NSA Loan Documents and Procedures 2

Question 1

The Promissory Note in a loan package is primarily a borrower's promise to do what?

Accepted Answer

Repay the loan according to stated terms

Answer

The Promissory Note is the borrower's legally binding promise to repay the loan under the interest rate, schedule, and terms specified.

Question 2

Which document in a loan package conveys a security interest in the property to the lender?

Accepted Answer

Deed of Trust or Mortgage

Answer

The Deed of Trust (or Mortgage) pledges the property as collateral, giving the lender a security interest if the borrower defaults.

Question 3

In a Deed of Trust state, who holds legal title to the property during the loan term?

Accepted Answer

The trustee

Answer

In a Deed of Trust arrangement, a neutral third-party trustee holds legal title until the loan is paid in full.

Question 4

What is the purpose of the Right of Rescission notice provided at closing for a refinance?

Accepted Answer

It gives the borrower 3 business days to cancel the transaction

Answer

Under TILA, borrowers on refinances of their primary residence have a 3-business-day right to cancel (rescind) the transaction.

Question 5

How many copies of the Notice of Right to Cancel must the NSA typically provide to each borrower at a refinance closing?

Accepted Answer

Two copies per borrower

Answer

Each borrower who has the right of rescission must receive two copies of the Notice of Right to Cancel so they retain one and return one.

(NSA) Notary Signing Agent Certification Practice Test