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43 Cards in this Set

  • Front
  • Back

Escrow Agent

Refers to the company

Escrow Officer

Refers to the title clerk

Escrowors are the...

sellers and buyers

Escrowee is the...

Escrow Company

Prorates

Divides Proportionally

Double Escrow

Seller uses a buyers money (usually a deposit) to acquire property in one escrow, and then del it to the buyer in another escrow, normally for profit

Back to Back escrow

A person uses one escrow for the simultaneous sell of one property and the purchase of another.

Termination of escrow can be brought about by:

-Close of Escrow


-Breach of contract


-Mutual Canncellation, or


-Forced cancellation

Interpleader is a...

Neutral third-party hired by an escrow agency to settle disputes. Also, a legal proceeding in which a third-party deposits distributed money or property with the court

Douctrine of relation back

ensures delivery of the deed to the grantee even if the grantor dies, assuming terms of the escrow are met. It eliminates specific performance lawsuit against the grantors heirs. The term "relation back" refers, or relates back,"to the late grantors wishes".

Escrow as dual agent is a...

Situation where the escrow agent and his escrow officers must remain neutral. The escrow agent may not favor the seller or the buyer, but must treat both the same. Any changes have to be approved by both parties

Debit

Something that is owed

Credit

Something that is receivable

Purchase price

This is a principal expense of the buyer and is carried as a credit for the seller and debit for the buyer

Pay off existing loan

If a loan is not assumed, it mist be paid off to the clear the title. The balance of the existing encumbrance, with any payout penalties, is debited to the seller.

Seller's loan assumed by buyer

If one or more of the sellers loans are being assumed by the buyer, the amounts are credited to the buyer and debited to the seller. In effect, the buyer agrees to assume the sellers debt in return for a credit against the price.

Second mortgage taken back by seller

Refers to as a seller carryback. This is handled in the same manner as an assumption, with a credit to the buyer and a debit for seller. The settlement statement entry is handled in this manner b/c it reduces net proceeds receivable by the seller at statement, and likewise, reduces the amount of money the buyer must come up with

Back Taxes

A lien on the property. They are due and must be paid prior to the title transfer. They are debited to the seller.

Brokers commission

Debited to seller except in cases where broker is retained by and also paid by the buyer.

Release fees on old loan

Fees for paying off the old financing instrument, and clearing this encumbrance from the title. This charge is sometimes called a reconveyance fee. Since the old loan is the responsibility of the seller, discharge is debited to the seller.

Title insurance premiums is a...

Fee paid to a title company for its insured opinion as to the condition of the title the seller is conveying. The sellers usually charge for it, therefore it is a debit to the seller.

Escrow fees are...

Charged by the title/escrow company for the services they provided in conjunction with closing the transaction. Seller and the buyer typically split the escrow fee; debit seller for the sellers portion. Note: if VA loan, seller must pay

Account servicing and set up fee

This charge applies when an escrow company receives payment from a borrower and forwards them to the respective lenders. This is typically done when there is an assumption and/or seller carry back. B/c both seller and buyer benefit, both would be debited.

Affidavit of value

Document states the actual price paid for the proper and indicates where future tax bills are to be sent. The associated fee may be decided to the seller.

Earnest money deposit is a...

portion of the purchase price. The entire amount has already been debited to the buyer for purchase; the earnest money deposited is credited to the buyer.

New loan obtained by buyer

If the property purchased is financed, the proceeds of the new loan are entered as a credit to the buyer's account. Although the repayment of the loan is a long term obligation of the buyer to the lender, its proceeds enable the seller to receive the funds immediately upon close of escrow. The buyer receives a corresponding credit for a large part of the purchase price, reducing the amount of cash they must bring in.

Seller's loan assumed by buyer

If the buyer assumes the seller's loan, this would be reflected as a credit to the buyer, debit to the seller. For a detailed explanation, please see the seller's debits section presented earlier in this chapter.

Second mortgage taken back by seller

If the seller "carries back" paper from the buyer then the buyer would be credited and the seller would be debited.

Purchase price

A principal expense of the buyer

Loan discount points on buyer's new loan

A point is a percent of the amount loaned. These are negotiable between buyer and seller on FHA, VA, and conventional offers, and are often dictated by the market. The prevailing practice in the current market is that the points are paid by the buyer.

Interest Adjustment

If the buyer's note payment is to be due on the first of the month, the lender may find it necessary to do an interest adjustment. An interest adjustment is calculated much like a proration, but would involve only the buyer. Interest would be collected starting the close of escrow date and cover the period until the first of the next month. Because the buyer's loan does not affect the seller, there is no corresponding credit to the seller

Lender's (ALTA) policy

most lenders will require, as one of their conditions of making the loan, that they be supplied with an insurance policy protecting themselves against loss if the title is defective. If the buyer is obtaining a new loan, it is charged, or debited to, the buyer.

Appraisal fee

This fee could be charged to either buyer or seller. The seller may order an appraisal in advance to enhance the marketing effort of the agent, in which case it is debited to the seller.

Survey Cost

A Survey is the process by which boundaries are measured and land areas determined. The cost is typically debited to the buyer when required by lender or initiated by the buyer, but could be negotiated differently.

Document preparation fees

These are fees that lenders charge to cover the cost of preparing a note and deed of trust or a mortgage to secure the loans obtained by the buyer. This expense is incurred by the borrower as a condition of obtaining the loan.

Account servicing/Set-up fee

b/c buyer benefits, they would be debited a portion of this fee.

Recording costs for financing Instruments

Although one purpose of recordation is to protect the interest of the lender, the fees for doing so are considered part of the costs of obtaining the loan, and are debited to the buyer.

Fire/Hazard Insurance Policy

If the buyer pays for insurance through escrow, the buyer would be debited on the settlement statement. If the seller has prepaid insurance, they will usually obtain a refund after closing (outside of escrow)

Loan Impound Account

If a loan is assumed, the buyer could acquire the money in the seller's impound account by "purchasing" the account. The amount in the account would be debited to the buyer, and the seller would be credited for the same amount. If the buyer is obtaining a new loan, the lender will likely collect money to establish the buyer's new impound account;the buyer would be debited

Loan origination fee for new loan is debited to...

the buyer

Credit Report

a fee (and debit) levied against the buyer by the lending institution for investigating the buyer's credit worthiness.

Termite report

Debit buyer, unless negotiated differently

Which items are commonly prorated between buyer and seller?

-Current Taxes


-Prepaid Taxes


-Interest on mortgage being assumed


-Rents


-Sale of Chattels