CHCP Real Estate Transactions & Documentation 5

Question 1

What is 'title seasoning,' and why do lenders and title underwriters care about it?

Accepted Answer

The length of time a seller has held title, used to detect property flipping fraud

Answer

Title seasoning refers to how long the current owner has held title; short seasoning periods can signal property flipping fraud that inflates prices.

Question 2

Under RESPA, which of the following is prohibited when providing settlement services?

Accepted Answer

Paying or receiving a kickback or unearned fee for referring business

Answer

RESPA Section 8 prohibits kickbacks and unearned fee splits among settlement service providers as they harm consumers by inflating costs.

Question 3

A 'right-of-way' easement discovered during title search gives a neighboring party the right to:

Accepted Answer

Cross or use a portion of the property for access or utilities

Answer

A right-of-way easement grants someone the legal right to travel across or use a defined portion of another's property.

Question 4

Which closing document specifically describes the amortization schedule and all financial terms agreed to in the mortgage loan?

Accepted Answer

Closing Disclosure

Answer

The Closing Disclosure (CD) includes the full loan terms, projected payments, and the complete amortization breakdown at consummation.

Question 5

What is the purpose of a 'gap endorsement' in title insurance?

Accepted Answer

To cover losses arising between the effective date of the title commitment and the date the deed is recorded

Answer

A gap endorsement protects against title issues (e.g., liens filed by creditors) that arise after the title search but before the deed is officially recorded.

(CHCP) Certified Home Closing Professional Practice Test

(CHCP) Certified Home Closing Professional Practice Test

CHCP Real Estate Transactions & Documentation 5