Loan Document Knowledge Flashcards
7 cards from real NSA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Loan Document Knowledge flashcards as text
What does the Closing Disclosure (CD) replace under TRID rules?
Answer: The HUD-1 Settlement Statement
TRID replaced the HUD-1 Settlement Statement with the Closing Disclosure for most residential mortgage transactions.
Which document establishes the lender's security interest in the property?
Answer: Deed of Trust or Mortgage
The Deed of Trust (or Mortgage in some states) is the security instrument that pledges the property as collateral for the loan.
The APR on a loan disclosure differs from the interest rate because it includes:
Answer: Fees and costs spread over the loan term
APR (Annual Percentage Rate) incorporates certain fees and costs into the rate to reflect the true cost of borrowing.
What is the purpose of the Compliance Agreement signed at closing?
Answer: Obligates the borrower to cooperate in correcting errors in loan documents
The Compliance Agreement requires the borrower to cooperate in correcting clerical or administrative errors discovered after closing.
On a Closing Disclosure, Section A lists:
Answer: Origination charges
Section A of the Closing Disclosure covers origination charges, including origination fees and points paid to the lender.
A 'balloon payment' loan means the borrower must:
Answer: Make a large lump-sum payment at the end of the loan term
A balloon payment is a large final payment due at the end of a loan term after a period of smaller regular payments.
Which document at closing informs the borrower of the total interest paid over the life of the loan?
Answer: Closing Disclosure
The Closing Disclosure includes the Total Interest Percentage (TIP) and total interest paid over the loan term.