NSA Preventing Unauthorized Practice of Law 2

Question 1

A borrower asks the NSA to explain the difference between the interest rate and the APR on their loan documents. What should the NSA do?

Accepted Answer

Decline to explain and refer the borrower to their lender

Answer

Explain using the definitions printed in the loan package

Answer

Provide a general definition from memory

Answer

Skip the question and ask the borrower to sign

Question 2

Which of the following actions is WITHIN the scope of an NSA's duties during a loan signing?

Accepted Answer

Identifying each document by its title before the borrower signs

Answer

Advising the borrower whether the loan terms are favorable

Answer

Recommending whether the borrower should accept a prepayment penalty

Answer

Explaining the legal effect of a deed of trust

Question 3

During a closing, a borrower says, 'I don't understand why I need to sign a Right of Rescission notice.' What is the correct NSA response?

Accepted Answer

Instruct the borrower to contact the lender or attorney for an explanation

Answer

Explain that federal law requires it for refinances

Answer

Tell the borrower it is just a formality and to sign

Answer

Read the document aloud and interpret its legal meaning

Question 4

An NSA who repeatedly provides legal advice during signings may face which consequence?

Accepted Answer

Criminal or civil liability for unauthorized practice of law

Answer

A warning letter from the signing service only

Answer

Suspension of their loan-officer license

Answer

A fine from the title company

Question 5

A borrower insists the NSA tell them whether a late-payment clause is enforceable in their state. The NSA should:

Accepted Answer

Decline and suggest the borrower consult an attorney

Answer

Answer based on general knowledge of state law

Answer

Look it up on the internet and relay the result

Answer

Ask the title company representative for guidance

Question 6

Which document in a loan package is MOST likely to prompt a borrower to ask an NSA for legal advice?

Accepted Answer

The deed of trust or mortgage

Answer

The Closing Disclosure

Answer

The hazard insurance binder

Answer

The wire transfer confirmation

Question 7

What phrase can an NSA use to professionally redirect a borrower who asks legal questions without seeming dismissive?

Accepted Answer

'I'm not authorized to give legal advice; your lender or an attorney can best answer that.'

Answer

'That's outside my area — I'll skip that page.'

Answer

'The document is self-explanatory, just sign here.'

Answer

'Legally speaking, it means you owe the money back.'