit (HELOCs)?

They contribute to significant claims. Signup and view all the answers

What is the purpose of Schedule B1 in the title commitment?

To identify general and specific title matters that need to be cleared before closing Signup and view all the answers

What happens if a requirement in the title commitment cannot be met but the parties agree to proceed with the closing?

The requirement is moved to Schedule B as an exception Signup and view all the answers

Which of the following is a responsibility of a title agent according to the agency agreement?

Following underwriting guidelines Signup and view all the answers

What is recommended if a requirement is moved to an exception in the title policy?

Obtain written consent from the parties regarding the exception Signup and view all the answers

What is one reason it is crucial to inform the lender of your intent to pay off a HELOC?

To avoid unauthorized access to the account after payoff Signup and view all the answers

Which document may be necessary for the borrower to sign when closing a HELOC?

A form to lock access to the account Signup and view all the answers

What is the best practice regarding the receipt of a signed satisfaction when dealing with private lenders?

Require receipt prior to closing and hold it in escrow Signup and view all the answers

Why is it important to verify that satisfaction has been recorded post-closing?

To avoid potential legal issues related to the mortgage Signup and view all the answers

What should be checked regarding the original note before closing?

If it has been sold to a different lender Signup and view all the answers

Study Notes

Title Commitment and Policy Issuance

Transaction begins with real estate contract, assigning closing agent responsibilities
Closing agent also acts as escrow agent, with duties outlined in contract
Contracts exist with lender (loan closing instructions) and underwriter (agency agreement)
Underwriting guidelines, contacting counsel for approval, and delivering title policy after closing are duties
Check contracts for duties and obligations; document any unmet obligations in writing
Commitment Schedule B1 requirements are the roadmap for title policy issuance
General requirements include purchase price, premium, assessments, taxes
Specific requirements include deed preparation, mortgage, prior mortgage releases, and liens
Exceptions to requirements can be documented and noted as such on the policy
Requirements that affect marketability or title are subject to resolution
Title commitment status should be marked for each requirement during transaction
Confirm all requirements are met or will be met at closing (three days prior)
Payoff statements should be written, addressed, and include definite figures, definite dates, and street addresses
Payoff statements should include loan number

Payoff Statements and HELOCS

Payoff statements should be current and updated prior to closing
Verify payment details, including possible reversals, late fees, penalties, or property taxes
Confirm correct instructions and amounts, including those for home equity lines of credit (HELOCs)
HELOCs should be closed properly to prevent further borrowing
Inform lender of intention to pay off HELOC; obtain forms requiring account closure, mortgage satisfaction
Verify account closure and record satisfaction upon closing
Private lender situations might involve additional steps (like obtaining a signed satisfaction)
Original note should be marked "canceled" to ensure accurate mortgage record
Recalculate payoff figures meticulously to avoid errors
Avoid using payoff statements older than x days (x can be between 5-30)

Schedule B-2 Exceptions

Exceptions to insurability remain in the policy
Exceptions affecting property remain (deletion possible with conditions); standard exceptions may be removed
Lender requests deletion of all B2 exceptions are generally not possible
Gap coverage if closing funds are dispersed within specific timeframes
Survey coverage depends on the survey completion timeline
Seller/borrower affidavits show no improvements/parties in possession within last 90 days
Closing affidavits are important for verifying details (new construction, for example)

Fraudulent Transactions and Wire Transfers

Fraud cases involving wired funds occur, with closing agents bearing liability
Closing agents have a duty to protect escrow funds
Security measures and verifying information are crucial to prevent fraud (guidelines and resources available)

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Description

Test your knowledge on title commitment and policy issuance processes in real estate transactions. This quiz covers key roles, requirements, and documentation involved in handling title policies and ensuring obligations are met. Perfect for real estate professionals and students alike.