NSA Key Mortgage Closing Documents 2 — Questions and Answers
Question 1: What does the Closing Disclosure replace under the TRID rule effective October 2015?
- The Promissory Note and Deed of Trust
- The HUD-1 Settlement Statement and final Truth in Lending disclosure (Correct answer)
- The Initial Escrow Statement and Privacy Notice
- The Compliance Agreement and Name Affidavit
Correct answer: The HUD-1 Settlement Statement and final Truth in Lending disclosure
TRID combined the HUD-1 and final TIL into the Closing Disclosure for most residential mortgage loans.
Question 2: On the Closing Disclosure, which page contains the loan terms summary including loan amount, interest rate, and monthly principal & interest?
- Page 2
- Page 3
- Page 1 (Correct answer)
- Page 4
Correct answer: Page 1
Page 1 of the Closing Disclosure contains the loan terms table with the key financial figures borrowers must review.
Question 3: How many business days before consummation must a borrower receive the Closing Disclosure under TRID?
- 1 business day
- 5 business days
- 3 business days (Correct answer)
- 7 business days
Correct answer: 3 business days
TRID requires the lender to provide the Closing Disclosure at least 3 business days before loan consummation.
Question 4: The Promissory Note is primarily a(n):
- Security instrument that pledges the property as collateral
- Personal promise by the borrower to repay the debt (Correct answer)
- Agreement between buyer and seller on purchase price
- Government disclosure about loan costs
Correct answer: Personal promise by the borrower to repay the debt
The Promissory Note is the borrower's written promise to repay the loan under stated terms, making it a personal debt obligation.
Question 5: Which party signs the Promissory Note but typically does NOT sign the Deed of Trust on a purchase transaction?
- The non-borrowing spouse
- A co-borrower
- A non-titled borrower who is financially obligated but not on title (Correct answer)
- The seller
Correct answer: A non-titled borrower who is financially obligated but not on title
A non-titled borrower signs the Note to be financially responsible for the debt but does not sign the Deed of Trust because they have no ownership interest in the property.
Question 6: What is the purpose of the Initial Escrow Disclosure Statement at closing?
- To authorize the lender to sell the loan on the secondary market
- To itemize the projected monthly payments for taxes and insurance held in escrow (Correct answer)
- To notify the borrower of their right to cancel the loan
- To confirm the borrower's income and employment status
Correct answer: To itemize the projected monthly payments for taxes and insurance held in escrow
The Initial Escrow Disclosure shows the anticipated annual disbursements for property taxes and insurance and the resulting monthly escrow payment.
Question 7: The Transfer of Servicing Disclosure informs the borrower that:
- The title company may transfer the escrow funds to a third party
- The lender has the right to transfer loan servicing to another company (Correct answer)
- The notary is transferring signing authority to a backup agent
- Property taxes are transferred to a new escrow servicer
Correct answer: The lender has the right to transfer loan servicing to another company
RESPA requires lenders to disclose that the right to service the loan (collect payments) may be transferred to another servicer after closing.
NSA Key Mortgage Closing Documents 2
What does the Closing Disclosure replace under the TRID rule effective October 2015?