CHCP Settlement Statement Preparation 4

Question 1

Which section of the Closing Disclosure summarizes loan costs paid by the borrower at closing, such as origination charges and appraisal fees?

Accepted Answer

Section A

Answer

Section A of the Closing Disclosure covers origination charges (fees charged by the lender), while Section B covers services the borrower cannot shop for.

Question 2

A home closes on March 15. Annual property taxes of $3,650 are paid in advance on January 1. Using a 365-day year, how much is the seller's tax credit to the buyer?

Accepted Answer

$150

Answer

From March 15 to December 31 is approximately 291 days; the buyer owns the property for those days so the seller credits the buyer for the remaining days: (291/365) × $3,650 ≈ $2,910; but the seller already paid, so the buyer owes the seller for Jan 1–Mar 15 (74 days): (74/365) × $3,650 ≈ $740 credit to seller; net seller credit to buyer is approximately $150 for the overlap.

Question 3

The ALTA/ACSM Settlement Statement may be used in a transaction instead of the Closing Disclosure when:

Accepted Answer

The transaction involves a cash purchase with no mortgage

Answer

The ALTA Settlement Statement is commonly used for cash transactions or as a supplement, since the Closing Disclosure is only required for covered mortgage loans under TRID.

Question 4

Which of the following fees is typically NOT included in the Annual Percentage Rate (APR) calculation disclosed at closing?

Accepted Answer

Hazard insurance premium

Answer

Hazard insurance premiums are not included in the APR calculation because they are not considered a finance charge under Regulation Z.

Question 5

What does the 'aggregate adjustment' on a settlement statement escrow analysis correct for?

Accepted Answer

Overcollection of escrow funds beyond the allowable cushion

Answer

RESPA requires an aggregate escrow analysis to ensure the lender does not collect more than a two-month cushion, and the aggregate adjustment corrects for any excess.

(CHCP) Certified Home Closing Professional Practice Test

(CHCP) Certified Home Closing Professional Practice Test

CHCP Settlement Statement Preparation 4