On August 20, Mr. and Mrs. Cleaver decided to buy a property from Mr. and Mrs. Ward for $110,000. On August 30, Mr. and Mrs. Cleaver obtained a loan commitment from OKAY National Bank for an $85,000 conventional loan at 5 percent for 30 years. The lender Informs Mr. and Mrs. Cleaver that a $2,200 loan origination fee will be required to obtain the loan. The loan closing is to take place September 22. In addition, escrow accounts will be required for all prorated property taxes and hazard insurance; however, no mortgage Insurance is necessary. The buyer will also pay a full year's premium for hazard Insurance to Rock of Gibraltar Insurance Company. A breakdown of expected settlement costs, provided by OKAY National Bank when Mr. and Mrs. Cleaver inspect the uniform settlement statement as required under RESPA on September 21, is as follows: I. Transaction between buyer-borrower and third parties a. Recording fees-mortgage $ 40.00 b. Real estate transfer tax 245.00 le. Recording foon/document proparation 220.00 d. Hazard insurance-one-year poliey Rock of Gibraltar Insurance company 440.00 c. Peggy Prudent-attorney 170.00 r. Inspections 60.00 g. tlo insurance fee (Landeo title Company) 420.00 h. Landeo title Company-Closing fee 135.00 II. Transactions between seller and third parties a. Release atatement-seller's mortgage 5.00 b. Payor-Seller' mortgage (Home State Bank) 32,765.00 e. Real estate brokerage fee (6+ Fast Deal Realty) 6,350.00 ITE. Buyer-borrower and lender Information a. Amount of loan $ 85,000 b. Prepaid interest is owed from closing through september 30, which equala nine days 204.79 inclusive). Regular payments to begin on November 1. 10.05 x 85,000) 365]* 9 e. Property tax escrow.-two months required 136.67 a. Loan origination fee 2,200.00 2,200.00 $ 110,000.00 1,520.00 d. Loan origination fee IV. Buyer and seller information a. Purchase price b. Deposit paid by Cleaver to Ward (paid in escrow to OKAY National Bank) c. Real estate tax proration (taxes for the current year to be paid in arrears by BUYER to county next January 1: $820 per year). Therefore, because the SELLER will own the property from January 1 to September 22, or 264 days. Therefore, the Buyer owes for the 102 days prior to closing and transfer of title. Therefore, a credit for part of the $820-peryear real estate tax (for 264 daya) is due to buyer from seller at closing. Required: a. What are the amounts due from the borrower and due to the seller at closing? b. What would be the disclosed annual percentage rate as required under the Truth-in-Lending Act? c. When will the first regular monthly mortgage payment be due from the borrower? $ 593.10
