CRU CRU Insurance & Title Requirements 2

Question 1

What is the purpose of an ALTA/NSPS Land Title Survey in residential lending?

Accepted Answer

To identify the boundaries, improvements, encroachments, and easements of the property

Answer

An ALTA/NSPS survey provides a detailed map of the property showing legal boundaries, structures, encroachments, and easements relevant to title insurance.

Question 2

Private Mortgage Insurance (PMI) is typically required on conventional loans when the LTV exceeds what threshold?

Accepted Answer

80%

Answer

Conventional lenders require PMI when the down payment is less than 20%, meaning the LTV exceeds 80%, to protect against borrower default.

Question 3

Under the Homeowners Protection Act (HPA), when must a lender automatically cancel borrower-paid PMI on a residential mortgage?

Accepted Answer

When the loan balance reaches 78% of the original purchase price or appraised value (whichever is lower), based on scheduled payments

Answer

The HPA requires automatic PMI cancellation when the principal balance reaches 78% of the original value based on the amortization schedule, provided the borrower is current.

Question 4

What is an easement appurtenant in the context of a property's title?

Accepted Answer

A right benefiting an adjacent parcel that runs with the land and transfers automatically with ownership

Answer

An easement appurtenant benefits a dominant estate (neighboring parcel) and automatically transfers when either parcel is sold, binding future owners.

Question 5

Which title condition would typically cause a residential underwriter to decline or condition a loan approval?

Accepted Answer

An unresolved mechanic's lien from a contractor who worked on the property

Answer

An unresolved mechanic's lien is a financial encumbrance that clouds the title and could give the lienholder priority over the new lender's mortgage.

(CRU) Certified Residential Underwriter Practice Test

(CRU) Certified Residential Underwriter Practice Test

CRU CRU Insurance & Title Requirements 2