Mortgage Closing and Settlement

Question 1

Which document provides borrowers with their final loan terms and closing costs at least 3 business days before consummation?

Accepted Answer

Closing Disclosure

Answer

Good Faith Estimate

Answer

Loan Estimate

Answer

HUD-1 Settlement Statement

Question 2

What is the right of rescission in a mortgage transaction?

Accepted Answer

The borrower's right to cancel certain refinance transactions within 3 business days of consummation

Answer

The lender's right to cancel the loan if the borrower's credit changes

Answer

The seller's right to back out of the sale after signing

Answer

The title company's right to delay disbursement

Question 3

Who typically conducts the closing of a real estate transaction?

Accepted Answer

An escrow officer, title company representative, or attorney

Answer

The borrower's real estate agent

Answer

The lender's loan officer

Answer

The property appraiser

Question 4

What is a 'dry closing'?

Accepted Answer

A closing where documents are signed but funds are not disbursed at the time of signing

Answer

A closing conducted entirely online without a notary

Answer

A closing held in a state that prohibits escrow accounts

Answer

A closing where the buyer submits a cashier's check instead of a wire

Question 5

What does 'cash to close' represent on the Closing Disclosure?

Accepted Answer

The total amount the borrower must bring to the closing table to complete the transaction

Answer

The total loan amount approved by the lender

Answer

The lender's net profit on the loan

Answer

The seller's net proceeds after payoff of their existing mortgage

Question 6

Under RESPA and TRID, how many business days before consummation must a lender provide the Closing Disclosure?

Accepted Answer

3 business days

Answer

1 business day

Answer

2 business days

Answer

5 business days

Question 7

What is the primary purpose of title insurance in a mortgage transaction?

Accepted Answer

To protect against losses arising from defects in the title or disputes over property ownership

Answer

To protect the borrower from property damage caused by natural disasters

Answer

To insure the lender against borrower default on the loan

Answer

To cover the cost of property taxes if the borrower becomes delinquent