Mortgage 2

  1. Which activities are regulated under the MBLAA?
    Dealing/trading in mortgages in ON, carrying on business as a lender or of administering mortgages in ON.
  2. What is a limited partnership?
    An association of 2+ partners formed to conduct a business jointly and in which one or more partners is liable only to the extent of the amount of money they have invested.
  3. Proprietor/Sole Proprietor?
    sole owner of an unincorporated business.
  4. Tied Selling?
    Act of requiring a borrower, lender or investor to obtain a product/service as a condition for obtaining another product/service. This is Prohibited!
  5. Mortgage Default Insurance?
    insurance policy between the insurer and Lender that will compensate the Lender for losses suffered on an insured loan.
  6. How does mortgage default insurance work?
    A premium is charged to the Lender who typically passes it on to the borrower. Borrower may pay the premium in a lump sum payment on advance, normally it is added to the amount borrowed and payed from the mortgage funds on closing.
  7. What are the benefits of mortgage default insurance?
    Allows the lender to make loans over 80% LTV and recover insured losses. Allows borrowers to receive high ratio mortgages with favourable terms and interest rates.
  8. What is capitalization?
    Lender adds amount of arrears to the loan principal amount, ie. Lender's fees.
  9. What are the 2 types of mortgage creditor insurance?
    • 1) Life Insurance by an institutional lender
    • 2) Life Insurance through a 3rd party not affiliated with an institutional lender
    • Both pay lender upon death of the insured.
  10. Institutional Mortgage Creditor Insurance?
    From the Lender, usually in the branch of the lender when borrower applies for the mortgage. Insurance premium is usually included in the mortgage payment. Only 3 basic health questions. Switching lender will result in having to reapply for insurance with new lender. Declines with the amount of the mortgage.
  11. When does mortgage creditor insurance expire?
    when the mortgage is paid off or the borrower reaches 70 years old
  12. Benefits of Mortgage Protection Plan?
    Life and Disability insurance, portable so can be taken with the borrower to a new lender, only available through a mortgage broker.
  13. What is better between Life Insurance and Mortgage Creditor Insurance?
    Life Insurance, better coverage
  14. What is covered under Home Insurance?
    Building coverage, Named-Perils coverage (fire, theft, water) rare, Contents coverage, Detached private structure (garage), Additional living expenses (hotel/food if forced to leave), Personal liability (protection from paying damages to people)
  15. What is Title Insurance?
    For title-related risks; forgery, fraud, missing heirs, etc. that affect rights of ownership
  16. What is Errors & Omissions Insurance?
    Insurance policy that covers the professional from claims made against him due to negligence and must contain a provision against fraud.
  17. Chattel Loan?
    Borrow funds for the purchase of movable personal property from the lender. Lender secures the loan with a mortgage against the chattel.
  18. What is a lien?
    Security against a property, either real or personal for a debt.
  19. What does NOM% stand for?
    annual rate of interest
  20. What does EFF% stand for?
    Annual rate of interest with one compounding period.
  21. What is meant by Bait & Switch?
    Brokerage attracts consumers by advertising a product at a rate lower than the market rate, but never actually providing that rate.
  22. What is post-purchase cognitive dissonance?
    buyer's remorse
  23. What is meant by PIPEDA consent?
    A document that allows the mortgage agent to use the applicant's personal info.
  24. What documents are required for a purchase
    Purchase and Sale Agreement, MLS Listing, Proof of Downpayment, Rental Letter (if applicable), Realtor Information
  25. Documents required for a refinance, equity take out and switch?
    Current mortgage statement, Charge/Mortgage, Transfer/Deed, Property Tax Statement, Property Insurance Policy, Mortgage Repayment History (if applicable)
Card Set
Mortgage 2
mortgages in ON