CMA Closing Process and Settlement

Question 1

What federal law requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a loan application?

Accepted Answer

TILA-RESPA Integrated Disclosure (TRID)

Answer

TRID (the TILA-RESPA Integrated Disclosure rule) mandates that lenders deliver a Loan Estimate to borrowers within three business days of application.

Question 2

What document replaces the HUD-1 Settlement Statement for most residential mortgage transactions closed after October 2015?

Accepted Answer

Closing Disclosure

Answer

The Closing Disclosure replaced the HUD-1 Settlement Statement under TRID, detailing all final loan terms and closing costs.

Question 3

How many business days before closing must a lender provide the Closing Disclosure to the borrower?

Accepted Answer

Three business days

Answer

Under TRID, borrowers must receive the Closing Disclosure at least three business days before the consummation of the loan.

Question 4

What are 'prepaid items' in a mortgage closing?

Accepted Answer

Upfront payments for items like homeowner's insurance, property taxes, and prepaid interest

Answer

Prepaid items are costs collected at closing for expenses paid in advance, such as the first year's insurance premium and initial escrow deposits.

Question 5

What is an escrow account in the context of mortgage servicing?

Accepted Answer

A lender-managed account that collects monthly payments for property taxes and insurance

Answer

An escrow account (impound account) is maintained by the servicer to collect and pay property taxes and homeowner's insurance on the borrower's behalf.

(CMA) Certified Mortgage Advisor Practice Test

(CMA) Certified Mortgage Advisor Practice Test

CMA Closing Process and Settlement