CMP - Certified Mortgage Processor Loan Closing and Funding Questions and Answers

Question 1

A mortgage loan is closing in a state that follows "dry funding" practices. What does this mean for the disbursement of loan proceeds?

Accepted Answer

Funds are not disbursed until after all closing documents have been fully reviewed and approved by the lender post-signing.

Answer

The loan funds are disbursed on the same day the closing documents are signed.

Answer

The borrower must bring all certified funds to the closing table before any documents can be signed.

Answer

The title company is solely responsible for funding the loan from its own accounts and seeking reimbursement later.

Question 2

A borrower is closing on a home purchase on November 15th. The seller has already paid the full annual property tax bill of $4,800 for the entire calendar year. How will this typically be reflected on the Closing Disclosure?

Accepted Answer

The buyer will reimburse the seller for the unused portion of the taxes, resulting in a debit for the buyer and a credit for the seller.

Answer

A debit to the seller and a credit to the buyer for the full $4,800.

Answer

No adjustment is necessary because the taxes have already been paid for the year.

Answer

A credit to the buyer for the remaining days of the year, paid by the lender.

Question 3

The three-business-day right of rescission, which allows a borrower to cancel the transaction after closing without penalty, applies to which of the following loan scenarios?

Accepted Answer

A refinance transaction on a primary, owner-occupied residence.

Answer

A purchase loan for a primary residence.

Answer

A purchase loan for an investment property.

Answer

A refinance transaction on a second home.

Question 4

While performing a final review of the Closing Disclosure (CD) just before the closing appointment, a processor notices the county recording fee is $50 higher than what was quoted on the Loan Estimate and is outside of tolerance. What is the most appropriate immediate action?

Accepted Answer

Contact the settlement agent immediately to correct the fee on the CD before the borrower signs.

Answer

Approve the loan for funding and request a refund for the borrower after closing.

Answer

Cancel the closing and issue a revised Loan Estimate to the borrower.

Answer

Proceed with the closing as scheduled, as the amount is minimal.

Question 5

Which of the following is a primary responsibility of the settlement agent during the loan closing process?

Accepted Answer

Ensuring closing documents are executed correctly, and managing the disbursement of funds to all parties.

Answer

Verifying the borrower's income and employment status on behalf of the lender.

Answer

Issuing the final loan approval and Clear to Close.

Answer

Negotiating repairs between the buyer and seller based on the appraisal report.

Question 6

An underwriter has cleared a file to close, but has included a "prior-to-funding" (PTF) condition. Which of the following is the BEST example of a PTF condition?

Accepted Answer

A verbal verification of employment (VVOE) completed on the day of disbursement.

Answer

A copy of the fully executed purchase contract.

Answer

The completed appraisal report for the subject property.

Answer

The borrower's initial loan application (Form 1003).