Closing and Settlement Procedures Flashcards
6 cards from real CMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Closing and Settlement Procedures flashcards as text
What is title seasoning, and why does it matter for mortgage transactions?
Answer: The length of time a seller has owned a property; some lenders require 90–180 days before resale
Title seasoning refers to how long a seller has owned a property; many lenders require minimum ownership periods to prevent mortgage fraud through quick resales.
Which fee on the Closing Disclosure represents the lender's charge for processing the loan, expressed as a percentage of the loan amount?
Answer: Origination point
An origination point is a fee charged by the lender for loan processing, equal to 1% of the loan amount.
What is a subordination agreement in the context of mortgage closings?
Answer: An agreement where a junior lienholder agrees to remain in a lower lien position relative to a new first mortgage
A subordination agreement allows an existing junior lien (like a HELOC) to remain subordinate to a new first mortgage during a refinance.
What is a 'funding fee' specific to VA loans, and when is it collected?
Answer: A one-time fee paid at closing, which can be financed into the loan amount
The VA funding fee is a one-time charge paid at closing that helps offset the cost of the VA loan program to taxpayers and can be rolled into the loan.
What document does a borrower sign at closing that establishes the mortgage lender's security interest in the property?
Answer: Deed of trust or mortgage
The deed of trust (or mortgage in some states) pledges the property as collateral and gives the lender a security interest that is recorded in public records.
Under TRID, which change to loan terms requires a revised Loan Estimate and resets the three-business-day waiting period before closing?
Answer: An increase in the APR by more than 1/8 of a percent for fixed-rate loans
Under TRID, a significant APR increase (more than 0.125% for fixed-rate loans), product change, or prepayment penalty addition triggers a revised Closing Disclosure and a new three-day waiting period.