NSA Post-Signing Procedures and Compliance 3 — Questions and Answers
Question 1: What is a 'cure' in the context of post-signing loan document compliance?
- A legal remedy for a fraudulent closing
- Correcting a minor document deficiency to allow the loan to fund (Correct answer)
- The borrower's right to rescind the loan
- A lender's internal audit process
Correct answer: Correcting a minor document deficiency to allow the loan to fund
A cure is a correction made to a document error or omission—such as a missing initial—that allows the loan to proceed to funding.
Question 2: Which document gives borrowers on a primary residence refinance the right to cancel the loan within three business days?
- Truth in Lending Disclosure
- Notice of Right to Cancel (Right of Rescission) (Correct answer)
- Closing Disclosure
- Deed of Trust
Correct answer: Notice of Right to Cancel (Right of Rescission)
The Notice of Right to Cancel, required by TILA/Regulation Z, gives eligible borrowers three business days to rescind a refinance transaction.
Question 3: How many copies of the Notice of Right to Cancel must typically be provided to each borrower?
- One copy total for the loan file
- Two copies per borrower (Correct answer)
- One copy per borrower
- Three copies per borrower plus one for the file
Correct answer: Two copies per borrower
Federal law requires lenders to provide two copies of the Notice of Right to Cancel to each eligible borrower.
Question 4: An NSA's E&O (Errors and Omissions) insurance is primarily designed to protect against:
- Borrower fraud and identity theft
- Financial losses caused by the NSA's mistakes or omissions during the signing (Correct answer)
- Lender errors on loan documents
- Theft of the NSA's equipment
Correct answer: Financial losses caused by the NSA's mistakes or omissions during the signing
E&O insurance covers the NSA if a client suffers financial harm due to the NSA's professional errors or oversights.
Question 5: After a signing, a borrower calls the NSA asking about their loan interest rate. The NSA should:
- Explain the rate based on the Closing Disclosure
- Refer the borrower to the lender or title company (Correct answer)
- Review the note and provide the information
- Advise the borrower to consult a financial advisor
Correct answer: Refer the borrower to the lender or title company
NSAs must not provide legal or financial advice; all loan-specific questions should be directed to the lender or title company.
Question 6: What is the purpose of the Closing Disclosure in a loan package?
- To authorize the NSA to notarize documents
- To provide the borrower with final loan terms, costs, and cash to close figures (Correct answer)
- To transfer title of the property
- To record the lien on the property
Correct answer: To provide the borrower with final loan terms, costs, and cash to close figures
The Closing Disclosure (CD) is required under TRID and itemizes all final loan terms, fees, and the amount needed at closing.
Question 7: What should an NSA do if they realize they completed a notarization in the wrong state format while out of their home state?
- Leave the notarization as-is since minor format differences are acceptable
- Notify the hiring company immediately and follow their instructions (Correct answer)
- Cross out the incorrect wording and handwrite the correct language
- Ask the borrower to re-sign without notarization
Correct answer: Notify the hiring company immediately and follow their instructions
Notarial format errors can invalidate a document, so the NSA must promptly notify the hiring company to determine how to remedy the issue.
NSA Post-Signing Procedures and Compliance 3
What is a 'cure' in the context of post-signing loan document compliance?