CRU CRU Insurance & Title Requirements

Question 1

What is the minimum required hazard insurance coverage amount for a conventional residential mortgage?

Accepted Answer

At least 100% of the insurable replacement cost of the improvements

Answer

The appraised value of the property

Answer

The outstanding loan balance only

Answer

The purchase price of the property

Question 2

Which federal program provides flood insurance to property owners in participating communities?

Accepted Answer

National Flood Insurance Program (NFIP)

Answer

FHA Mortgage Insurance Program

Answer

Federal Crop Insurance Program

Answer

FEMA Disaster Relief Fund

Question 3

Under the Flood Disaster Protection Act, when is a lender required to mandate flood insurance on a residential property?

Accepted Answer

When the property is in a Special Flood Hazard Area (SFHA) and the community participates in the NFIP

Answer

Whenever the borrower requests it

Answer

Only for properties with basements

Answer

When the loan-to-value ratio exceeds 80%

Question 4

What does a lender's title insurance policy protect?

Accepted Answer

The lender's security interest against prior title defects, liens, or encumbrances not disclosed in public records

Answer

The borrower's equity in the property

Answer

The homeowner against future title claims only

Answer

The appraiser against errors in the appraisal report

Question 5

What is a 'mortgagee clause' (also called 'loss payee clause') in a homeowner's insurance policy?

Accepted Answer

A provision naming the lender as a co-insured to receive claims proceeds to the extent of its interest

Answer

A clause allowing the insurer to cancel the policy without notice

Answer

A requirement that the borrower pay the deductible before coverage applies

Answer

A clause that increases coverage after a loss is reported

Question 6

Which type of title search examines recorded instruments for a specified number of years back from the present?

Accepted Answer

Chain of title search

Answer

Abstract of title

Answer

Bring-down search

Answer

Root of title search