Closing Process and Settlement Flashcards
6 cards from real CMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Closing Process and Settlement flashcards as text
What is the 'right of rescission' in mortgage lending?
Answer: A borrower's right to cancel a refinance or home equity loan within three business days of closing
Under TILA, borrowers have a three-business-day right to rescind (cancel) certain refinance and home equity transactions on their primary residence.
What is a 'cash-to-close' figure on a Closing Disclosure?
Answer: The total funds the borrower must bring to settlement to complete the transaction
Cash to close is the total amount the borrower needs to pay at closing, including the down payment and closing costs minus any credits.
Under RESPA Section 8, which of the following is prohibited?
Answer: Paying or receiving kickbacks or referral fees for settlement services
RESPA Section 8 prohibits giving or accepting any fee, kickback, or thing of value in exchange for referrals of settlement service business.
What is 'wet funding' in mortgage closing?
Answer: A closing where loan documents are signed and funds are disbursed on the same day
Wet funding means the lender releases funds on the same day documents are signed, common in most US states.
What is a 'dry closing'?
Answer: A closing where documents are signed but funds are disbursed at a later date
In a dry closing, all documents are executed but funds are not released until certain post-signing conditions are met, common in some states like California.
Which party typically orders the title search in a residential mortgage transaction?
Answer: The title company or closing attorney, usually engaged by the lender or escrow officer
A title company or closing attorney conducts a title search through public records to verify clear ownership and identify any liens or encumbrances.