|Mortgage products are available in both prime and subprime markets.
In subprime mortgage market Borrowers usually have a large equity position in the property being mortgaged. Lenders are not concerned with the type of property being mortgaged, since the borrower's covenant is the only important consideration. Applicants usually have high credit scores with no credit problem A typical applicant falls within a B or C credit level.
Which of the following would be a primary purpose of the requirement for. a mortgage broker to provide a Statement of Mortgage? To ensure the mortgage broker is paid their fee. For the borrower to be informed of the cost of borrowing. It enables the mortgage broker to obtain an advance deposit. it is a mortgage commitment from the lender.
Mortgage products offer advantages to investors over other type of investments. These advantages include: The benefits of capital appreciation. The ease of re-investing small periodic mortgage payments in other investments High liquidity as mortgages can quickly be converted to cash. Typically higher yields than many other financial products.
The REBBA 2002 Code of Ethics is unique compared to many other professional codes because: It is also a legal requirement because it is a Regulation contained within the Act. It is a voluntary set of standards there are no penalties for non-compliance with the Code. It applies to all real estate brokers and mortgage brokers in Ontario . It sets a higher standard than all other professional codes.
Lenders normally use the term bonus mortgage to mean: The borrower receives a lesser amount on closing than the face value of the mortgage, due to fees or bonuses to the lender. The real estate salesperson receives a finder's fee for referring the borrower to the lender. A mortgage that can be prepaid at any time during the term of the mortgage with a three month bonus of interest to the lender. The borrower is given a bonus or incentive for doing business with that lender.
Which of the following statements is correct with respect to the term "Agreement For Sale"? The buyer is granted possession of the property, but not title, until a future event stipulated in the
It is a document providing for the sale of a mortgage from one investor to another. An Agreement For Sale" is a listing agreement. An "Agreement For Sale" is basically a seller take back mortgage.
A high ratio mortgage is typically defined as: A mortgage that does not exceed 80% of the appraised lending value of a property. A mortgage with a loan to value ratio exceeding 80%. A loan with an amortization period extending beyond 25 years. Any mortgage on which a lender requires mortgage default insurance.
Which of the following correctly applies to income requirements for mortgage applicants? It is easier for self-employed individuals to qualify for a mortgage than salaried employees. Lenders usually require proof of income tax paid as part of the qualifying process for self-employed applicants. Bonuses and overtime pay are totally excluded by lenders when determining the qualifying income of an applicant. In the qualifying process, lenders will include the full amount of a capital gain made by an applicant
Which of the following statements is correct on the topic of mortgage brokerage? Mortgage brokerages are often able to arrange mortgages with private lenders. Since brokerage is defined as representing another party, a lender who is lending their own funds is not considered to be involved in mortgage brokerage. A real estate salesperson selling a property and including a saller take back mortgage in the agreement is acting as a mortgage broker.
For a residential mortgage transaction, a mortgage' brokerage is not permitted to charge the borrower a fee
One of the legal remedies available to a mortgagee when a mortgage is in default is power of sale. Which of the following statements is correct regarding power of sale?
If prices have declined, the lender may take title to the property and delay selling it until the market has improved
Power of sale is a legal remedy and a mortgagee must make application, to the court to commence the action.
The minimum time limit that a mortgagor must be in default before power of sale can be commenced is 30 days If a sale by the mortgagee results in a surplus, the excess funds are returned to the mortgagor.
Which of the following statements correctly applies to the subprime mortgage market? Subprime mortgages have slightly lower interest rates due to the weak financial status of subprime borrowers. It may be possible to obtain a mortgage even though the applicant's income is unverifiable, based on an adequate down payment, a good credit history and a property that meets the lender's requirements A mortgage is considered to be "subprime" based mainly on the location and quality of the real
property being offered as security.
Even though subprime lenders tend to be flexible, individuals with recent bankruptcies or involved in consumer proposals would not be accepted as mortgage applicants.
Which of the following statements is correct regarding mortgage brokerage? The purpose of an Investor/Lender Disclosure statement is to provide the borrower with the details of the terms of the mortgage. The total cost of borrowing, including the interest rate for the mortgage, plus the costs of arranging the mortgage must be shown on the Statement of Mortgage, expressed as a percentage. The mortgage broker must provide a Statement of Mortgage to the borrower when the lender is a bank and the mortgage brokerage fee is paid by the lender. A mortgage broker is not permitted to receive a fee from a mortgage lender.
A conventional mortgage is typicaly defined as: A mortgage loan that does not exceed 80% of the appraised lending value of a property. Any mortgage where the loan to value ratio is less than 100%. Any mortgage where funding has been obtained from a regulated lender rather than a private
A first mortgage with a fixed interest rate as opposed to a variable rate.
Which of the following statements is correct with respect to mortgage payment options and privileges? The term "fully open" means the borrower can increase the principal amount of the mortgage at
Prepayment of a defined amount on the anniversary date(s) of the mortgage is a popular mortgage provision. A "fully closed" mortgage can be prepaid as long as the amount of the prepayments does not require the amortization schedule for the mortgage to be revised A "fully open" mortgage usually has specific restrictions on the type of prepayments that can be made.
Lenders focus on two principal criteria in the mortgage underwriting process. These are: The net worth of the buyer and the down payment. The financial ability of the applicant and the lending value of the property The down payment and the closing date of the transaction The selling price of the property and size of the buyer's down payment.
Mortgage interest rates are an important factor in the real estate marketplace, Which of the following is a correct statement regarding this factor? Real economic risk tends to make investors divert capital to other investments resulting in lower supply of mortgage money but perceived risks have no effect. An increase in demand for mortgage money drives interest rates down with a corresponding rise in rates when demand diminishes.
A relatively small percentage point fall in mortgage rates can impact new house construction, renovations, and real estate sales
Rising yields in other investments such as commodities, term deposits and foreign currencies force longer term mortgage rates lower.
The mortgage market is made up of many different sources of funds. Which of the following statements is correct as it relates to those sources?
The primary market consists of lenders who deal in first mortgages while the secondary market deals only in subsequent mortgages. Regulated capital refers to mortgage funding from lenders that fall under the Bank Act while the source for unregulated capital is mainly private lenders. Under Provincial legislation, mortgage brokerages are permitted to act as an intermediary to secure financing but are not permitted to lend their own funds. The subprime market can be broadly defined as lenders who specialize in low risk mortgage loans at interest rates below the prime rate.
The Bank of Canada establishes monetary policies that directly impact interest rates. Which of the following is a correct statement regarding the activities of the Bank of Canada? The Bank of Canada does not set rates, but rather influences rates by establishing an overnight rate and associated operating band. The overnight rate is set on a weekly basis by the Bank of Canada and regulates the interest rate charged by institutional lenders to borrow and lend money. Public announcements regarding the official Bank of Canada rate are made on a monthly basis
throughout the year.
The maximum spread in the operating band set by the bank of Canada is 1%, e.g., the spread between 3.5% and 4.5%.
Numerous types of mortgages and features are available in the marketplace. With that in mind, which of the following ls a correct statement? A mortgage with a cashback feature allows a mortgagor to withdraw money from the equity in the property anytime during the term of the mortgage
Portability refers to the ability to transfer an existing mortgage to another property and have it become a blanket mortgage registered against both properties.
In a home equity line of credit, borrower has access to credit based on the lending value of his property, less any outstanding mortgage amount.
An add-on feature in a mortgage allows a mortgagor to increase the existing mortgage principal at the same interest rate as the existing mortgage.
A variety of mortgage insurance products are available to a borrower. Which of the following best describes one of these products?
Under mortgage disability insurance, mortgage payments are made by the insurance company if a mortgagor incurs a disability as set out in the policy. Upon the death of the mortgagor, mortgage life insurance pays out the original principal amount of the mortgage to the estate of the mortgagor. Mortgage borrower insurance protects the lender by paying off the mortgage in the event of default by the mortgagor. Job loss insurance protects the mortgagor by discharging the mortgage in the event of a permanent layoff by the mortgagor's employer.