CMA Closing Process and Settlement

Question 1

What federal law requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a loan application?

Accepted Answer

TILA-RESPA Integrated Disclosure (TRID)

Answer

RESPA

Answer

ECOA

Answer

HMDA

Question 2

What document replaces the HUD-1 Settlement Statement for most residential mortgage transactions closed after October 2015?

Accepted Answer

Closing Disclosure

Answer

Loan Estimate

Answer

Truth-in-Lending Statement

Answer

Good Faith Estimate

Question 3

How many business days before closing must a lender provide the Closing Disclosure to the borrower?

Accepted Answer

Three business days

Answer

One business day

Answer

Two business days

Answer

Five business days

Question 4

What are 'prepaid items' in a mortgage closing?

Accepted Answer

Upfront payments for items like homeowner's insurance, property taxes, and prepaid interest

Answer

Fees paid to the lender for originating the loan

Answer

Third-party settlement charges

Answer

Discount points paid to lower the interest rate

Question 5

What is an escrow account in the context of mortgage servicing?

Accepted Answer

A lender-managed account that collects monthly payments for property taxes and insurance

Answer

An account holding earnest money during contract negotiation

Answer

A reserve fund held by the title company

Answer

A savings account funded by the seller at closing

Question 6

What does 'title insurance' protect against in a mortgage transaction?

Accepted Answer

Loss from defects in the title or ownership disputes discovered after purchase

Answer

Property damage from natural disasters

Answer

Default by the borrower on the mortgage

Answer

Decline in property market value