CRU Documentation & Legal Requirements 4

Question 1

Under FIRREA, which threshold allows federally regulated lenders to use a Property Condition Report instead of a full USPAP-compliant appraisal for certain transactions?

Accepted Answer

Loans up to $500,000

Answer

FIRREA exemptions allow federally regulated institutions to use evaluations instead of full appraisals for transactions at or below $500,000 (non-complex residential).

Question 2

A property is located in a Special Flood Hazard Area (SFHA). Under the Flood Disaster Protection Act, what is required before the loan can close?

Accepted Answer

Flood insurance in at least the amount of the loan or the maximum available, whichever is less

Answer

The Flood Disaster Protection Act requires mandatory flood insurance for properties in SFHAs, with coverage at least equal to the loan amount or NFIP maximum, whichever is less.

Question 3

When an appraisal identifies a property condition that requires repair, and the lender requires the repair to be completed before closing, what document must be obtained after the work is done?

Accepted Answer

A completion certificate (1004D) or appraisal update confirming the repair

Answer

Fannie Mae Form 1004D (Appraisal Update and/or Completion Report) is used to certify that required repairs or improvements have been completed satisfactorily.

Question 4

Which title document provides a detailed history of all recorded instruments affecting a property's ownership over time?

Accepted Answer

Abstract of Title

Answer

An Abstract of Title is a chronological summary of all recorded documents (deeds, liens, judgments) affecting ownership of a specific property.

Question 5

A lender's title insurance policy (loan policy) primarily protects which party from title defects discovered after closing?

Accepted Answer

The lender's security interest up to the loan amount

Answer

The lender's (loan) title insurance policy protects the lender's security interest in the property up to the outstanding loan balance against covered title defects.

(CRU) Certified Residential Underwriter Practice Test

(CRU) Certified Residential Underwriter Practice Test

CRU Documentation & Legal Requirements 4