Podcast
Questions and Answers
What document legally outlines the loan terms and the borrower's obligation to repay the loan?
What document legally outlines the loan terms and the borrower's obligation to repay the loan?
What document serves as collateral for the loan and allows the lender to foreclose on the property in case of default?
What document serves as collateral for the loan and allows the lender to foreclose on the property in case of default?
Which document is updated at closing to reflect the final loan terms and is signed by both the borrower and mortgage loan officer?
Which document is updated at closing to reflect the final loan terms and is signed by both the borrower and mortgage loan officer?
Which of the following documents outlines the amount the borrower will pay towards escrow each month?
Which of the following documents outlines the amount the borrower will pay towards escrow each month?
Signup and view all the answers
Why is conducting a title search essential before closing?
Why is conducting a title search essential before closing?
Signup and view all the answers
Why is it necessary for everyone listed in the title to sign the Security Instrument, even if they are not borrowers?
Why is it necessary for everyone listed in the title to sign the Security Instrument, even if they are not borrowers?
Signup and view all the answers
What clause in the Security Instrument dictates the terms under which the loan can be assumed by a new borrower?
What clause in the Security Instrument dictates the terms under which the loan can be assumed by a new borrower?
Signup and view all the answers
What is a potential consequence for the borrower if they transfer ownership of the property without the lender's consent, assuming the loan has a Due on Sale Clause?
What is a potential consequence for the borrower if they transfer ownership of the property without the lender's consent, assuming the loan has a Due on Sale Clause?
Signup and view all the answers
What is typically collected at closing to establish an escrow account for property taxes?
What is typically collected at closing to establish an escrow account for property taxes?
Signup and view all the answers
What is the usual amount collected for hazard insurance premium at closing?
What is the usual amount collected for hazard insurance premium at closing?
Signup and view all the answers
Who may allow a borrower to use Power of Attorney to close a loan?
Who may allow a borrower to use Power of Attorney to close a loan?
Signup and view all the answers
What is the maximum time allowed for a borrower to rescind a transaction after signing?
What is the maximum time allowed for a borrower to rescind a transaction after signing?
Signup and view all the answers
Which of the following individuals has the right to rescind the loan transaction?
Which of the following individuals has the right to rescind the loan transaction?
Signup and view all the answers
What does the settlement agent do after closing and disbursement of loan proceeds?
What does the settlement agent do after closing and disbursement of loan proceeds?
Signup and view all the answers
What is included in the disclosures that must be provided for the rescission process?
What is included in the disclosures that must be provided for the rescission process?
Signup and view all the answers
What does the term 'business day' exclude when calculating the rescission period?
What does the term 'business day' exclude when calculating the rescission period?
Signup and view all the answers
What is typically done with insurance premiums and guarantees after documents are returned?
What is typically done with insurance premiums and guarantees after documents are returned?
Signup and view all the answers
What information is essential for tracking trailing documents post-closing?
What information is essential for tracking trailing documents post-closing?
Signup and view all the answers
Study Notes
Loan Closing Documents and Procedures
- Borrowers sign numerous documents at closing, including disclosures, contracts, explanations, settlement documents, and title transfer paperwork.
- Key mortgage loan documents include the final Uniform Residential Loan Application (URLA), the Note, and the Security Instrument (Mortgage or Deed of Trust).
- The final URLA reflects updated loan details and ensures accuracy.
- The Note defines loan terms and borrower obligations.
- The Security Instrument pledges the property as collateral. It references the deed and records the mortgage.
- Defaults allow lenders to foreclose and take possession.
- Assumable loans have clauses specifying terms.
- Non-assumable loans have due-on-sale clauses, triggering immediate repayment if ownership transfers without lender consent.
- Everyone in the title must sign. State laws differ; some protect spouses' real estate rights.
- Title searches ensure all parties with property interests are known.
Escrow and Prepaid Expenses
- Escrow accounts are often required (e.g., FHA, VA, USDA, conventional loans >80% LTV).
- Initial Escrow Disclosure details monthly escrow payments for the coming year.
- Closing payments include first-year homeowners insurance and taxes.
- Prepaid expenses (including interest) are collected before due dates.
- Property taxes, insurance premiums, mortgage insurance/guaranty premiums, and FHA/USDA fees are collected at closing. Amounts collected for escrow depend on upcoming payments' dates.
Power of Attorney and Rescission Rights
- Power of Attorney allows a designee to sign documents on behalf of a borrower absent at closing.
- Power of Attorney documents specify authority terms and limitations.
- Lenders may have restrictions on Power of Attorney use.
- A deployed service member may use a spouse's Power of Attorney to close on a VA home loan.
- Rescission rights apply to loans that are rescindable.
- Borrowers have three business days to cancel.
- Everyone in title (including those not on the loan) has rescission rights and must be notified.
- Written notifications of rescission must be delivered by midnight of the third business day after consummation, disclosure delivery, or rescission right notice.
- The settlement agent disburses loan proceeds after the rescission period.
Post-Closing Activities
- Closed loan documents return to the lender.
- Post-closing activities include sending notices, accepted commitments, certifications, and premium payments to insurers/guarantors.
- Servicing-related communications (e.g., transfer notices, first payment notices) are sent.
- Computer entries for loan servicing begin.
- "Trailing documents" (e.g., recorded mortgage, title policy, accounting) are tracked.
- Loan purchase/funding records, secondary-market purchaser payments, and investor disbursements are reconciled.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
This quiz covers essential loan closing documents and procedures involved in real estate transactions. Learn about key documents such as the Uniform Residential Loan Application (URLA), the Note, and the Security Instrument, and understand their roles in the closing process. The quiz also highlights important aspects like title searches and the differences between assumable and non-assumable loans.
