Chapter 6 - Transaction Overview

Question 1

Explain the 3 expectations that Lenders make regarding their business dealings with a Mortgage Agent

Answer 1

1. Provide borrowers who are suitable for the lender - For example, borrower meets that lenders’ employment requirements, property requirements, credit requirements, etc. AND that the lender has the right product the borrower is looking for
2. Provide appropriate protection against fraud
3. Facilitate the transaction to funding

Question 2

Discuss the 4 expectations that Borrowers make regarding their expectations of a Mortgage Agent

Answer 2

1. Act in the borrower’s best interests
2. Analyze the borrower’s needs
3. Make appropriate recommendations based on the borrower’s needs
4. Facilitate the transaction to funding

Question 3

Name 4 KYC factors

Answer 3

Risk Tolerance
How long the customer plans on living in this home
Debt expectations (ie will this customer need to refinance in the future?)
Saving habits

Question 4

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

Answer 4

The amount is calculated by multiplying the mortgage amount by the finder’s fee.

.0085 x 350,000 = $2,975.00

Question 5

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

Answer 5

Pros: determine affordability of a mortgage

Cons: time consuming and the Borrower may not wish to go into as much detail as is required to complete a budget

Question 6

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

Answer 6

The initial consultation (discovery)