Chapter 6: Transaction Overview

Question 1

Discuss the expectations that lenders make regarding their business dealings with a mortgage agent (3)

Answer 1

Lender Expecations:

1. Provide borrowers who are suitable for the lender
   - Send only borrowers that fit lenders’ criteria (income, employment, property, credit requirements).
2. Provide appropriate protection against fraud
3. Facilitate the transaction to its successful completion (funding)

Borrower is appropriate for the lender, lender expects if the approved mortgage will close.

Question 2

Discuss the expectations that borrowers make regarding their expectations of a Mortgage Agent

Answer 2

1. Act in the borrowers best interests
2. Completely analyze the borrower’s needs
3. Make appropriate recommendations based on the borrower’s needs
4. Facilitate the transaction to its successful completion (funding)

Question 3

What is bps?

If a finder’s fee is 85 bps, how much would a lender pay a Mortgage Agent on a $350, 000 mortgage transaction?

Answer 3

Basis points, otherwise known as bps or “bips,” are a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument.
One basis point is equivalent to 0.01% (1/100th of a percent) or 0.0001 in decimal form.

0.0085 x 350, 000 = $2975

Question 4

Discuss the pros and cons of creating a budget for the Borrower

Answer 4

Pro: Can assist in determining the affordability of a mortgage thereby ensuring 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 required to complete a budget

Question 5

What step(s) in the mortgage transaction do you feel is or are the most important?

Answer 5

The initial consultation is extremely important in identifying your client’s needs, however this is an opinion based question.

As long as you can back up your decision with valid points there is no right or wrong answer.