Chapter 18 Flashcards
This term refers to the act of making something evident:
Select one:
a. Disclosure
b. Cost of borrowing
c. Mortgage fraud
d. Conflict of interest
Correct Answer: Disclosure
Rationale: Disclosure: The act of making something evident. There are several disclosure requirements mandated by the MBLAA and its Regulations with relation to a mortgage being recommended to a borrower, investor or lender by a brokerage.
Relevant section(s) of the textbook: 18.10 Key terms and Definitions
The correct answer is: Disclosure
Which of the following is NOT an item that must be included in the cost of borrowing, according to the MBLAA?
Select one:
a. Charges for overdrafts
b. Lawyer’s fees
c. Administrative charges
d. Insurance charges
Correct Answer: Charges for overdrafts
Rationale: Charges for overdrafts is NOT an item that must be included in the cost of borrowing, whereas the other options are relevant.
Relevant section(s) of the textbook: 18.2 Cost of Borrowing – Expanded Explanation
The correct answer is: Charges for overdrafts
Which of the following is NOT an item that must be included in the cost of borrowing, according to the MBLAA?
Select one:
a. Administrative charges
b. Lawyer’s fees
c. Insurance charges
d. Charges for overdrafts
Correct Answer: Charges for overdrafts
Rationale: Charges for overdrafts is NOT an item that must be included in the cost of borrowing, whereas the other options are relevant.
Relevant section(s) of the textbook: 18.3 Cost of Borrowing – Expanded Explanation
The correct answer is: Charges for overdrafts
This term refers to all payments involved in arranging a mortgage transaction, excluding repayment of the mortgage:
Select one:
a. Interest charges
b. Disclosure
c. Fees and payments
d. Cost of borrowing
Correct Answer: Fees and payments
Rationale: Fees and payments: This phrase is used to describe all payments involved in arranging a mortgage transaction, excluding repayment of the mortgage
Relevant section(s) of the textbook: 18.10 Key terms and Definitions
The correct answer is: Fees and payments
Which of the following is NOT information that the borrower disclosure must include, according to the MBLAA?
Select one:
a. The role of the brokerage
b. Risks associated with the proposed mortgage
c. Terms and conditions of the proposed mortgage
d. The role of the borrower
Correct Answer: The role of the borrower
Rationale: The role of the borrower is NOT information that the borrower disclosure must include, whereas the other options are relevant.
Relevant section(s) of the textbook: 18.1 Borrower Disclosure – What must be disclosed
The correct answer is: The role of the borrower
The purpose of borrower disclosure is to:
Select one:
a. Ensure the borrower can be pre-approved for renewal
b. Ensure that there is enough information to make an informed decision regarding the transaction
c. Ensure adequate funding has been obtained to complete the transaction
d. Enable borrower to negotiate the interest rate of the transaction
Correct Answer: Ensure that there is enough information to make an informed decision regarding the transaction
Rationale: The purpose of borrower disclosure is to ensure that there is enough information to make an informed decision regarding the transaction.
Relevant section(s) of the textbook: 18 Introduction
The correct answer is: Ensure that there is enough information to make an informed decision regarding the transaction
Which of the following is NOT one of the four key requirements that must be met by the brokerage when providing written disclosure to borrowers?
Select one:
a. It may be a separate document
b. It must be written in clear, plain language
c. It must be written in legal terms and language
d. It may be provided electronically
Correct Answer: It must be written in legal terms and language
Rationale: It must be written in legal terms and language is NOT one of the four key requirements that must be met by the brokerage when providing written disclosure to borrowers, whereas the other options are relevant.
Relevant section(s) of the textbook: 18.3 Borrower Disclosure – How Disclosure Must be Made
The correct answer is: It must be written in legal terms and language
This term refers to the interest or discount applicable to the mortgage; any amount charged in connection with the mortgage that is payable by the borrower to the brokerage or lender, etc.:
Select one:
a. Risks
b. Fees and payments
c. Interest charges
d. Cost of borrowing
Correct Answer: Cost of borrowing
Rationale: Cost of borrowing: The MBLAA defines the cost of borrowing as “the interest or discount applicable to the mortgage; any amount charged in connection with the mortgage that is payable by the borrower to the brokerage or lender; any amount charged in connection with the mortgage that is payable by the borrower to a person other than the brokerage or lender, where the amount is chargeable, directly or indirectly, by the person to the brokerage or lender, and; any charge prescribed as included in the cost of borrowing, but does not include any charge prescribed as excluded from the cost of borrowing. It must be disclosed as either a percentage or in dollars and cents depending on the disclosure requirements of the Regulations.”
Relevant section(s) of the textbook: 18.2 Cost of Borrowing – Expanded Explanation
The correct answer is: Cost of borrowing
The cost of borrowing is calculated by which of the following formulas?
Select one:
a. APR = C / (T x P) x 1000
b. APR = T / (C x P) x 100
c. APR = T / (C x P) x 1000
d. APR = C / (T x P) x 100
Your answer is incorrect.
Correct Answer: APR = C / (T x P) x 100
Rationale: APR = C / (T x P) x 100 is the correct formula for calculating the cost of borrowing.
Relevant section(s) of the textbook: 18.1 Borrower Disclosure – What must be disclosed
The correct answer is: APR = C / (T x P) x 100
According to the MBLAA, all of the following are excluded from the cost of borrowing, EXCEPT:
Select one:
a. Default charges
b. Charges for tax accounts
c. Survey costs
d. PST on default insurance premiums
Your answer is incorrect.
Correct Answer: PST on default insurance premiums
Rationale: PST on default insurance premiums are included in the cost of borrowing, whereas the other options are not.
Relevant section(s) of the textbook: 18.3 Cost of Borrowing – Expanded Explanation
The correct answer is: PST on default insurance premiums
