West Virginia Mortgage Law Practice Test

According to West Virginia law, what must lenders ensure about funds disbursed to the settlement agent?

1. Funds are available immediately

2. Funds are in good form

3. Funds are in good faith

4. Funds are good funds

The correct answer is: Funds are available immediately

The correct answer is that lenders must ensure that the funds disbursed to the settlement agent are classified as "good funds." This term typically refers to funds that are immediately available for use and have been verified to prevent issues such as insufficient funds or unauthorized transactions. This requirement is designed to protect both lenders and borrowers, ensuring that all parties involved in the transaction can proceed with confidence that the funds are legitimate, safely deposited, and accessible for closing costs or other settlement fees. Ensuring that funds are "good funds" reduces the risk of fraud and enhances the overall security of the mortgage process. In contrast, while ensuring funds are available immediately could seem similar to the concept of good funds, it doesn’t capture the broader need for the funds to be verified and legitimate. The terms "in good form" and "in good faith" address different aspects of transactions and relationships in lending and do not specifically refer to the availability and validity of the funds in the same way that "good funds" does.