CHCP Settlement Statement Preparation 5

Question 1

A buyer receives a $5,000 lender credit on the Closing Disclosure. How does this appear on the settlement statement?

Accepted Answer

Credit to buyer, reducing cash to close

Answer

A lender credit appears as a credit on the buyer's side, directly reducing the total cash the buyer needs to bring to closing.

Question 2

Under RESPA, which settlement cost can never be increased between the Loan Estimate and the Closing Disclosure?

Accepted Answer

Lender fees (zero tolerance category)

Answer

Lender fees and transfer taxes fall into the zero-tolerance category under RESPA/TRID and cannot increase from the Loan Estimate to the Closing Disclosure.

Question 3

Which line on the seller's settlement statement shows money the seller receives after all debits and credits are calculated?

Accepted Answer

Net proceeds to seller

Answer

Net proceeds to seller is the final line showing the amount the seller actually receives after the purchase price is reduced by all debits such as commissions, payoffs, and fees.

Question 4

HOA fees that are paid monthly by the seller and are current through closing would appear on the settlement statement as:

Accepted Answer

A seller credit and buyer debit for the unused portion of the paid period

Answer

If the seller has prepaid HOA fees covering a period beyond closing, the unused portion is credited to the seller and debited to the buyer.

Question 5

What is the primary purpose of the 'Summaries of Transactions' section on Page 3 of the Closing Disclosure?

Accepted Answer

To reconcile the buyer's and seller's debits and credits to show final cash amounts

Answer

The Summaries of Transactions on Page 3 presents a side-by-side comparison of buyer and seller debits and credits, arriving at cash to close and seller proceeds.

(CHCP) Certified Home Closing Professional Practice Test

(CHCP) Certified Home Closing Professional Practice Test

CHCP Settlement Statement Preparation 5