Financing and Settlement Practices Flashcards

Under RESPA, which of the following is NOT considered a settlement service?

Answer: Home inspection negotiation by buyer

Negotiation by the buyer is not a settlement service under RESPA; services like title search, appraisal, and credit reporting are.

A borrower applies for a mortgage in Arkansas. Under TRID, within how many business days must the lender deliver the Loan Estimate?

Answer: 3 business days

TRID requires lenders to deliver the Loan Estimate within 3 business days of receiving a completed loan application.

Which type of mortgage loan features a fixed interest rate but payments that increase at specified intervals?

Answer: Graduated payment mortgage

A graduated payment mortgage (GPM) has a fixed rate but scheduled payment increases over time, often used by borrowers expecting rising incomes.

In Arkansas, the document that transfers legal title to real property at closing is called a:

Answer: Warranty deed

A warranty deed conveys legal title and includes the grantor's guarantee against title defects.

A lender charges a borrower 2 discount points on a $200,000 loan. How much does the borrower pay in discount points?

Answer: $4,000

Each discount point equals 1% of the loan amount, so 2 points on $200,000 = $4,000.

Which federal law prohibits lenders from discriminating in mortgage lending based on the racial composition of a neighborhood?

Answer: HMDA/Fair Housing Act (redlining prohibition)

Redlining—denying loans based on neighborhood racial composition—is prohibited under the Fair Housing Act and reinforced by HMDA reporting requirements.

Under Arkansas law, a deed of trust involves how many parties?

Answer: Three

A deed of trust involves three parties: the trustor (borrower), the trustee (neutral third party), and the beneficiary (lender).