Chapter 1 - Market Overview Flashcards
What are the main differences between a mortgage agent and a mortgage broker?
A mortgage broker can also be the chief compliance officer (ie., principal broker) of a brokerage. In addition a broker is able to supervise a group of mortgage agents.
What are the typical activities of a mortgage agent/broker?
Brokering a new mortgage, collateral mortgage, line of credit, or other type of loan secured by real property (which is land and whatever is affixed to it)
Refinancing of an existing mortgage
Arranging investing in a mortgage by one or more individuals
Providing mortgage advice and counsel, including about renewal options
List and define the key participants in the Ontario mortgage industry (11)
Institutional Lender - Schedule 1, 2 and 3 banks, credit unions, loan and trust companies & finance companies
Private Lender - an individual investor with funds who would like to invest in mortgages. More common in second mortgages
Borrower (Mortgagor)
Institutional Mortgage Originators - i.e., advisors at a big bank
Real Estate Agents
Home Inspectors
Mortgage Default Insurer - the government insurer, the Canada Mortgage and Housing Corporation (CMHC) and the two private insurers, Genworth Financial Canada and Canada Guaranty.
Lawyer
Mortgage Creditor Insurer
Title Insurer
MTG Admin
Define the sub-prime mortgage market
A market for Borrowers who do not qualify for traditional lending products
What impact has the U.S. sub-prime market collapse had on the Ontario mortgage market?
Several sub-prime lenders have scaled back on their programs or closed their business
Which type of Lender is the predominant Lender in the Canadian mortgage market?
Institutional Lenders (ie banks) - accounts for 61% of all MTGs in ON
What segment of the Canadian population has a Beacon Score of 750 to 799?
27%
What are the six major differences between the commercial and residential mortgage markets? (PAIL EAT)
Property
Appraisal
Income
Lenders
Environmental Assessment
Timing
What is the typical maximum Loan to Value of a private mortgage?
85% LTV
What advice would you give to an individual wishing to invest in mortgages? (4)
1) Understand risk involved
2) Long ROI, reduces cash flow
3) Investor should understand the value of the property
4) Have a lawyer
What options are available for investors who wish to invest in mortgages but have a low tolerance for risk?
They can invest in a MIC (ie., a pool of mortgages) or they can invest in mortgage backed securities
