NSA Managing the Signing Assignment 3 — Questions and Answers
Question 1: What is the primary purpose of the Closing Disclosure (CD) in a real estate transaction?
- To authorize the NSA to collect the down payment from the borrower
- To provide the borrower with final loan terms and closing costs at least three business days before closing (Correct answer)
- To transfer title of the property from the seller to the buyer
- To certify that the property appraisal meets the lender's requirements
Correct answer: To provide the borrower with final loan terms and closing costs at least three business days before closing
The Closing Disclosure is a federally required form that gives borrowers final loan terms and costs, and must be delivered at least three business days before consummation.
Question 2: During a signing, a borrower crosses out a clause on one of the loan documents before signing it. The NSA should:
- Allow the change if the borrower initials next to the strikeout
- Stop the signing and immediately contact the hiring party to report the alteration (Correct answer)
- Proceed with notarizing the document since the borrower has the right to modify it
- Have the borrower write a separate letter explaining the modification
Correct answer: Stop the signing and immediately contact the hiring party to report the alteration
Borrowers generally cannot unilaterally alter loan documents; the NSA must halt and notify the hiring party because unauthorized changes can void the transaction.
Question 3: What does a 'wet signature' requirement mean in the context of a loan signing?
- The borrower must sign in blue or black ink only
- Original physical signatures are required on the actual paper documents (Correct answer)
- The documents must be signed in the presence of two witnesses
- Electronic signatures are acceptable as long as they are notarized
Correct answer: Original physical signatures are required on the actual paper documents
A 'wet signature' refers to an original ink signature on a physical document, as opposed to an electronic or digital signature.
Question 4: An NSA is asked to notarize a document for a borrower who is signing under a Power of Attorney. What must the NSA confirm?
- That the attorney-in-fact is a licensed attorney
- That the POA document is valid, current, and covers the transaction, and that the lender has approved its use (Correct answer)
- That the property owner has been notified of the signing
- That a second notary is present to co-sign the notarization
Correct answer: That the POA document is valid, current, and covers the transaction, and that the lender has approved its use
The NSA must verify the POA is valid and lender-approved before proceeding, as not all lenders accept a POA for real estate transactions.
Question 5: Which of the following is the NSA's responsibility when a borrower states they did not receive a copy of the loan documents before the signing appointment?
- Provide the borrower with copies from the signing package to review immediately
- Reschedule the signing until the borrower can review documents in advance
- Inform the hiring party and proceed according to their instructions (Correct answer)
- Cancel the signing because federal law requires advance document delivery
Correct answer: Inform the hiring party and proceed according to their instructions
The NSA should report the situation to the hiring party, who will determine how to proceed based on loan type and applicable disclosure timelines.
Question 6: In the context of a signing assignment, what is a 'straw buyer' situation, and how should an NSA respond?
- A buyer who uses gift funds for the down payment; proceed normally
- A person acting as buyer on behalf of another to circumvent lending rules; refuse to notarize and report the suspected fraud (Correct answer)
- A first-time homebuyer unfamiliar with the process; provide extra guidance
- A buyer who purchases raw land; use a different document set
Correct answer: A person acting as buyer on behalf of another to circumvent lending rules; refuse to notarize and report the suspected fraud
A straw buyer arrangement is mortgage fraud; NSAs who suspect it must refuse to participate and report it to the appropriate authority.
Question 7: After completing a signing, the NSA's call-back report to the hiring party should include:
- The borrower's credit score and debt-to-income ratio as observed from the documents
- Confirmation that signing is complete, any issues encountered, and the return shipping tracking number (Correct answer)
- A recommendation on whether the loan should be approved based on the signing
- The exact loan amount and interest rate to confirm accuracy
Correct answer: Confirmation that signing is complete, any issues encountered, and the return shipping tracking number
The call-back report keeps the hiring party informed of completion status, any problems, and return shipment details so the transaction can proceed to funding.
NSA Managing the Signing Assignment 3
What is the primary purpose of the Closing Disclosure (CD) in a real estate transaction?