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mortgage broker exam > mock 11 > Flashcards

mock 11 Flashcards

1
Q

Your clients are retired and have decided to supplement their income with a reverse annuity mortgage (RAM) based on the security of their $600,000 home. The terms of the mortgage specify an interest rate of 6% per annum, compounded monthly and that the borrower will receive $1,500 per month. The bank decides that the RAM will not exceed 60% of market value of the home at the time the loan was written. How many full payments will be received during the term of the loan?

  1. 158
  2. 117
  3. 142
  4. 165
A
  1. 158
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2
Q

A borrower has decided to pay one half of a monthly payment on their mortgage loan every two weeks, The effect is that the borrower makes the equivalent of one extra monthly payment per year, thus paying down the principal faster and paying less interest. The borrower is

  1. making bi-weekly interest only payments.
  2. making bi-weekly accelerated payments
  3. making bi-weekly accelerated interest accruing payments
  4. in a reverse annuity mortgage
A
  1. making bi-weekly accelerated payments
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3
Q

Doug makes a written offer to Todd; Which is the following will NOT release Doug offer?

  1. Doug discovers later that Todd is illiterate.
  2. Todd fails to accept the offer before the expiry of the time limit specified in the offer.
  3. Todd makes a counter-offer
  4. Doug revokes his offer to Todd via telephone
A
  1. Doug discovers later that Todd is illiterate.
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4
Q

Your Client is purchasing a single-family home for personal use with a ending value of $450,000, using an insured mortgage. What is the maximum loan allowed under the mortgage loan insurance program?

  1. $440,000
  2. $360,00
  3. $382,750
  4. $427,000
A
  1. $427,000
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5
Q

Which of the following interests in land require a dominant and servient tenement?

Life estates
Easements
Freehold estates
Profits a prendre
1.  B only
2.  A and C only
3.  B, C and D only
4.  All of the above
A
  1. B only
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6
Q

In mortgage lending, a ‘bonus’ is:

  1. the mortgage principal amount outstanding at any point in time
  2. the fee charged by a mortgage broker that can be deducted or added to the future value of the loan
  3. always subtracted from the ceiling price of the property
  4. the portion of the face value of a mortgage loan which exceeds the funds actually received by the borrower
A
  1. the portion of the face value of a mortgage loan which exceeds the funds actually received by the borrower
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7
Q

With which one of the following loans is the lender’s initial capital and periodic income at the greatest risk?

  1. straight line principle reduction loans
  2. accelerated bi-weekly loans
  3. interest only loan
  4. interest accruing loans
A
  1. interest accruing loans
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8
Q

Under the Builders Lien Act, within how many days of the substantial completion, end or abandonment of a project must a claimant file a builders lien?

  1. 15 days
  2. 30 days
  3. 45 days
  4. 90 days
A
  1. 45 days
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9
Q

Arbitration is a form of Alternative Dispute Resolution (ADR) that

  1. involves voluntary and informal attempts to seek mutually acceptable solution between two parties
  2. involves the parties authorizing a neutral party to decide the outcome of their dispute.
  3. is held in a formal court of law
  4. is always turned to when one party adds an “eleventh hour throw in”
A
  1. involves the parties authorizing a neutral party to decide the outcome of their dispute.
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10
Q

Generally speaking, the ethical duty of professional courtesy and good faith is owned to:

  1. client of the mortgage broker
  2. fellow mortgage broker
  3. the Registrar of the mortgage broker
  4. oneself.
A
  1. client of the mortgage broker
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11
Q

Which of the following statements is TRUE?

  1. The adjustment date and the possession date must be the same day.
  2. a deposit paid by a buyer will appear on the buyer’s statement of adjustments as a debt.
  3. It is standard practice to hold the buyer responsible for the taxes on the adjustment date itself.
  4. The total of the credit column on the seller’s statement of adjustments will always be e identical to the total of the debit column on the seller’s statement of adjustments.
A
  1. It is standard practice to hold the buyer responsible for the taxes on the adjustment date itself.
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12
Q

A young executive has applied to her bank for a Mortgage loan to enable her to purchase a house. Her income is

$55000 per year. the bank inform her they will apply 32% gross debt service ratio when calculating her maximum loan, and that the current mortgage rates are 3.9 % per annum, compounded semi annually for 20 year amortization mortgages. The bank of Canada’s posted 5 year rate is 6.2 % per annum, compounded semi annually. Annual property taxes are $2000 and mortgage payments are to be made monthly.what is the maximum Mortgage loan the bank will grant, given the stress test borrower qualification rules for an insured mortgages?

  1. $1867,963.81
  2. $188,106.38
  3. $157,906.22
  4. $179,693.93
A
  1. $179,693.93
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13
Q

When a judge ‘distinguishes’ a case on its facts, he or she:

  1. highlights of former decision as one that establishes an important legal principal.
  2. Formally reports the case before him or her since it is a crucial decision
  3. Follows a former decision because it is based on similar facts
  4. Decides that facts crucial to a formal decision are not present in the case at hand and therefore, that form a decision should not be followed
A
  1. Decides that facts crucial to a formal decision are not present in the case at hand and therefore, that form a decision should not be followed
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14
Q

Which of the following items will NOT appear on the buyer’s statement of adjustments?

  1. cash proceeds of the sale
  2. purchase price
  3. property transfer tax
  4. balance due to complete
A
  1. cash proceeds of the sale
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15
Q

Which of the following is NOT a privacy principle from the Personal Information Protection Act?

  1. Limit collection
  2. Obtain consent
  3. Provide recourse
  4. Identify the proposal
A
  1. Identify the proposal
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16
Q

Which of the following statements is TRUE with respect to damages for breach of contract?

  1. A completely innocent party is not required to mitigate his or her damages.
  2. Damage awards are intended to punish the party who breached the contract.
  3. If the parties to a contract provide for a genuine pre-estimate of foreseeable damages in the contract, that amount will be enforceable, even if the actual loss is lower or higher.
  4. At common law, damages can only be awarded for the breach of a condition.
A
  1. A completely innocent party is not required to mitigate his or her damages.
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17
Q

A real estate investment trust is:

  1. taxed at corporate income tax rates
  2. created to invest in mortgages or properties
  3. managed by the Registrar of Companies
  4. a combination of three legal entities, which cooperate in carrying out real estate development
A
  1. created to invest in mortgages or properties
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18
Q

Which of the following statements about corporations are TRUE?

corporation is subject to income tax, unlike a partnership
Only shareholders are entitled to manage a corporation in accordance with the Business Corporations Act
A corporation whose shares are traded on a stock exchange is referred to as a private Company
Individuals who acquire shares in a company do not own the assets of the company
1. Only statements A and D are true
2. Only statements A, B and C are true.
3. Only statements B and D are true
4. A, B,C and D are true

A
  1. Only statements A and D are true
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19
Q

Eric and Mandy own a unit in Poppyseed Place, a beautiful strata development that sits on the waterfront of a lake in northern British Columbia They bought the unit five years ago as joint tenants and have rented it out to Ms Johnson, who continues to occupy the unit Mandy has recently passed away, and her will gifted her interest in the unit to her son, Melvin. Melvin has now contacted Eric and is demanding that he be paid one-half of the rent paid by Ms. Johnson Which of the following statements is FALSE?

Upon Mandy’s death, the entire interest remains with the surviving joint tenant, Eric
By gifting her interest in the unit to Melvin, Mandy severed the joint tenancy.
Melvin and Eric now own the unit as tenants in common
Melvin and Eric now own the unit as joint tenants
1. Only A is false
2. Only D is false
3. Only A and D are false
4. Only B, C and D are false

A
  1. Only B, C and D are false
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20
Q

In marketing, the initial trigger that starts the buying process is known as:

  1. The buying decision
  2. Self actualization
  3. The product purchase activity
  4. A felt need
A
  1. A felt need
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21
Q

You were recently hired by an appraisal company. You were asked by your boss to appraise the following for properties:

A concrete plant n the garden
A small single-family house in the central business district of Langley
A residential condominium in Richmond
A multi-unit apartment complex in Coquitlam
Which appraisal method would be more suitable to appraise each of these properties?

  1. A) income; B) market comparison; C) residual; D) cost
  2. A) residual; B) cost; C) market comparison; D) income
  3. A) market comparison; B) income; C) cost; D) residual
  4. A) cost; B) residual; C) market comparison ; D) income
A
  1. A) cost; B) residual; C) market comparison ; D) income
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22
Q

Which one of the following is NOT an appraisal approach to value?

  1. the income approach
  2. the redevelopment approach
  3. the direct comparison approach
  4. the cost approach
A
  1. the redevelopment approach
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23
Q

Which of the following statements regarding alternative repayment and refinancing methods is/are TRUE?

A sinking fund assisted mortgage is a loan repayment plan which reduces the amount of the initial payments in order to improve affordability.
In a variable rate mortgage, the interest rate is changed periodically but the required payment is never changed
One of the benefits to the “blend and extend option of refinancing is that it helps borrowers avoid prepayment penalties
In graduated payment mortgages, payments are decreased during the loan term
1. Only statements B and D are true.
2. Only statements A and C are true
3. Only statements A, C, and D are true.
4. All of the above statements are true.

A
  1. Only statements A and C are true
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24
Q

Consider the following information about a commercial property

Gross Potential Revenue $115,000

General Operating Expenses $ 45,000

Vacancy and Bad Debt Allowance 4% of Gross Potential Revenue

Given a capitalization rate of 15 %, how much should an investor pay for this property?

  1. $716,000
  2. $460,667
  3. $340,000
  4. $436,000
A
  1. $436,000
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25
Q

Jorden grants Mary a mortgage over his property, Blackacre. One of the terms in the standard mortgage contract that they execute allows Mary, aside from pursuing a foreclosure, to exercise the remedies of an ordinary creditor if Jordan defaults. If Jordan defaults and Mary pursues this option, she will be taking action on the

  1. order nisi
  2. personal covenant
  3. collateral advantage
  4. priorities
A
  1. personal covenant
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26
Q

A mortgage loan with a face value of $475,000 is arranged through a mortgage broker. A commission of $7,250, appraisal fees of $425, as well as survey and legal fees totaling $600 will be deducted from the face value before the funds are advanced to the borrower

Calculate the cost of funds advanced to the borrower, expressed as an effective annual rate, if the loan is written at 5 % per annum, compounded semiannually, with monthly payments over 25 year amortization period and a 5 year term

  1. 5.344991%
  2. 5.368396 %
  3. 5.502478%
  4. 6.954952%
A
  1. 5.502478%
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27
Q

The Business Practices and Consumer Protection Act defines the Total Value Paid by the Borrower as

  1. the anticipated dollar cost of the mortgage loan to the borrower, over its term.
  2. the average outstanding principal over the term of the loan
  3. money paid or to be paid by the borrower to the lender.
  4. the total cost of credit divided by the length of the term expressed in years.
A
  1. money paid or to be paid by the borrower to the lender.
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28
Q

Your client wants to purchase a house that is listed for $376,000 The bank’s appraiser estimates that the lending value of the property is $375,000. Your client’s annual gross income is $60,000 per year The bank applies an 80% loan-to-value ratio and a grass debt service ratio of 32%. Property taxes amount to $1,800 per year. Assume that the lender demands a 25-year amortization period and monthly payments and a contract rate of J2= 3% The Bank of Canada’s posted 5-year rate is J2= 5.75 %. How much can your client borrow, given the stress test borrower qualification rules for uninsured mortgages? Round your answer to the nearest $10

  1. $226,630
  2. $231,990
  3. $340,000
  4. $300,000
A
  1. $231,990
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29
Q

In order to protect themselves from builders liens, individuals purchasing strata lots from an owner developer must hold back (X) of the gross purchase price for (Y) days after the

project is substantially completed, ended or abandoned. What are the values of (X) and (Y)?

  1. X=10 % ; Y=5
  2. X=20%; Y= 20
  3. X=7%; Y= 55
  4. X =15% ; Y=90
A
  1. X=7%; Y= 55
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30
Q

Axel is purchasing Roddy’s house. Given the following information, calculate the cash proceeds of sale to Roddy on completion:

Prices: $295,000

Deposit paid to brokerage : $ 30,000

Financing: 1st mortgage of $105,000 to be assumed

2nd mortgage of $47,000 has been arranged by Axel.

Taxes: (391.23) The taxes in the amount of $1,200 are not yet due. Commission: 5% of sale price. (14,750)

Conveyancing fees: $900

Adjustment, completion and possession Dates: April 30th

Note: It is not a leap year.

  1. $174,858.77
  2. $144,858.77
  3. $ 176,058.77
  4. $ 174,855.48
A
  1. $174,858.77
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31
Q

A mortgage was written for $418,000.00 with an interest rate of J2 =4 %, an amortization period of 25 years, a term of 5 years and monthly payments rounded to the next higher cent. Calculate the outstanding balance owing at the end of five years

  1. $363,885.00
  2. $367,724.15
  3. $364,600.37
  4. $364,181.28
A
  1. $363,885.00
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32
Q

Which of the following statements regarding the misleading of mortgage lenders is true?

  1. If a mortgage broker does not verify a particular piece of information from a borrower he/she does not have to advise the lending institution of this fact.
  2. financial institutions are encouraged to report to the Registrar of Mortgage Brokers instances of false information parsed on by mortgage brokers
  3. mortgage brokers may safety rely on all of the information provided to them by potential mortgage borrowers in support of a mortgage application.
  4. the failure to provide mortgage lenders with accurate information is an ethical breach only
A
  1. financial institutions are encouraged to report to the Registrar of Mortgage Brokers instances of false information parsed on by mortgage brokers
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33
Q

You are assigned the task of appraising a small apartment building Current construction Costs are $101 per square foot, the total area of the building is 10,000 square feet, the land value is estimated to be $300,000, and the Gross Potential Rent from the building is estimated at $120,000. The building was built 4 years ago, and is deemed to have depreciated 10% in this time. It has been determined that a reasonable capitalization rate is 11%. Using the cost method of appraisal, estimate the market value of the building

  1. $1,010,000
  2. $1,209,000
  3. $1,179,000
  4. $1,090,909
A
  1. $1,209,000
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34
Q

Your client has applied for a $100,000 closed variable rate mortgage. The interest rate to be charged on this loan will be at the prime rate plus 1 % The current prime rate is 3% per Annum, compounded semi annually The borrower will make monthly payments rounded up to the next higher cent on a 25 year amortization period and a 5 year term. Interest rate adjustments will be made annually on the anniversary date of the mortgage. If the prime rate decreases to 2% at the end of year 1, what will the outstanding balance owing on this loan be at the end of year 2?

  1. $90,609.29
  2. $97,611.09
  3. $92,655.97
  4. $94,162.56
A
  1. $94,162.56
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35
Q

Three years ago, you bought a house at which time you arranged a mortgage in the amount of $520,000 The loan was written at a rate of 4.75% per annum, compounded semi-annually, with a 5 year term, 25 year amortization period and monthly payments. You have just received an offer to buy your house. The offer is to provide $60,000 cash and to assume the existing financing for the remainder of the term. If current lending raten for 2 year term mortgages are 5.75% per annum, compounded semi-annually, what is the market value of the offer?

  1. $532,106.49
  2. $484,174.13
  3. $536,068.20
  4. $544,174.13
A
  1. $536,068.20
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36
Q

Using the cost method of appraisal, determine the market value of a property with a 40,000 square foot building if construction costs new are $60 per square foot, land value is estimated to be $1,200,000, and total depreciation on the building to date is estimated to be 6%?

  1. $3,456,000
  2. $3,310,480
  3. $3,408,000
  4. $3,481,600
A
  1. $3,456,000
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37
Q

Common property in a strata title development is:

  1. property that the strata council has a duty to repair and maintain under the Local Government Act
  2. property that an owner may be granted exclusive use of through the designation of it as “limited common property.
  3. owned by the strata council to manage in the best interests of the strata corporation.
  4. owned by the strata corporation.
A
  1. property that an owner may be granted exclusive use of through the designation of it as “limited common property.
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38
Q

You are arranging a mortgage loan with a face value of $575,000. You have calculated that the Total Cost of Credit to the borrower will be $220,000, and the average outstanding principal over the 4 year term of the loan (P) will be $562,500 What is the Annual Percentage Rate (APR) that you must disclose on the disclosure statement, Note: APR (100 C/(TxP)

  1. 9.777778%
  2. 7.822222%
  3. 5.189189%
  4. 6.392025%
A
  1. 9.777778%
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39
Q

You would like to put aside some money into a savings account to accumulate money towards a down payment. If you can deposit $500 at the end of every month, and the savings account earns interest at 3.5% per annum, compounded annually, how much money will you have in the savings account at the end of the 4th year?

  1. $25,692.83
  2. $25,721.05
  3. $24,840.00
  4. Unable to determine given the information provided.
A
  1. $25,692.83
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40
Q

How is “ethics” different from “law”?

  1. Ethics are unwritten, whereas laws are written
  2. Breaches of law are not breaches of ethics
  3. While the law may prescribe the minimum standard of conduct of a certain individual, ethics can go further and require a higher moral standard of conduct
  4. Breaches of ethics are always less serious than breaches of law.
A
  1. While the law may prescribe the minimum standard of conduct of a certain individual, ethics can go further and require a higher moral standard of conduct
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41
Q

A mortgage common in the condominium development industry whereby the mortgage contains a clause that permits the mortgage registered against all of the lots to be released from each individual lot as it is purchased is known as a(n)

  1. reverse annuity mortgage
  2. wrap around mortgage.
  3. interim blanket mortgage
  4. release-by-sale mortgage
A
  1. interim blanket mortgage
42
Q

What is the effective annual rate of interest that is equivalent to 11 1/2% per annum, compound daily?

  1. 12.185312%
  2. 10.887064%
  3. 0.031507%
  4. 11.830625%
A
  1. 12.185312%
43
Q

Which one of the following will NOT be found on the Balance Sheet of a corporation?

  1. Retained earnings to date
  2. Names of the corporation’s shareholders
  3. Original cost of the property owned by the corporation
  4. Number of shares issued
A
  1. Names of the corporation’s shareholders
44
Q

The blend and extend refinancing option

  1. Involves renegotiating a first mortgage with the lender and making repayment penalties.
  2. always provides the largest amount of new funds for borrowers
  3. Typically allows borrowers to take advantage offer low interest rate on their current mortgage funds as well as additional funds, while avoiding costly prepayment penalties
  4. Is illegal and not available in Canada
A
  1. Typically allows borrowers to take advantage offer low interest rate on their current mortgage funds as well as additional funds, while avoiding costly prepayment penalties
45
Q

In which of the following circumstances would an employer likely NOT to held vicariously liable?

  1. An employee of a grocery store forget to clean up a spill in the beverage aisle. A customer slipped on the spill and broke his hip
  2. An employee of the a fitness gym noticed that a large number of free weights are lying on the mat when they should have been stored on the racks. Instead of putting the weights back on the rack, the employee decided to leave them on the mat. A customer tripped on the weight and fell, resulting in two chipped front teeth.
  3. An employee of a landscaping design company used the company’s forklift for the weekend to landscape his backyard without his employer’s permission. While operating the forklift, the employer accidently backed into and damaged the neighbour’s fence.
  4. An employee of the car wash scratched the door of customer’s car while washing it.
A
  1. An employee of a landscaping design company used the company’s forklift for the weekend to landscape his backyard without his employer’s permission. While operating the forklift, the employer accidently backed into and damaged the neighbour’s fence.
46
Q

The Registrar of Mortgage Brokers has the power to order that a person pay an administrative penalty up to a maximum of

  1. $50,000
  2. $1,000
  3. $500,000
  4. $1,000,000
A
  1. $50,000
47
Q

The sensitivity analysis of a borrower’s ability to manage certain variances is known as

  1. term analysis
  2. stress testing
  3. variability measuring
  4. strength-assessment
A
  1. stress testing
48
Q

The protection in the Property Law Act which limits the liability of the seller of real property under a mortgage when the buyer of the property assumes the mortgage applies only to :

  1. vendor take back mortgages
  2. commercial mortgages
  3. situation in which the mortgage contract permits the application of the Property Law Act.
  4. mortgages of the residentials purpose.
A
  1. mortgages of the residentials purpose.
49
Q

According to section 14 of the Mortgage Brokers Act, mortgage brokers and sub mortgage brokers are prohibited from making ________________ statements in promoting their service.

  1. false, misleading or deceptive
  2. irresponsible, unethical or intimidating
  3. deceptive, malicious or aggressive
  4. exaggerated, misleading or impossible
A
  1. false, misleading or deceptive
50
Q

You have a partially completed appraisal report that you need to fill in. The 2500 square foot subject property has 5 bedrooms. the house next door is similar in all respects except for the number of bedrooms and Square footage. The 2400 square foot comparable sold $750000 and has four bedrooms. If the market value of a bedroom is $3500 and above a 2000 square foot benchmark, each hundred square feet is worth $5000, the adjusted sale price for this comparable is:

  1. $741,500
  2. $758,500
  3. $760,000
  4. $753,500
A
  1. $758,500
51
Q

Your client has a mortgage for $500000 which is written at 5% per annum, compounded semi-annually. the mortgage calls for monthly payments rounded to the next higher dollar, a five year term, and a 20 year amortization period. The mortgage contract from its the borrower to repay the full amount of the loan subject to the interest rate differential penalty. Your client wishes to repay this loan at the end of the first year (with the 12th payment). At the time of the repayment, the current comparable interest rate is 3.75% per annum, compounded semi annually. What is the amount of the interest rate differential prepayment penalty?

  1. $24,185.78
  2. $16,139.33
  3. $33,825.05
  4. $22,588.64
A
  1. $24,185.78
52
Q

Your client owns a small office building and has applied for a loan at the bank. The property has an annual net operating income of $117,000 and has a lending value of $500,000. The bank uses a 1.17 debt coverage ratio and will allow a maximum loan-to value ratio of 75% Mortgage rates are J1=5% for fully amortized loans over a 4 year term with annual payments. What is the maximum 4 year loan your client will be loaned from the bank, rounded to the next higher dollar?

  1. $375,000
  2. $322,987
  3. $354,596
  4. $414,877
A
  1. $354,596
53
Q

On August 1, Matt offered to buy Jason’s summer cottage which Jason accepted. The cottage was on a secluded property close to a river and neither party was aware that just two days prior the water levels rose dramatically in the river and the cottage was washed away. Jason has no insurance and is seeking to enforce the contract

Which of the following statements is TRUE?

  1. Both Matt and Jason are relieved of their future obligations in the contract under the doctrine of frustration
  2. The doctrine of mutual mistake allows Matt to rescind the contract.
  3. This is an example of common mistake and the contract is void.
  4. A court will set aside the contract based on “non est factum” (it is not my deed) or unilateral mistake since Matt did not know the nature of the document he was signing and could not have known the cottage was no longer standing
A
  1. This is an example of common mistake and the contract is void.
54
Q

Which of the following is estimated using actual current rents paid on similar property based on 100% occupancy?

  1. gross potential revenue
  2. gross realized revenue
  3. effective gross income
  4. net operating income
A
  1. gross potential revenue
55
Q

John is a member of a mortgage brokerage professional association and has just been found by a disciplinary committee to have breached the association’s by-laws, Which of the following penalties are likely to be available to the association to impose on John?

Suspension of the use of the association’s member services

Performance of community service

Imprisonment for offences which are also criminal in nature

A monetary fine

  1. A, B, and D only
  2. A and D only
  3. B and C only
  4. All of the above
A
  1. A and D only
56
Q

A small town in British Columbia Smallville, passes a bylaw which requires any one who runs for mayor to own an interest in land in Smallville. Any valid interest in land, no matter how small, qualifies under this bylaw. Which of the following people would NOT be able to run because of this bylaw?

  1. Phil, a resident of Alberta, buys an airspace parcel above a private residence in Smallville.
  2. Kelsey, a resident of a neighbouring town, has the right to operate her hot dog stand in Smallville’s central park.
  3. Guy, a resident of Quebec, is the remainderman of a fee simple estate in Smallville.
  4. Kate has a month to month lease in an apartment in Smallville
A
  1. Kelsey, a resident of a neighbouring town, has the right to operate her hot dog stand in Smallville’s central park.
57
Q

The anchoring effect is best described as:

  1. a sociological theory that predicts that the longer someone occupies a property, the higher the price he or she will seek upon deciding to sell it.
  2. a psychological phenomenon whereby the first number quoted in a negotiation causes the rest of the negotiation to be based on that number
  3. a market force that causes the median price of a good to fall when there is a declining market for that good.
  4. an economic factor that decreases demand for real estate services due to an increase in interest rates
A
  1. a psychological phenomenon whereby the first number quoted in a negotiation causes the rest of the negotiation to be based on that number
58
Q

You have been looking for a mortgage loan so that you can purchase a house. Two separate companies have offered you identical loans with the exception being the amortization period Company A’s offer has an amortization period of 15 years whereas Company B’s offer has an amortization period of 20 years. The interest rate, loan amount and term are the same under both options Which of the following statements is/are TRUE?

Under Company A’s offer, each monthly payment will contribute less towards paying off the principal than Company B’s offer

Your monthly payments will be higher if you take Company A’s offer.

The effective annual interest rate paid by you would be the same under either company’s offer

Company A’a capital risk is higher than Compony B’s

  1. Only D is true.
  2. Only A and C are true.
  3. Only B and C are true.
  4. All of the above statements are true.
A
  1. Only B and C are true.
59
Q

Your client has asked you for assistance with improving her credit score. Which of the following is a strategy that will typically improve the credit score?

  1. Increasing credit utilization above 90% of each revolving account’s credit limit
  2. Correcting all credit report errors
  3. Increasing the number of credit applications and inquiries from an assortment of lenders
  4. Obtaining a large number of unsecured credit cards or loans
A
  1. Correcting all credit report errors

3. Increasing the number of credit applications and inquiries from an assortment of lenders

60
Q

Which of the following statement is FALSE regarding negotiations?

  1. It is more important to focus on object to measure negotiations than the relative power of each party’s will.
  2. Taking notes during negotiations is the single biggest thing that one can do to improve negotiation effectiveness.
  3. Learned negotiation skill can be used in one’s personal and professional life.
  4. Negotiation skill can be mastered by simply reading them, as practice is also essential.
A
  1. Taking notes during negotiations is the single biggest thing that one can do to improve negotiation effectiveness.
61
Q

You have applied for a mortgage loan to finance the purchase of a townhouse listed at $276,000. The market value of the townhouse is $270,000 and the lender has assigned a $265,000 lending value to it The lender demands a 30% gross debt service ratio and an 80% loan-to-value ratio The purchaser’s annual income is $59,000, property taxes are

$1,200 per annum and, if approved, the loan is to be repaid with monthly payments over 25 years with an interest rate of J2 =6 %. Calculate the maximum loan allowable under the lender’s loan-to-value criterion

  1. $220,800
  2. $190,750
  3. $216,000
  4. $212.000
A
  1. $212.000
62
Q

Jason, a resident of Saskatchewan, came to Vancouver to visit his grandmother. Tired after the long drive from Saskatchewan, he accidentally stepped on the gas pedal instead of the brake pedal when parking near his grandmother’s house. As a result, his car hit and severely damaged the standalone garage of one of the neighbors, Charlie, who paid $37,000 to have the garage built only two months ago. Jason refuses to pay for the damage. What actions can Charlie take?

He can bring a claim against Jason in Small Claims Court for $37,000
He can sue Jason’s grandmother on the basis of vicarious liability, since Jason is staying with her while in Vancouver
He can bring an action against Jason in the Supreme Court of British Columbia for $37,000
He can make an application for court supervised mediation after initiating a claim against Jason
1. A, B and D only
2. C and D only
3. A and D only
4. C only

A
  1. C and D only
63
Q

Which of the following scenarios would result in the termination of an agency relationship?

  1. An oral revocation of the agency relationship by the principal
  2. An oral revocation of the agency relationship by the agent
  3. The death, insanity or bankruptcy of either the principal or the agent
  4. All of the above
A
  1. All of the above
64
Q

The “term” of a mortgage ALWAYS

  1. is equal to the amortization period
  2. necessitates the payment of an outstanding balance payment
  3. specifies the duration of the contractual relationship
  4. lowers the amount of the monthly payment
A
  1. specifies the duration of the contractual relationship
65
Q

Which of the following statements regarding the immobility and durability of land is FALSE?

  1. The immobility of real estate as a commodity allows it to be moved to a better market
  2. The physical durability of real property means that it has value as an investment and a source of shelter.
  3. When considering the durability of structures, it is important to distinguish between the physical life and the economic life of the structure
  4. Immobility is responsible for the local nature of real property markets
A
  1. The immobility of real estate as a commodity allows it to be moved to a better market
66
Q

The evaluation of an applicant’s ability to meet the terms of mortgage and the amount of their income available for the fortune mortgage payments is known as:

  1. A credit score
  2. A credit review
  3. A credit analysis
  4. A credit report
A
  1. A credit analysis
67
Q

The marketing mix consists of

  1. Product, personal selling, price, and publicity
  2. Place, product, promotion, and price
  3. Personal selling, publicity, advertising, and promotion
  4. Advertising, product, place, and publicity
A
  1. Place, product, promotion, and price
68
Q

Which of the following statements regarding slide presentation guidelines are TRUE?

Make sure font sizes are legible and use simple fonts

Slides should use pictures and graphics instead of text for emphasis and explanations

Transition effects and sounds help viewers focus on the presentation

There should be no more than 6 words per slide

  1. Only A and D
  2. Only C and D
  3. Only A, B and D
  4. All of the above.
A
  1. Only A, B and D
69
Q

Which of the following is an element of a graduated payment mortgage?

  1. the decreasing indebtedness occurring in the initial years of the loan
  2. high initial payments that decrease over time
  3. the ability to adjust the interest rate during the contractual term
  4. the increasing size of payments over time
A
  1. the increasing size of payments over time
70
Q

The two types of mortgage fraud that are the most prevalent in Canada are:

  1. identity fraud and title fraud
  2. value fraud and false document fraud
  3. identity fraud and value fraud
  4. false document fraud and title fraud
A
  1. identity fraud and value fraud
71
Q

If a mortgage broker has a conflict of interest with another party in the mortgage transaction:

  1. the mortgage broker must always remove himself or herself from the transaction
  2. the mortgage broker must only disclose the conflict of interest if another party asks about it
  3. the mortgage broker is not obligated to inform any other parties of this conflict of interest
  4. the mortgage broker must always disclose the conflict of interest.
A
  1. the mortgage broker must always disclose the conflict of interest.
72
Q

Which of the following is NOT relevant in the determination of the duty of care owed by an Occupier under the Occupiers Liability Act

  1. The conduct of third parties on the premises
  2. The conduct of a guest off the premises
  3. The activities on the premises
  4. The condition of the premises
A
  1. The conduct of a guest off the premises
73
Q

Which of the following is TRUE with respect to the Contaminated Sites Registry (“CSR”) in British Columbia?

  1. The CSR is port of the land title registration system in BC
  2. The CSR was established by the Land Title Act
  3. It is more likely that a commercial property will be in the CSR than a residential property
  4. CSR searches must be done by visiting the CSR office in Victoria, BC.
A
  1. It is more likely that a commercial property will be in the CSR than a residential property
74
Q

A key purpose of a foreclosure action is to

  1. extinguish the borrower’s equitable right to redeem the property
  2. obtain judicial recognition that the lender has a valid mortgage in the particular property
  3. register a mortgage with the Land Title Office
  4. obtain a quitclaim deed in the property whereby the borrower agrees to forfeit his or her title to the lender
A
  1. extinguish the borrower’s equitable right to redeem the property
75
Q

Which of the following is within the category of law called “public law”?

  1. Agency law
  2. Constitutional law
  3. Contract law
  4. Tort law
A
  1. Constitutional law
76
Q

Ellen purchases a house for $200,000, most of it being financed by a mortgage Soon after completion, Ellen sells the house to her friend, Sandy, at an inflated price of $350,000, who promptly uses the property to secure a mortgage of $325,000 from Big Bucks Bank on the basis of the $350,000 valuation The $325,000 is used to repay Ellen’s mortgage and, as arranged, Ellen and Sandy share the remaining amount Sandy disappears and does not make any mortgage payments, forcing Big Bucks Bank to foreclose on the house whose price has been artificially inflated What sort of mortgage fraud have Ellen and Sandy likely committed?

  1. Identity fraud
  2. title fraud
  3. Equity fraud
  4. Value fraud
A
  1. Value fraud
77
Q

An appraiser must understood why the client has requested to appraisal. If the purpose id for property development, it would be known as a :

  1. market reason.
  2. capital sum reason.
  3. justified price reason.
  4. statutory reason.
A
  1. market reason.
78
Q

All other things being equal, shortening the contractual term on a constant payment mortgage always has the effect of :

  1. decreasing the size of periodic payments required to fully amortize the loan.
  2. increasing the number of the payments that need to be made during the loan terms.
  3. increasing the size of the periodic payments required to fully amortize the loan.
  4. none of the above.
A
  1. none of the above.
79
Q

Which of the following statements regarding the management of individual loans is TRUE?

  1. The mortgage document is a contract that is only signed by the mortgagee.
  2. The book value of a mortgage is the amount of principal outstanding at a particular point in time.
  3. A mortgage is an asset that cannot be sold to other investors
  4. Individual borrowers have the right, under the terms of the Interest Act, to repay all the outstanding debt at anytime after one year from the initiation of the mortgage.
A
  1. The book value of a mortgage is the amount of principal outstanding at a particular point in time.
80
Q

In mortgage lending, the interest adjustment period is:

  1. one period after the date on which the first payment is due on
  2. Any period of 12 consecutive months chosen by a business as its accounting period
  3. The period of time agreed to by both parties to a real estate transaction for the adjustment of property taxes, rent, interest, and other items.
  4. The period of time between the date that funds are advanced and the beginning of the first payment period
A
  1. The period of time between the date that funds are advanced and the beginning of the first payment period
81
Q

Generally accepted accounting principles are the rules and guidelines followed in preparing financial statements. The revenue recognition principle states that

  1. the asset’s historical cost is the appropriate amount to record on the books of the enterprise, rather than its fair market value.
  2. relatively low cost purchases that are used up over a period of several months may be immediately expensed when acquired
  3. expenses directly associated with particular revenues should be recognized in the same period in which the revenue is recognized
  4. revenue should be recognized by an enterprise when it is earned, not necessarily when cash is received.
A
  1. revenue should be recognized by an enterprise when it is earned, not necessarily when cash is received.
82
Q

Lenders who are attempting to ration mortgage funds could:

  1. increase their gross debt service ratio
  2. decrease their interest rate on mortgage loans
  3. decrease their maximum loan to value ratio
  4. make sure the safety margin limits the gross income used in calculations.
A
  1. decrease their maximum loan to value ratio
83
Q

The Business Practice and Consumer Protection Act defines the Total Cost of Credit as:

  1. the total cost of the credit divided by the length of the term expressed in year.
  2. the average outstanding principle over the term of the loan.
  3. money paid or to be paid by the borrower to the lender.
  4. the anticipated dollar cost of the mortgage loan to the borrower, over its term.
A
  1. the anticipated dollar cost of the mortgage loan to the borrower, over its term.
84
Q

Claire mails a letter to Roger, offering to sell her beach house in Fiji to Roger for $100,000. Roger mails a letter back saying he will buy it for $90,000. Claire replies by mail saying that she cannot accept less then $95,000. roger writes back and asks if he can give Claire his apartment in Thailand , worth $75,000, and rest in cash. Claire write back saying she wants the entire value in cash. Which of the following statement is TRUE?

Assume that their dealings are governed by the law applicable to British Columbia.

  1. Roger may still accept Claire’s offer to sell the beach house for $100,000.
  2. Roger may still accept Claire’s offer to sell the beach house for $95,000.
  3. Claire may still accept Roger’s offer to buy the beach house for $90,000.
  4. Roger will need to make a new offer if he still wishes to buy the beach house.
A
  1. Roger will need to make a new offer if he still wishes to buy the beach house.
85
Q

Which one of the following would NOT be permitted act of the Registrar of Mortgage Brokers?

  1. The Registrar may attach conditions to the registration of an individual.
  2. Registrar may investigate an individual or an organization to determine whether or not to grant registration
  3. The register may deny registration on a legitimate basis without giving the applicant the right of reply.
  4. The registrar may attach restrictions to the registration of an organization.
A
  1. The register may deny registration on a legitimate basis without giving the applicant the right of reply.
86
Q

When the original loan agreement between the lender and a seller of property is replaced by a new loan agreement between the lender and the buyer of the property for the mortgage debt, what legal concept has occurred

  1. Assignment
  2. Novation
  3. Redemption
  4. Foreclosure
A
  1. Assignment
87
Q

Given the following information, calculate the cash proceeds of sale to Victoria, the seller, from Peter, the buyer

Price: $200,000

Deposit to brokerage: $15,000

Financing: Ist mortgage of $92,000 to be assumed

2nd mortgage of $34,000 has been arranged

Taxes: Unpaid and overdue in the amount of $1,095. A penalty is owing of $105. These will be paid by the conveyancer

(-1095 ; -105 ; +369)

Commission: 5% of sale price (10,000)

Conveyancing Fees: $1000

Adjustment, completion & possession dates August 31st Note: Assume that it is NOT a leap year

  1. $97,166.00
  2. $96,169 00
  3. $97,169.00
  4. $82,169 00
A
  1. $97,169.00
88
Q

Which of the following statements about the Financial Institutions Commission (FICOM) is FALSE?

  1. FICOM is an agency of the provincial government that administers a number of statutes and regulations, including the Mortgage Brokers Act.
  2. FICOM’s jurisdiction includes credit unions, insurance and trust companies
  3. FICOM is solely responsible for enforcing all of the consumer protections granted by the Business Practices and Consumer Protection Act
  4. Through the Registrar of Mortgage Brokers, FICOM governs the registration of mortgage brokers and sub mortgage brokers
A
  1. FICOM is solely responsible for enforcing all of the consumer protections granted by the Business Practices and Consumer Protection Act
89
Q

In the comparative method of appraisal , it is MOST important that the subject building and the comparable building be :

  1. similar with respect to factors that have a major influence on the buyers and sellers.
  2. free from any mortgage on title.
  3. of the same general architectural style.
  4. constructed by either average or above average workmanship.
A
  1. similar with respect to factors that have a major influence on the buyers and sellers.
90
Q

You purchased a warehouse for $600,000 cash and redeveloped it over a 15 months period If you sold the warehouse for $725,000, what effective annual yield did you earn on this investment (assuming that these are the only cash flows)?

  1. 17.548922%
  2. 15.235263%
  3. 1.269052%
  4. 16.345450 %
A
  1. 16.345450 %
91
Q

You have promised to pay your friend $15,000 four years from today. What is the present value of the $15,000 if the effective annual rate is 7%?

  1. $11,443.43
  2. $19,661.94
  3. $14,655.05
  4. $10,995.68
A
  1. $11,443.43
92
Q

The “sophisticated persons exemption” applies to

  1. disclosure under the Business Practices and Consumer Protection Act
  2. conflict of interest disclosure (Forms 10 and 11)
  3. registration as a mortgage broker under the Mortgage Brokers Act
  4. the required disclosure to investors and lenders (Form 9)
A
  1. the required disclosure to investors and lenders (Form 9)
93
Q

Which of the following statements regarding a credit report is TRUE?

  1. Credit reports can be requested from, and are provided by, all major federally chartered financial institutions
  2. A credit report never provides information on credit balances in terms of credit limits.
  3. The applicant’s credit score accurately reflects their credit history.
    1. Companies must follow the legislation put forth by the provincial and federal government in order to gain access to an applicant’s credit report
A
    1. Companies must follow the legislation put forth by the provincial and federal government in order to gain access to an applicant’s credit report
94
Q

Which of the following is an offence under the Competition Act?

  1. Failure to disclose a conflict of interest
  2. Charging an excessive rate of interest
  3. Agreements in restraint of trade
  4. Committing mortgage fraud
A
  1. Agreements in restraint of trade
95
Q

An offer of $525,000 is accepted, comprised of a cash down payment of $100,000 and a vendor supplied mortgage loan of $425,000 at 5.5% per annum, compounded semi annually. The loan has an amortization period of 15 years, a term of 5 years and calls for monthly payments rounded up to the next higher dollar. Market rates of interest for equivalent mortgages are currently 9.5% per annum, compounded semi-annually The market value of the offer is:

  1. $463,807.98
  2. $466,323.73
  3. $461,690.44
A
  1. $466,323.73
96
Q

Assuming that none of the exemptions apply, in which of the following transactions would a mortgage broker be required to provide a Form 9 written disclosure statement ?

  1. A transaction where the mortgage broker arranges a mortgage for the lender in return for a commission.
  2. A transaction in which a mortgage broker arranges the sale of lender ‘s interest in a mortgage in return for the brokerage fee.
  3. A transaction in which a mortgage broker sells his or her interest in a mortgage to a third party.
  4. A Form 9 would be required in all the above circumstances.
A
  1. A Form 9 would be required in all the above circumstances.
97
Q

Your Client is considering borrowing $170,250 to purchase a new house, The loan is to be repaid over 25 years by monthly payments at an interest of J2 = 11.5%. Assuming that the payment are rounded up to the next higher $10, what is the amount of the final payment?

  1. $1,017.26
  2. $682.74
  3. $2,382.74
  4. $ 1,690.29
A
  1. $1,017.26
98
Q

With respect to the application of the Environmental Management Act (“EMA) to mortgages, which of the following is TRUE?

  1. Lenders can face liability under the EMA if they become registered owners of the property as a result of a foreclosure
  2. The EMA automatically makes a lender partially responsible for environmental contamination of a property if the lender’s mortgage was registered on title at the time of the contamination.
  3. Lenders can file a notice with the EMA before providing mortgage proceeds directing the Director of Waste Management to conduct an environmental assessment of the subject property
  4. The EMA has no application to mortgages
A
  1. Lenders can face liability under the EMA if they become registered owners of the property as a result of a foreclosure
99
Q

Who has the power to investigate a complaint about a breach of the Mortgage Brokers Act or the regulations?

  1. Real Estate Council of British Columbia
  2. Register of Mortgage Brokers
  3. Mortgage Brokers Errors and Omissions Insurance Corporation
  4. Mortgage Broker Council of British Columbia
A
  1. Register of Mortgage Brokers
100
Q

Which of the following elements are necessary to waive a condition precedent under section 54 of the Law and Equity Act

The waiver must be made before any time stipulated for fulfillment of the condition precedent, or within a reasonable time if no time is stipulated
The condition precedent must only benefit the party that seeks to waive it.
The condition precedent must have been made under seal.
The contract can be performed without the condition precedent being fulfilled
1. A and D only
2. B and C only
3. A, B and D only
4. All of the above

A
  1. A, B and D only

mortgage broker exam (13 decks)

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