Settlement

Settlement: What Happens at the Closing Table Settlement (also called closing) is the final step in a real estate transaction — and the exam tests it heavily because it sits at the intersection of federal law (RESPA, TILA), mortgage math, and the mechanics of transferring title. Expect 3–5 questions touching these concepts directly. --- ## What Is Settlement? Settlement (or closing) is the meeting — physical or virtual — at which ownership of real property transfers from seller to buyer, funds are disbursed, and all required documents are signed. At closing, the deed is delivered and accepted, which is the legal moment title passes. > 🔑 Critical point: Title passes at delivery and acceptance of the deed — not when it is signed, not when it is recorded. --- ## Federal Laws Governing Settlement Two federal laws dominate the settlement section of the exam. ### RESPA — Real Estate Settlement Procedures Act RESPA protects buyers by requiring transparency in settlement costs and prohibiting certain abusive practices. | Requirement | Key Detail | |---|---| | Loan Estimate (LE) | Lender must provide within 3 business days of loan application | | Closing Disclosure (CD) | Lender must provide 3 business days before closing | | Section 8 — No Kickbacks | Prohibits unearned fees, fee-splitting, or kickbacks between settlement service providers | | Affiliated Business Disclosure | If referring to an affiliated provider (e.g., an in-house title company), written disclosure is required; use of the affiliate cannot be required | Section 8 is particularly exam-friendly. A lender cannot pay a real estate agent for referrals. A title company cannot split fees with a broker for sending business. These are per…