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mortgage broker exam > mock 8 > Flashcards

mock 8 Flashcards

1
Q

The stabilized annual net income for your property is $90,000. If you sell the property for $575,000, what is the yield on this property?

  1. . 15.3043%
  2. . 8.2580%
  3. . 15.6522%
  4. .. 6.3889%
A

3..15.6522%

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2
Q

You have a partially completed appraisal report that you need to fill in. The subject property has 5 bedrooms and 4 bathrooms. The house next door is similar in all respects except for the number of bedrooms. The comparable sold for $650,000 and has 4 bedroom and 4 bathrooms. If the market value of a bedroom is $4,500 and the market value of a bathroom is $5,000, the adjusted sale price for this comparable is:

  1. 640,500
  2. 645,500
  3. 654,500
  4. 659,500
A
  1. 654,500
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3
Q

A $600,000 variable rate mortgage was written at 4% per annum, compounded semi-annually, to be amortized over 20 years with monthly payments rounded to the next higher dollar. The mortgage contract specified that the interest rate could be adjusted, on each anniversary of the mortgage, to the current market rate. Two years later, the market rate decreased to 3% per annum, compounded semi-annually. Calculate the required payments, rounded to the next higher dollar, after the second year, assuming the amortization period is not to be extended and the contract allows variable payments.

3,348
3,626
3,909
2,829

A

3,348

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4
Q

A mortgage broker is considering how her client would be affected if his income were to become interrupted for six months. This is known as:

strength – assessment
variability- measuring
income-assessment
stress-testing

A

stress-testing

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5
Q

Which of the following types of law falls within the public law?

The law of trespass
Criminal law
The law of nuisance
Agency law

A

Criminal law

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6
Q

A mortgage loan with a face value of $250,000 is arranged through a mortgage broker. A commission of $7,500, appraisal fees of $675, as well as survey and legal fees totaling $1,200 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 8.5% per annum, compounded semi-annually, with monthly payments over 20 year amortization and a five year term.

  1. 344991%
  2. 755823%
  3. 634197%
  4. 211350%
A

9.755823%

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7
Q

According to section 14 of the Mortgage Brokers Act, mortgage broker act, mortgage brokers and sub-mortgage brokers are prohibited from making ___________statements in promoting their services.

False, misleading or deceptive
Irresponsible, unethical or intimidating
Deceptive, malicious or aggressive
Exaggerated, misleading or impossible

A

False, misleading or deceptive

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8
Q

The “sophisticated persons exemption” applies to:

Disclosure under the Business Practices and Consumer Protection Act
Conflict of interest disclosure (Form 10 and 11)
Registration as a mortgage broker under the Mortgage Brokers Act
The required disclosure to investors and lenders (form 9)

A

The required disclosure to investors and lenders (form 9)

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9
Q

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

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

A

The mortgage broker must always disclose the conflict of interest.

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10
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. 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?

158
117
142
165

A

158

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11
Q

In BC, there are three basic requirements for a common law easement. Which of the following is NOT a requirement?

The easement must be capable of forming the subject matter of a grant

The easement must be filed in the Land Title Office to be valid
The easement must accommodate the dominant tenement
There must be both dominant and servient tenements

A

The easement must be filed in the Land Title Office to be valid

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12
Q

Who is responsible for ensuring that mortgage brokers meet the requirements of the Mortgage Brokers Act?

Real Estate Council of BC
Superintendent of Mortgage Brokers
Superintendent of Real Estate
Registrar of Mortgage Brokers

A

Registrar of Mortgage Brokers

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13
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:

reverse annuity mortgage
wrap-around mortgage
interim blanket mortgage
release-by-sale mortgage

A

interim blanket mortgage

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14
Q

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

  1. An employee of a grocery store forgot to clean up a spill on the beverage aisle. A customer slipped on the sill and broke his arm.
  2. An employee of a fitness gym noticed that a large number of free weights were lying on the mat when they should have been stored on the racks. Instead of putting the weights back onto the racks, the employee decided to leave them on the mat. A customer tripped on the weights 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 employee accidently backed into and damaged the neighbor’s fence.
  4. An employee of a car wash scratched the door of a 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 employee accidently backed into and damaged the neighbor’s fence.
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15
Q

In order to protect themselves form builders liens, individuals purchasing strata lots from the 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?

X= 10%; Y= 75
X= 20%; Y= 20
X= 7%; Y = 55
X= 15%; Y= 90

A

X= 7%; Y = 55

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16
Q

Alex puts an advertisement in the local newspaper offering to sell his property for 1 million. This advertisement is known at law as:

Offer to sell
Open offer
Invitation to treat
Standing offer

A

Invitation to treat

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17
Q

When a fraudster creates and uses fictitious employment records in order to secure a mortgage loan, it is known as:

transaction fraud
identity fraud
title fraud
qualification fraud

A

identity fraud

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18
Q

Jake is a member of a mortgage professional association and has just been found by a disciplinary committee to have breached the association’s bylaws. Which of the following penalties are likely to be available to the association to impose on Jake?

A. Suspension of the use of the association’s member services

B. Performance of community service

C. Imprisonment for offences which are also criminal in nature

D. A monetary fine

A , B and D only
A and D only
B and C only
All of the above.

A

A and D only

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19
Q

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

A. From the mortgagor’s prospective, the reverse annuity mortgage allows a means by which the equity rich mortgagor may postpone selling his house.

B. In a variable rate mortgage, the interest rate is changed periodically while the required payment is never changed.

C. In graduate payment mortgages, payments are increased during the loan term.

D. One of the benefits that the “blend and extend” option off refinancing is that it helps borrowers avoid prepayment penalties.

Only C is true
Only statement B and D are true
Only statement A , C and D are true
All of the above.

A

Only statement A , C and D are true

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20
Q

changes in mortgage interest rates tend to lag behind changes in bond yields in both upward and downward movements. One reason for this “stickiness” is:

  1. The short-term nature of a mortgage loan contract
  2. Mortgages are highly liquid investments
  3. They have wide use of advance commitments for a rate of interest before a loan is advanced
  4. Mortgage rates do not change during fluctuations in the national economy.
A
  1. They have wide use of advance commitments for a rate of interest before a loan is advanced
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21
Q

Lucy ask Ricci to act as her agent at the auction of the paintings of a famous BC painter. Lucy is an enthusiastic art collector and tells Ricci that no matter what, she must become the owner of the deceased’s famous “Apple tree” painting. Ricky is also told that under no circumstances is he to come away from the action without binding painting for Lucy. At the action, the deceased BC painter’s “Apple tree” painting is offered with a second “small tree” painting. The two paintings are offered as a package and accordingly, Ricci as the successful bidder, purchases both paintings for Lucy. What type of authority did Lucy provide Ricci with in their agency relationship?

Express authority only
Both express and implied authority
Customary authority only
Neither express nor implied authority as there has been a breach of implied authority.

A

Both express and implied authority

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22
Q

The anchoring effect is best described as:

  1. A physiological phenomenon whereby the first number quoted in a negotiation causes the rest of the negotiation to be based on that number.
  2. An economic trend that prevents the value of any one property in a neighborhood. rising too far above the value of the least valuable property in that neighborhood.
  3. 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.
  4. A market force that causes all commission rates in an area to fall uniformly in proportion when one licensee in the area reduces his or her commission rate.
A

1.A physiological phenomenon whereby the first number quoted in a negotiation causes the rest of the negotiation to be based on that number.

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23
Q

A mortgage lending, a ‘bonus’ is:

  1. The mortgage principal amount outstanding at any point in time.
  2. The portion of the face value of a mortgage loan which exceeds the funds actually received by the borrower.
  3. The amount of the future value of a mortgage loan that is received by the mortgage broker for arranging the loan.
  4. The fee charged by a mortgage broker that can be deducted or added to the future value of the loan.
A

2.The portion of the face value of a mortgage loan which exceeds the funds actually received by the borrower.

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24
Q

A caveat is:

A warning issued by a court.
A specific type of builder’s lien.
Formal to anyone searching title that a course action has been commenced concerning the property.
None of the above.

A

None of the above.

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25
Q

Loss in value caused by outmoded or inadequate design is known as:

salvage value
physical depreciation
functional depreciation
capital value allowance

A

functional depreciation

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26
Q

Your $150,000 loan has quarterly payments (rounded up to the next higher 10 dollars) over an amortization period of 20 years and a nominal interest rate of 6% per annum, compounded semi-annually. Calculate the final payment.

1,730.77
1,817.34
3,219.43
1,912.58

A

1,817.34

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27
Q

Which of the following statements regarding mortgages is TRUE?

An acceleration clause allows the lender to accelerate the expiry of the term of the mortgage and demand repayment of the entire loan amount, provided that the borrower is given ‘three months’ notice.
Upon the execution of the mortgage contract, the lender is required to advance the total amount of the mortgage immediately, regardless of the terms of the mortgage.
Under the Property Law Act, a lender cannot require the borrower to obtain the advance consent of the lender before making any alterations or improvements to the property.
4. The mortgage contract, in addition to the common law, provides the lender with a number of options and remedies to pursue when the borrower defaults on the mortgage. It is up to the lender to choose the remedy it feels is most advantageous in the circumstances

A
  1. The mortgage contract, in addition to the common law, provides the lender with a number of options and remedies to pursue when the borrower defaults on the mortgage. It is up to the lender to choose the remedy it feels is most advantageous in the circumstances
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28
Q

The disclosure by mortgage brokers and lenders under the Business Practices and Consumer Protection Act is focused on:

  1. Individuals who borrow for primary personal, family or household purposes.
  2. Individuals who are particularly vulnerable to deceptive actions by lenders.
  3. Borrowers who borrow for commercial purposes.
  4. All borrowers, regardless of their purpose for borrowing.
A

4.All borrowers, regardless of their purpose for borrowing.

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29
Q

When Mike entered into a contract, he was 18 years old. The contract was for a two year telephone plan with Telus with the requirements for him to make monthly payments in exchange for telephone service. The Telus representative thought that Mike was 19 years old because he signed up for a plan payable to university students. After reaching 19, Mike keeps making monthly payments for several months. Assuming that the contract is governed by the laws of BC, which of the following statements is TRUE?

  1. The contract is voidable by Mike as it was made when he was an infant.
  2. The contract is void as it was made between an infant and a party who did not know that it was dealing with an infant.
  3. The contract is enforceable because only those individuals who are less than 18 years old are considered to be “infants’ in BC
  4. The contract is enforceable as Mike continued to perform it after turning 19
A

4.The contract is enforceable as Mike continued to perform it after turning 19

30
Q

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

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

A

FICOM is solely responsible for enforcing all of the consumer protections granted by the Business Practices and Consumer Protection Act

31
Q

Doug makes an offer to Tim. Which of the following will NOT release Doug’s offer?

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

Doug discovers later that Tim is illiterate

32
Q

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

  1. Lenders can face liability under the EMA if that 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

Lenders can face liability under the EMA if that become registered owners of the property as a result of a foreclosure.

33
Q

An investor wants to decide whether he should buy a mortgage which calls for monthly payments of $450 for 20 years. If the investor can earn J12= 3% in other investments, at what price should the investor purchase the mortgage?

62,811.35
81,139.91
86,100.37
94,894.40

A

81,139.91

34
Q

A young executive applied to his bank for a mortgage loan to enable him to purchase a house. His income is $45,000 per year. The bank informs him they will apply a 30% gross debt service ratio when calculating his maximum loan, and that the current mortgage rates are 4.5% per annum, compounded semi-annually for 20-year amortization. The Bank of Canada’s posted 5-year term rate is 4.25% per annum, compounded semi-annually. Annual property taxes are $1,500 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 uninsured mortgages?

135,043. 81
150,698.35
147,986. 22
140,412.28

A

135,043. 81

35
Q

Which of the following statements regarding mortgage default insurance are TRUE?

A. An insured mortgage is generally referred to as a conventional mortgage.

B. In Canada, an insured loan can only be obtained from private lenders.

C. In a majority of cases, the insurance fee is added onto the loan amount since borrowers have used their cash for the down payment and other transaction costs.

D. With an insured mortgage, an insurance company guarantees that the lender can recover all of the funds loaned on case of default.

Only statements C and D are true
Only B and C are true
Only A, C and D are true
All of the above are true.

A

Only statements C and D are true

36
Q

Your friend took out an interest only loan at the bank. She borrowed $178,000 at an interest rate of 4.75% per annum, compounded semi-annually. She makes quarterly payments and the loan has a term of five years. What is the amount of her 13th quarterly interest only payment?

$2,825.09
$2,101.35
$697.72
$10,044.17

A

$2,101.35

37
Q

The acts of discouraging the reduction of prices, placing upwards pressure on prices, and discrimination against someone because of their low pricing policy (by means of threat, promise or agreement) are offences under the:

Mortgage brokers act
Competition act
Business practices and consumer protection act.
Price maintenance act.

A

Competition act

38
Q

Which one of the following people would not be specifically exempted from the current registration requirements of the mortgage brokers act?

  1. Selma Seto, a mortgage loans officer at one of the banks listed in the Bank Act of Canada.
  2. Joe Page, a criminal lawyer, helps clients out when in need by lending them money on the security of their property. He has collected $19,000 of fees this year
  3. Al Cooper is a real estate licensee who facilitates the sale of a vendor take-back mortgage for a client during the course of one of his real estate transactions.
  4. Jane Simmons, an employee of the ministry of finance for British Columbia (and the ministry lends money to low income households on the security land.
A

Joe Page, a criminal lawyer, helps clients out when in need by lending them money on the security of their property. He has collected $19,000 of fees this year

39
Q

Which of the following statements is/are FALSE with respect to the statements of adjustments?

A. The practice is to hold the seller responsible for the taxes on the adjustment date itself.

B. The adjustment date and the possession date do not have to be on the same day.

C. The total of the debit column on the sellers statement must be identical to the total of the credit column on the buyers statement.

D. On the completion date of the sale of real property , the buyer is usually entitled to the transfer of title.

Only A and B are false
Only A and C are false.
Only B and C are false.
All of the statements are false.

A

Only A and C are false.

40
Q

Farmer Browns fruit trees have been destroyed as a result of the flooding of his fields caused by the outflow from a neighboring municipality to add more storm sewers which all drain into the only one central drainpipe. A rising municipal population has prompted the municipality to add more storm sewers which all drain into only one central drain system. Farmer Brown has asked the municipality to reroute the storm runoff, but to no avail. Which of the following statements is TRUE?

A. The municipality may successfully defend against a lawsuit by Farmer brown if it can prove that the flooding is the unavoidable result of doing an act authorized by statute law.

B. These facts reveal an example of the tort called occupiers liability.

C. An injunction may be available to Farmer Brown as a remedy.

D. The municipality may successfully defend against a lawsuit by Farmer Brown, by showing that the majority of the municipal residents benefit from this central drain system.

Only A and C are true.
Only B is true
Only C and D are true.
Only A is true.

A

Only A and C are true.

41
Q

Susan plans on suing John for breach of contract. John can expect to be served first with what type of document?

Notice of civil claim
Response to civil claim
Notice of motion
Statement of defense.

A

Notice of civil claim

42
Q

Which one of the following is FALSE?

  1. Both arbitration and mediation can produce non-binding resolutions.
  2. The neutral third party in both arbitration and mediation may impose a binding solution.
  3. The rules of evidence are relaxed for arbitration and mediation.
  4. Both arbitration and mediation are less formal then the courts.
A

The neutral third party in both arbitration and mediation may impose a binding solution.

43
Q

Which of the following statements about fixtures and chattels are FALSE?

  1. Where an object is affixed to land for the better use or enjoyment of the object as an object, it will be considered a fixture.
  2. Items that are fixtures go with the land and will belong to the buyer upon completion. While chattels remain the personal property of the seller.
  3. Articles that are affixed to the land, regardless of how slightly, are initially presumed to be fixtures (unless circumstances show otherwise)
  4. To determinate whether a piece of property is a fixture or a chattel, the courts have adopted a general three-part test.
A

Where an object is affixed to land for the better use or enjoyment of the object as an object, it will be considered a fixture.

44
Q

Which of the following statements is FALSE with respect to fee simple estates?

  1. A fee simple owner has more rights over his or her land than an owner of any other kind of estate in land.
  2. The land act allows the government to make further reservations for its benefit over free simple estates.
  3. If a fee simple owner dies with no will and no heirs, the property escheats back to the previous owner of the land or his or her heirs.
  4. The crown is the absolute owner of any fee simple estate.
A

If a fee simple owner dies with no will and no heirs, the property escheats back to the previous owner of the land or his or her heirs.

45
Q

An investor deposits $5,000 in a savings accounts which bears interest at a rate of 3% per annum , compounded daily. What amount will be on hand at the end of 4 years?

$5,637.46
$5470.85
$5,627.54
$5,600.00

A

$5,637.46

46
Q

You are trying to calculate the market value of an income producing property. In order to determinate the market value, however, you must find the yield of several comparable properties and determinate a market capitalization rate. The following information is for the recent sale of a similar income producing property:

Selling price $864,000
Gross potential revenue $100,000 per annum
Operating expenses $22,750 per annum
Market vacancy rate 4%What is the yield on the sale of the comparable property?
 8.11722%
 8.47801%
 9.98964%
 8.94097%
A

8.47801%

47
Q

Your client makes an offer to purchase a house , subject to obtaining an acceptable first mortgage. A lender , who has appraised the property at $560,000 , requires a 80% loan to value ratio and a 32% gross debt service ratio. Property taxes are $6,365 per annum and your client has a gross income of $130,000 per year. What is the maximum amount this lender will advance if the rate is J2=5.75%, the amortization period is 25 years , and payments are to be made monthly:

$469,783.37
$554,647.04
$440,000.00
$448,000.00

A

$448,000.00

48
Q

The promotional mix is a blend of:

  1. Personal selling , advertising , place , price and promotion.
  2. Product , price , personal appearance , public relations and sales promotion.
  3. Personal selling , advertising , public relations, sales promotions and publicity.
  4. Product , price , place and personal appearance.
A

3.Personal selling , advertising , public relations, sales promotions and publicity.

49
Q

Consider the scenario where a lender offers a low upfront mortgage rate and then raises the mortgage rate to market levels within six months to two years. This would be best described as a :

Refinancing mortgage
Teaser rate mortgage
Blend and extend mortgage
Reverse mortgage

A

Teaser rate mortgage

50
Q

You are assigned the task of appraising a small apartment building. Current construction cost 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.

$1,010,000
$1,209,000
$1,179,000
$1,090,909

A

$1,209,000

51
Q

Which of the following statements regarding a credit score is FALSE?

  1. A low credit score will typically allow a borrower to get the lowest mortgage interest rate.
  2. A low credit score indicates a high risk of delinquency.
  3. A credit score of 0 may mean that the applicant has a very little or no credit.
  4. In order to improve a credit score , a barrower should not exceed the credit limits on his or her credit cards.
A

A low credit score will typically allow a borrower to get the lowest mortgage interest rate.

52
Q

Which of the following statements regarding generally accepted accounting principles are TRUE?

A- The consistency principle holds that changes to accounting principles should only be made when the change results in providing more relevant and useful information to the user of the financial statements.

B-The objectivity principle is closely aligned to the cost principle because the best way to ensure objectivity in accounting transactions is to record the amount of consideration given up at the date of transaction.

C- To conform with the cost principle it is important to record the asset at what might be considered its fair market value instead of what the enterprise paid for it.

D-The matching principle requires the cash basis of accounting; that is, expenses are always recorded when they are paid, which is not necessarily when they were incurred.

Only statements A and D are true.
Only statements C and D are true.
Only statements A and B are true
Only statements B and C are true

A

Only statements A and B are true

53
Q

Which of the following statements best describes a “strata plan”?

  1. A document that outlines the development plan for the relevant local government including timelines, for the strata project.
  2. A document that is used for the marketing of a strata development property in accordance with the Real Estate development marketing act.
  3. A document that designates which parts of a strata project are strata lots and which are common property.
  4. A document that contains blueprints and building specifications for each of the strata units that will be built within the strata project.
A

A document that designates which parts of a strata project are strata lots and which are common property

54
Q

The registrar of Mortgage brokers has the power to order that a person pay an administrative penalty up to a maximum of:

$50,000
$1,000
$500,000
$1,000,000

A

$50,000

55
Q

A property is listed for $725,000, the market value is estimated to be $715,000 and the property’s lending value is estimated to be $700,000. If you purchase the property for $705,000 subject to a mortgage of $525,000, what loan to value ratio was applied by the lender that you negotiated the mortgage with? Assume that the loan to value to value ratio was the binding constraint on the loan size:

75%
70%
65%
80%

A

75%

56
Q

If you were to become a limited partner in business , it would be important to know that in a limited partnership:

  1. Limited partners may still take part in the day to day operations and remain limited partners.
  2. Limited partners can be actively engaged in managing the business without any consequences to their partnership status
  3. Limited partners have liability to creditors which is limited to the amount of money that they have invested in the business.
  4. Limited partners, because they are not involved in the day to day operation of the business, are taxed at a lower rate than general partners with respect to individual distributions.
A
  1. Limited partners have liability to creditors which is limited to the amount of money that they have invested in the business.
57
Q

Which of the following message sources would be considered the MOST credible?

Sales promotion
Email
Personal selling
Word of mouth

A

Word of mouth

58
Q

The purpose of code of ethics is to:

A. Define the minimum standard of conduct for professionals, as required by law.

B. Maintain the reputation of the profession in the eyes of the public.

C. Set out the remedies that a person may have against a professional who has wronged him or her.

D. Replace the rigidity of the legal system of professionals

A only
B only
C and D only
All of the above.

A

B only

59
Q

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

Straight line principal
Accelerated by-weekly loans
Interest only loans
Interest accruing loans

A

Interest accruing loans

60
Q

A mortgage was written for $60,000 at an interest rate of J2 = 10% , an amortization period of 20 years and monthly payments. Calculate the balance owing at the end of five years rounded to the nearest dollar?

$54,885
$53,753
$53,806
$56,372

A

$53,753

61
Q

Your client bought a house two years ago, at which time he arranged a $210,000 mortgage. This loan was written at a nominal rate of 6.5% per annum, compounded semi-annually , with a ten year term and amortization period , and a monthly payments. Today your client has received and offer to buy his house for a $50,000 cash plus assumption of his mortgage. If current mortgage rates are 8% per annum , compounded semi – annually , for eight year term loans , what is the market value of the offer?

$268,023.90
$218,023.90
$246,890.11
$218,812.85

A

$218,812.85

62
Q

An investor has the opportunity to invest in one of four alternative mortgages , each with the same degree of risk. The only distinction between these investments is the rate of the interest charged to the borrower. These rates are :

Loan A : 3.25% per annum, compounded daily.
Loan B : 3.50% per annum , compounded quarterly.
Loan C : 3.45% per annum, compounded semi-annually.
Loan D : 3.25% per annum , compounded annually.
Assuming that the investor can purchase each mortgage for the same amount of the money which investment will the investor prefer:

Loan A
Loan B
Loan C
Loan D

A

Loan B

63
Q

Which one of the following does NOT form part of the definition of market value?

  1. Value is the price which might reasonably be expected.
  2. The buyer and seller must have bargaining at arm’s length.
  3. Value is determinate at a particular point in time.
  4. Value is based on the personal opinion of the value to the owner.
A
  1. Value is based on the personal opinion of the value to the owner.
64
Q

Which of the following statements regarding mortgage loans is false:

  1. An open mortgage usually has a contract rate that is lower than an equivalent closed mortgage.
  2. Default means that a borrower is not making any mortgage payments
  3. An estimate of the amount that might be received if the existing mortgage was sold in an arms-length transaction under current conditions is known as the market value of the mortgage.
  4. Partially amortized mortgages are almost universally used for long term mortgage financing in Canada.
A

1.An open mortgage usually has a contract rate that is lower than an equivalent closed mortgage.

65
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?

A. Upon Mandy’s death, the entire interest remains with the surviving joint tenant, Eric.

B. By gifting her interest in the unit to Melvin, Mandy severed the joint tenancy.

C. Melvin and Eric now own the unit as tenants in common.

D. Melvin and Eric now own the unit as joint tenants.

Only A is false
Only D is false
Only A and D are false
Only B, C, and D are false

A

Only B, C, and D are false

66
Q

A company is looking to receive a second mortgage on its business offices. The lender requires a total loan to value ratio of 70%. The property is currently valued at $8,000,000 and the outstanding balance of the first mortgage is $3,200,000. The company’s net operating income is $600,000. Calculate the maximum additional financing available to the company using the loan to value ratio:

$7,650,000
$3,360,000
$2,400,000
$5,621,000

A

$2,400,000

67
Q

With respect to record keeping and according to the mortgage brokers act regulations, which of the following statements is False?

  1. Records may be kept in electronic form , provided that the record can be easily reproduced in a printed format.
  2. A mortgage broker can enter into a contract with a third party provider to relinquish the control of all mortgage transaction records.
  3. Mortgage brokers can keep inactive records on site or in a secure offsite storage facility where the records can be easily retrieved and made available.
  4. All records relating to each mortgage transaction in which the mortgage broker is involved must be kept for seven years.
A
  1. A mortgage broker can enter into a contract with a third party provider to relinquish the control of all mortgage transaction records.
68
Q

Eric and Lorne are about to begin a second day of negotiations on a very lucrative deal , which is important to both parties. The first day of negotiation took place at a rented meeting room paid for by both Eric and Lorne. A number of minor concessions were made by both sides. However the major issues still need to be resolved. The next morning , Eric phones Lorne to advise that the location of the negotiations has to be changed and will now take place in the boardroom at this penthouse office. The air conditioning has been turned off and the air is humid and hot. Lorne arrives on time but Eric deliberately makes Lorne wait for almost an hour. Then just when Lorne is about to leave , Eric shows up, accompanied by his lawyers , to continue the negotiations . Which one of the following responses would NOT BE APPROPIATE for Lorne to make?

  1. Lorne could continue with the negotiations despite the less than ideal situation.
  2. Lorne could raise the issues of the temperature and humidity and suggest an alternative location for the negotiations to continue.
  3. Lorne could insist upon a break from the negotiations and refuse to continue until they find a more suitable location for the negotiations
  4. Lorne could clearly state that this change of venue by Eric was obviously just a dirty trick to shift the advantage to Eric’s ”home court” and that Lorne will not stand for it.
A
  1. Lorne could clearly state that this change of venue by Eric was obviously just a dirty trick to shift the advantage to Eric’s ”home court” and that Lorne will not stand for
69
Q

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

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

3.The immobility of real estate as a commodity allows it to be moved to a better market.

70
Q

Which of the following is NOT a privacy principle from the personal information protection:

Limit collection
Obtain consent
Provide recourse
Identify proposal

A

Identify proposal

mortgage broker exam (13 decks)

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