CMA Closing and Settlement Procedures 2

Question 1

What is an escrow impound account used for at closing?

Accepted Answer

Collecting funds for property taxes and insurance payments

Answer

An escrow impound account collects monthly portions of property taxes and homeowner's insurance so the lender can pay these bills on the borrower's behalf.

Question 2

Which party typically orders the property appraisal in a mortgage transaction?

Accepted Answer

The lender, through an Appraisal Management Company (AMC)

Answer

Under HVCC and Dodd-Frank guidelines, lenders order appraisals through independent AMCs to prevent undue influence on valuation.

Question 3

What is a 'dry closing' in mortgage terminology?

Accepted Answer

A closing where funds are not disbursed on the same day documents are signed

Answer

A dry closing occurs when loan documents are signed but funds are not disbursed until a later date, common in some states like California.

Question 4

What is the purpose of a settlement statement's 'cash to close' figure?

Accepted Answer

The net amount the borrower must bring to closing after credits and down payment

Answer

Cash to close represents the total funds the borrower needs to bring to the closing table, including down payment minus any seller credits.

Question 5

Which document conveys ownership of a property from seller to buyer at closing?

Accepted Answer

Warranty deed

Answer

A warranty deed transfers ownership from the seller to the buyer and includes the seller's guarantee of clear title.

(CMA) Certified Mortgage Advisor Practice Test

(CMA) Certified Mortgage Advisor Practice Test

CMA Closing and Settlement Procedures 2