Key Loan Documents

A typical loan signing package contains 100-150 pages of documents. While the NSA guides borrowers through every page, certain documents are especially critical and frequently tested.

The "Big Three" Loan Documents

1. Promissory Note (The Note)

The promissory note is the borrower's written promise to repay the loan. It is the most important document in the package.

Key Features:

• States the loan amount (principal)
• States the interest rate (fixed or adjustable)
• States the monthly payment amount
• States the maturity date (when the loan must be fully repaid)
• Defines late payment penalties
• Contains the borrower's signature (NOT notarized in most states)
• Is NOT recorded with the county recorder — it stays with the lender

Why it matters: The note is the borrower's personal obligation to repay. Even if the property is sold or foreclosed, the note may still create personal liability for the borrower.

2. Deed of Trust / Mortgage

The deed of trust (or mortgage, depending on the state) gives the lender a security interest in the property. It allows the lender to foreclose if the borrower fails to make payments.

Key Features:

• Names the property as collateral for the loan
• Is recorded with the county recorder — this puts the public on notice of the lender's lien
• Requires notarization — usually an acknowledgment
• Uses three parties (in deed of trust states): borrower (trustor), lender (beneficiary), trustee
• Uses two parties (in mortgage states): borrower (mortgagor), lender (mortgagee)

Why it matters: Recording the deed of trust/mortgage establishes the lender's priority — their claim against the property relative to other creditors.

3. Closing Disclosure (CD)

The closing disclosure (which replaced the HUD-1 Settlement Statement) is a detailed accounting of all costs, fees, and financial terms of the loan.

Key Features:

• Itemizes all closing costs (lender fees, title fees, recording fees, taxes)
• Shows the cash required from the borrower at closing
• Compares the final terms to the original loan estimate
• Must be provided to the borrower at least 3 business days before closing
• The borrower signs but does not have it notarized

Other Important Documents

NSA Best Practices with Loan Documents

1. Never skip documents — Every page in the package is there for a reason
2. Point, don't explain — Show borrowers where to sign; refer questions to the lender
3. Check for completeness — Before leaving, verify all signatures, initials, and dates
4. Return the package promptly — Late return can delay or void the closing
5. Keep copies of the notarized pages for your records

On the Exam

Loan document questions test your knowledge of:

• The Note = promise to repay (NOT recorded)
• Deed of Trust/Mortgage = security interest (IS recorded, IS notarized)
• Closing Disclosure = financial summary (NOT notarized)
• Name/Occupancy Affidavits require jurats (sworn statements)
• Right to Cancel applies to refinances (3 business days)