CTC Financial Transactions and Escrow Flashcards

What is a 'contingency' in a real estate purchase agreement?

Answer: A condition that must be satisfied for the transaction to proceed to closing

A contingency is a condition written into the purchase contract that must be met for the sale to proceed; if the condition is not satisfied, either party may have the right to cancel.

What is the purpose of a 'financing contingency' in a purchase agreement?

Answer: It allows the buyer to cancel the contract without penalty if they cannot secure mortgage financing

A financing contingency protects the buyer by allowing them to exit the contract without forfeiting their earnest money if they are unable to obtain satisfactory mortgage financing.

What does an 'as-is' addendum mean in a real estate purchase contract?

Answer: The buyer agrees to purchase the property in its current condition without requiring the seller to make repairs

An 'as-is' addendum means the buyer accepts the property in its existing condition, though they typically retain the right to inspect and cancel based on their findings.

What is the purpose of a 'buyer's net sheet' in a transaction?

Answer: To estimate the total cash the buyer will need to bring to closing

A buyer's net sheet (also called a buyer's closing cost estimate) breaks down all anticipated closing costs so the buyer understands exactly how much cash to bring to closing.

What is real estate wire fraud and how can a transaction coordinator help prevent it?

Answer: A scam where criminals intercept wire instructions to redirect funds; TCs help by verifying wiring details via a confirmed phone call

Wire fraud involves criminals hacking emails to intercept and alter closing wire instructions; TCs can help prevent it by always confirming wire details via a previously verified phone number — never via email.

What was the 'Good Faith Estimate' (GFE) and what replaced it in 2015?

Answer: A RESPA-required estimate of closing costs, replaced by the Loan Estimate under the TRID rule in 2015

The Good Faith Estimate was replaced by the standardized Loan Estimate form in 2015 under the TRID (TILA-RESPA Integrated Disclosure) rule to simplify and unify mortgage disclosures.