05 Residential Mortgages

Question 1

Secondary Mortgage Market–Mortgage backed Security

- the security behind MBS is real estate, it is somewhat secure, it is alo illiquid

Answer 1

Key difference between bonds and MBSs
- bonds provide a stable stream of income, assuming no default,
the income received from an MBS varies as mortgages provide the borrower with pre-payment options
- bonds pays principal only at maturity
mortgage backed security, the pirncia is paid gradually over the life of the loan with mortgage.

Question 2

Rights and constrains of Real property
- Municipal taxation
Expropriation –taking real property by the government by eminent domain

• Eminent domain - the power to expropriate real property for public use with compensation to the owner

Answer 2

• easement - the acquired right to use another real estate,,e.g. road access or hydro company enter the property to read the meter
• land use restriction - municipalities regulates the use of land, allowable height of buidling

Question 3

QUebec - the real rights
- usufruct - refers to the right of use and enjoyment for a specific period of time of a property that is owned by someone else

Question 4

Tenancy in Common - two or more owners who own land together
- upon death of one of owners, the deceased’s proportionate ownership transfers to herirs

Answer 4

Joint tenancy - own the land together, the deceased’s share of ownership transfer to the surviving owners
- must met possession, titile, time and interest

Question 5

Power of Sale

• Quick process
• Not Involve the courts
• Not require the lender to take title

Answer 5

Foreclosure

-

Question 6

Required down paymetn Rules

Answer 6

5% on the protion up to 500K
10% on the poriton 500-1Mil
20% on portion above 1 mil

Question 7

HELOC

• max limit of HELOC 80% of property’s appraised
• however LOC portion is restricted to no more than 65%

Answer 7

Reverse mortgage - home equity conversion mortgage

• aged 55+, access the equity, tax freee without having to sell the home
• help finance the retimrent
• not income, not impact gis

Question 8

First time home Buyer incentive –interest free government loan

• putting 5% of own money down +plus 5% interest free equity loan form the government
• government has the 5% portion of real estaet
• when you sell, you must repay 5% back to government