NSA Loan Document Knowledge 2

Question 1

What does the Closing Disclosure (CD) replace under TRID rules?

Accepted Answer

The HUD-1 Settlement Statement

Answer

TRID replaced the HUD-1 Settlement Statement with the Closing Disclosure for most residential mortgage transactions.

Question 2

Which document establishes the lender's security interest in the property?

Accepted Answer

Deed of Trust or Mortgage

Answer

The Deed of Trust (or Mortgage in some states) is the security instrument that pledges the property as collateral for the loan.

Question 3

The APR on a loan disclosure differs from the interest rate because it includes:

Accepted Answer

Fees and costs spread over the loan term

Answer

APR (Annual Percentage Rate) incorporates certain fees and costs into the rate to reflect the true cost of borrowing.

Question 4

What is the purpose of the Compliance Agreement signed at closing?

Accepted Answer

Obligates the borrower to cooperate in correcting errors in loan documents

Answer

The Compliance Agreement requires the borrower to cooperate in correcting clerical or administrative errors discovered after closing.

Question 5

On a Closing Disclosure, Section A lists:

Accepted Answer

Origination charges

Answer

Section A of the Closing Disclosure covers origination charges, including origination fees and points paid to the lender.

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