Chapter 6 Key Terms & Definitions

Question 1

Advertising

Answer 1

A paid, controlled message through a non-personal medium. Types of advertising include publicity, public relations, product placement, sponsorship, and sales promotion.

Question 2

Advisor

Answer 2

An expert who provides objective advice. A mortgage agent, for example, acts as an advisor to a borrower.

Question 3

Application

Answer 3

A form used to record information about a potential borrower’s state of affairs, including financial, credit, and employment

Question 4

Budget

Answer 4

An estimate of income and spending

Question 5

Commission (from a lender)

Answer 5

A commission or fee paid to a mortgage brokerage by a lender. This fee is usually based on a certain number of basis points multiplied by the mortgage amount.

Question 6

Commission (from a a brokerage)

Answer 6

The amount paid to the mortgage broker or agent who completed the transaction. This is typically based on a percentage of the commission or finder’s fee paid by the lender to the mortgage brokerage.

Question 7

Commitment letter

Answer 7

A document illustrating an offer by a lender to a borrower, including the terms and conditions of that offer

Question 8

Conditions (relating to a commitment letter)

Answer 8

These are the requirements of the lender that must be met before the mortgage is funded

Question 9

Disclosure documents

Answer 9

These are the documents prescribed under the Mortgage Brokers, Lenders and Administrators Act, 2006 (formerly the Mortgage Brokers Act) that must be provided to the borrower (and the investor in the case of a private transaction) before the mortgage can be funded. These documents include the Investor / Lender Disclosure for Brokered Transactions, the Investor / Lender Disclosure Statement for Brokered Mortgages on Renewal, and the borrower disclosure.

Question 10

Finder’s fee

Answer 10

A commission or fee paid to a mortgage brokerage by a lender. This fee is usually based on a certain number of basis points multiplied by the mortgage amount.

Question 11

Marketing

Answer 11

Presenting products or services to potential customers in a fashion that positively promotes the product or service and makes customers eager to buy or use those products or services

Question 12

Referral

Answer 12

A client or customer who has been advised by a third party to use the product or service of another

Question 13

Remuneration

Answer 13

A payment or reward provided to someone for a product or service rendered