NSA Conducting a Loan Signing 3 — Questions and Answers
Question 1: On a refinance transaction, which document gives the borrower the right to cancel within three business days?
- Promissory Note
- Deed of Trust
- Notice of Right to Cancel (NORTC) (Correct answer)
- HUD-1 Settlement Statement
Correct answer: Notice of Right to Cancel (NORTC)
The Notice of Right to Cancel (under TILA/Regulation Z) gives borrowers on refinance transactions three business days to rescind.
Question 2: Why is it important for the NSA to verify that the borrower's name on the ID matches the name on the loan documents?
- To comply with IRS reporting requirements
- To ensure the correct person is signing the legally binding documents (Correct answer)
- To satisfy the lender's credit check requirements
- To determine the borrower's eligibility for the loan
Correct answer: To ensure the correct person is signing the legally binding documents
Verifying ID against document names ensures the right party is executing the loan, preventing fraud and ensuring legal validity.
Question 3: When should the NSA present the Promissory Note to the borrower?
- After all other documents have been signed (Correct answer)
- At the beginning of the signing appointment
- Only if the borrower requests it
- Only after the lender approves the package
Correct answer: After all other documents have been signed
Many NSA best practices suggest presenting the Note near the end, but it must be signed; sequencing may follow the lender's or title company's instructions.
Question 4: The Deed of Trust (or Mortgage) in a loan package primarily serves to:
- Transfer ownership of the property to the lender
- Pledge the property as collateral for the loan (Correct answer)
- Itemize all closing costs for the borrower
- Authorize the title company to disburse funds
Correct answer: Pledge the property as collateral for the loan
The Deed of Trust pledges the property as security for the loan, giving the lender a lien if the borrower defaults.
Question 5: An NSA notices a blank space where a date should be filled in on a document. What is the correct action?
- Fill in today's date to complete the document
- Leave it blank and hope the lender doesn't notice
- Contact the hiring party to determine the correct date (Correct answer)
- Have the borrower write in a date of their choice
Correct answer: Contact the hiring party to determine the correct date
NSAs should not fill in dates without authorization; they must contact the hiring party for the correct information.
Question 6: Which form, introduced under the TRID rule, replaced the HUD-1 for most residential mortgage closings?
- Closing Disclosure (CD) (Correct answer)
- Loan Estimate (LE)
- Good Faith Estimate (GFE)
- RESPA Settlement Form
Correct answer: Closing Disclosure (CD)
The Closing Disclosure (CD), required under the TRID rule, replaced the HUD-1 for most residential mortgage transactions after October 2015.
Question 7: If a borrower is visually impaired and cannot read the documents, the NSA should:
- Sign all documents on the borrower's behalf
- Read each document aloud and confirm the borrower understands before signing (Correct answer)
- Cancel the appointment and reschedule
- Only have the borrower sign the Promissory Note
Correct answer: Read each document aloud and confirm the borrower understands before signing
NSAs may read documents aloud to assist borrowers with disabilities, but must still ensure the borrower signs their own documents.
NSA Conducting a Loan Signing 3
On a refinance transaction, which document gives the borrower the right to cancel within three business days?