The Transaction Process from Contract Through Closing

More complex transactions coupled with a society more into lawsuits sets the stage for real problems for real estate professionals. Email can save you due to the ability to document what's happened and when.

Our ever more mobile lifestyles are bringing email into play more often in real estate negotiations. Especially with parties in divergent locations, email can pull it all together in a good way.

With more real estate professionals using smart phones and netbooks to conduct real estate business, can email really convey the tone of a comment, or emotion?

RESPA, or the Real Estate Settlement Procedures Act, regulates certain marketing and business relationships of real estate settlement service providers. Learn what can get you into trouble.

RESPA, or the Real Estate Settlement Procedures Act, regulates certain marketing and business relationships of real estate brokers, title companies, home warranty companies and more. Learn who is and who isn’t regulated.

Too many real estate agents and brokers are in the dark when it comes to the very stringent regulations in RESPA, the Real Estate Settlement Procedures Act. Not only does RESPA and HUD regulate AfBA's, or Affiliated Business Arrangements, but also many other aspects of the settlement of real estate transactions and settlement provider marketing practices. Get a thorough understanding of RESPA,…

An AfBA is an Affiliated Business Arrangement. What is that in relation to RESPA, the Real Estate Settlement Procedures Act? Do you have one? Is it illegal?

If you are involved in an AfBA, or Affiliated Business Arrangement, both RESPA Section 8 and HUD will use certain criteria to determine if it is legal and OK for you to refer business in a settlement transaction.

Is an AfBA, Affiliated Business Arrangement, really legal? HUD is more strict than RESPA in their 10 point sham AfBA business test.

RESPA regulates any federally related mortgage loan with a lien on residential property. There's more to learn here about the coverage of the Real Estate Settlement Procedures Act.

RESPA, the Real Estate Settlement Procedures Act, covers the vast majority of residential loans. Learn the loan types not covered by RESPA and why.

RESPA, the Real Estate Settlement Procedures Act, was first enacted by Congress in 1974. Learn more about RESPA and Regulation X.

AfBA is the acronym for Affiliated Business Arrangement as related to real estate settlement procedures. RESPA, the Real Estate Settlement Procedures Act, regulates AfBA's, and disclosure in the settlement process.

RESPA, the Real Estate Settlement Procedures Act, was enacted by Congress in 1974 in order to regulate disclosure of costs in real estate transactions.

Buyers frequently deposit earnest money in a real estate transaction. Learn how real estate earnest money is accounted for, handled, and refunded in the real estate purchase transaction.

In most real estate deals involving a lender, the lender has their own source for getting a flood certification on a property before making the loan. A third party provider produces a report certifying the flood zone status of the property based on the most current FEMA flood maps. If your client is doing a cash deal, you might want to get them to do their own flood cert, or you can get it for them inexpensively.

One of the first things every new real estate agent should learn is the HUD-1 Settlement Statement inside and out. After all, you'll be going over it with clients and frequently be asked to explain items or how they're calculated. Here's a completed example HUD-1 on a .pdf with live links to instructional quick tips for the items.

In this section of the HUD-1 Settlement Statement, the totals are brought down from line 120 and line 220. Subtracting one from the other, we arrive at the Cash Due from Borrower at closing.

The 200 series items in the HUD-1 Settlement Statement is titled Amounts Paid By or In Behalf of the Borrower. This section will normally always have at least two items. These are the earnest money deposit placed by the buyer at contract acceptance and the amount of the loan proceeds.

On the HUD-1 Settlement Statement, the first section of items after the addresses and transaction information is the 100 series titled Gross Amount Due From Borrower. In this section is the purchase price, a summary of the settlement charges from the second page on line 1400, and any debits/charges to the buyer for items that have been paid by the seller in advance and need to be prorated for closing.

Section 1300 of the HUD-1 Settlement Statement is a catch-all for charges that don't fit in the other sections. Many times the survey charge will be placed here.

The 1200 series in the HUD-1 Settlement Statement passes along charges to the buyer or seller for fees charged by the government for recording of items like deeds and mortgages. Things like tax stamps for city, county or state also show up here. The title of this section is thus Government Recording and Transfer Charges.

The 1100 series of the HUD-1 Settlement Statement is entitled Title Charges. It consists of charges to buyers and sellers for items and services related to the title and title insurance. Whether the charge ends up on the buyer or seller side is dictated by the purchase agreement or contract in most cases.

Generally, the other two items one finds in the 900's on the HUD-1 Settlement Statement are prepayment of Mortgage Insurance Premium for a certain number of months and the hazard insurance premium in years, usually a one year premium payment.

The HUD-1 Settlement Statement 900 section contains items required by the lender to be paid in advance. The first of these is mortgage loan interest. It is normally charged by the day for the period from the closing date to the first day of the following month.

There are a variety of loan fees that might show up in the 800 item section of the HUD-1 settlement statement. These could include fees for credit report, lender inspection, funding and review, tax services, document preparation, flood certificate, processing fee, wire transfer, loan interest rate lock or extension, etc.

The HUD-1 Settlement Statement contains a line in the 800 item series for the appraisal fee. This is a fee charged by the appraiser for the value appraisal of the property. The appraiser is normally chosen from an approved list by the lender. This fee could be paid up front and shown as "paid outside closing (poc)" on the settlement statement.

Sections in the HUD-1 real estate settlement statement are numbered and each "100" series are all items related in some way. The 700 series deals with the commissions to brokers. In this area, the contract price upon which the commissions are calculated is shown, as well as the commission percentages and calculated dollar amounts.

In the 800 series of items on the HUD-1 Settlement Statement, there is an item for "Loan Discount." This is a fee, usually expressed as a percentage or points on the loan that is paid by the Buyer to "buy down" the interest rate. In other words, the buyer might pay 1 point or 1% of the loan amount to buy down the interest rate an eighth of a percent for lower payments over the life of the loan.

Pretty straight forward, the HUD-1 settlement statement, in the 800 series items, will show an item for the loan origination fee. This is a fee, usually based on a percentage of the total loan amount, paid by the borrower up front for the ability to obtain the loan. A common percentate is 1 point, or 1% of the loan amount, however it varies with several factors.

This HUD-1 Settlement Statement tutorial is part of a series explaining every item on the statement, as well as calculations and methods. Here we discuss sections C through I, which identify buyers, sellers, title company, lender, property location and settlement date.

This instruction is part of a comprehensive series of instructions for understanding the HUD-1 Real Estate Settlement Statement. Here we discuss Section B, which is the basic loan type, file and loan number information.

There are variables in how proration is accomplished in a real estate transaction. The numbers can vary considerably, so you should know how it's done.

In the HUD-1 Settlement Statement 1000 item series, the lender requires sums to be deposited and held for future payment of taxes, insurance, etc. These are variously called reserves, escrows, or impounds.

When setting up the "escrows", "impounds" or "reserve" items on the HUD-1 Settlement Statement in the 1000 series, the last line, usually line 1011, is an adjustment made based on calculating with two different accounting methods. This is something few of us will ever need to know, but the text of 3500.17(d) is presented here for reference.

Section 600 of the HUD-1 Settlement Statement contains the final number for how much the seller will either receive or have to pay to settle up and close the deal. It uses the totals from lines 420 and 520 to arrive at this number.

The 500 series items are on the Seller side of the HUD-1 Settlement Statement. These are items that will reduce the amount received by the seller at closing. This includes a line item for the total settlement charges from the second page, as well as any prorated items for amounts due after closing but owed by the seller.

The 400 series items on the HUD-1 settlement statement apply to the seller. The contract sales price will be there, as well as any credits to the seller for items they've already paid that apply to the time period after closing.

It's not fun to get an offer on a property you have listed, and during the process to closing find out that there's a lien on the home that could kill the deal. A standard pre-listing question should turn up mechanics' or tax liens to be dealt with in advance and in pricing the home.

FIRPTA, the Foreign Investment In Real Property Tax Act, may not be on your radar as a possible trap for real estate brokers, buyers and investors ... but it should be. It's "buyer beware," or pay the seller's taxes.