Chapter 6: The Role of the mortgage agent Flashcards
Discuss the expectations that lenders make regarding their business dealings with a mortgage agent.
(3)
- provide borrower who are suitable for the lender
- provide appropriate protection against fraud
- facilitate the transaction to its sucessful completion (funding)
Discuss the expectations that borrowers make regarding their expectations of a mortgage agent.
(4)
- act in the borrower best interest
- completly analyze the borrower needs
- make appropriate recommendation based on the borrowers needs
- facilitate the transaction to its sucessful completion (funding)
Termination of agency
(4)
- performance, where the purpose of the agency has been achieved
- mutual agreement, both parties agree to terminate
- individually, where one party terminate the agency
- by operation of law
5 C’s of Credit
- credit: determine likihood that they will make payments on time
- collateral: property being financed, the lender has specific guidelines that must be met
- capacity: ablity to afford the mortgage payments
- character: borrowers stablity, employee history
- capital: down paymeent, if a purchase, or equity, if refinance
Mortgage Transactions Steps
(19)
- attracting a client
- first contact
- initial consultation
- file creation and management
- application analysis: income and GDS/TDS
- borrower credit
- property and LTV ratio
- choosing a lender
- submitting the application
- obtaining the commitment
- preparing disclosure documents
- presenting the commitment and disclosure docuements
- meeting conditions
- instructing the lawyer
- lawyer and client meet
- funding the transaction
- file submission to brokerage
- receiving comission
- record keeping
If a finder’s fee is 85 bps, how much would a lender pay the mortgage brokerage on a $800,000 mortgage transaction?
The amount is calculated by multiplying the mortgage amount by the finder’s fee.
.0085 x 800,000 = $6,800.00
Discuss the pros and cons of creating a budget for the borrower.
(2)
Pros: can assist in determining the affordability of a mortgage thereby ensuring that the mortgage is suitable for the Borrower, a requirement of the MBLAA.
Cons: time consuming and the Borrower may not wish to go into as much detail as is required to complete a budget
Define the law of agency
In common law, agency refers to the relationship that exists when one person or party (the principal) engages another (the agent) to act for them.
What is the role of the agent in the law of agency?
(7)
The following are some of the main duties an agent has to their principal:
- A duty to account for monies received or spent while acting on behalf of the principal
- A duty to protect the confidential information of the principal
- A duty of dealing with a third party or the principal in good faith
- A duty to act in the best interests of the principal
- A duty of loyalty to the principal
- A duty to act with reasonable care and skill at all times
- A duty to follow and obey the instructions of the principal
What is the role of the principal in the law of agency?
(2)
- A duty to indemnify the agent, and
- A duty to pay the agent, for example, a commission or fee
