CHCP CHCP Closing Costs & Fee Structures 1

Question 1

Which federal law requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a loan application?

Accepted Answer

TILA-RESPA Integrated Disclosure (TRID)

Answer

TRID, effective October 2015, requires lenders to deliver a Loan Estimate within three business days of a completed loan application.

Question 2

At closing, an origination charge paid to the lender for making a loan is classified as a:

Accepted Answer

Section A fee

Answer

On the Closing Disclosure, origination charges such as points and lender fees are listed in Section A of the Loan Costs table.

Question 3

Which closing cost is typically based on the sales price of the property and paid to the state or local government?

Accepted Answer

Transfer tax

Answer

Transfer taxes (also called deed stamps or conveyance taxes) are levied by state or local governments as a percentage of the property's sales price.

Question 4

A closing cost that cannot increase from the Loan Estimate to the Closing Disclosure is said to fall under which tolerance category?

Accepted Answer

No tolerance / zero tolerance

Answer

Under TRID, certain fees such as lender origination charges and transfer taxes have zero tolerance, meaning they cannot increase at all between the Loan Estimate and Closing Disclosure.

Question 5

Which party typically pays the owner's title insurance premium in states where there is no established custom?

Accepted Answer

It is negotiable between buyer and seller

Answer

While regional customs vary (e.g., sellers pay in some states, buyers in others), the owner's title insurance premium is generally negotiable between buyer and seller.

(CHCP) Certified Home Closing Professional Practice Test

(CHCP) Certified Home Closing Professional Practice Test

CHCP CHCP Closing Costs & Fee Structures 1