UNIT 10 - Mortgage Financing and Fraud Awareness

Question 1

The pledging of real property to a lender as security for a loan

A) Mortgage
B) Referral
C) Mortgagee
D) Mortgagor

Answer 1

A) Mortgage

Question 2

Mortgagee is the ________________ and the mortgagor is the __________________

Choose only ONE best answer.

A) Borrower, lender
B) Lender, borrower
C) Pledger, borrower
D) Borrower, pledger

Answer 2

B) Lender, borrower

Question 3

Includes land, structures affixed to the land, and the rights and interests a person holds in respect to the land

A) Personal Property
B) Real Property
C) Fixed Assets

Answer 3

B) Real Property

Question 4

Refers to non-permanent items that can be removed without injury to the property.

A) Personal Property
B) Real Property
C) Fixed Assets

Answer 4

A) Personal Property

Question 5

Activities that include soliciting a person to borrow money, negotiating a mortgage contract, and collecting mortgage payments.

A) Referrals
B) Dealing in mortgages
C) Banking
D) Mortgage Broker

Answer 5

B) Dealing in mortgages

Question 6

The class of licence industry professionals require if they want to be authorized by RECA to deal in mortgages.

A) Referrals
B) Dealing in mortgages
C) Banking
D) Mortgage Broker

Answer 6

D) Mortgage Broker

Question 7

An alternate term used to describe personal property

Answer 7

Chatel

Question 8

Which of the following statements best describes the term amortization?

Choose only ONE best answer.

A) The pledging of real property as security for debt
B) The amount of time the borrower is committed to a lender for debt
C) The repayment of debt through a series of equal payments
D) A loan from a lender

Answer 8

C) The repayment of debt through a series of equal payments

Question 9

Which of the following statements best describes mortgage term?

A) The pledging of real property as security for debt
B) The amount of time the borrower is committed to a lender for debt
C) The repayment of debt through a series of equal payments
D) A loan from a lender

Answer 9

B) The amount of time the borrower is committed to a lender for debt

Question 10

What is a conventional mortgage?

Choose two

1. A mortgage where the loan to value is less than 80%
2. A mortgage where the loan to value is greater than 80%
3. A mortgage where the down payment is 20% or higher
4. A mortgage where the down payment is less than 20%

Answer 10

Statements 1 & 3

Question 11

What is a high ratio mortgage?

Choose two

1. A mortgage where the loan to value is less than 80%
2. A mortgage where the loan to value is greater than 80%
3. A mortgage where the down payment is 20% or higher
4. A mortgage where the down payment is less than 20%

Answer 11

2 & 4

Question 12

Which of the following activities requires an authorization from RECA as a mortgage professional?

A) Collecting borrower information
B) Negotiates a mortgage transaction
C) Administering a mortgage or collecting mortgage payments
D) Solicits a person to borrow or lend money that will be secured by a mortgage
E) All of the above

Answer 12

E) All of the above

Question 13

RECA plays an active role in the suppression of mortgage fraud. Which of the following statements is correct regarding its efforts?

A) Provides industry professionals with information and education regarding mortgage fraud
B) Works with other organizations also focused on the fight against mortgage fraud
C) Investigates industry professional conduct related to participation in mortgage fraud
D) All of the statements are correct regarding RECA’s efforts to fight mortgage fraud

Answer 13

D) All of the statements are correct regarding RECA’s efforts to fight mortgage fraud

Question 14

The standards of practice, Rules 41 & 42, establish the expectations of conduct for an industry professional. Which expectation of industry professional conduct is correct?
I. Provide competent service and comply with the legislation
II. Fulfill any fiduciary obligations owed to clients and act honestly
III. Conduct their business in accordance with Canada Revenue Agency
Vi. Avoid and disclose conflicts of interest and cooperate with RECA

A) Statements I and II
B) Statements I, II, and III
C) Statements I, II, and VI
D) Statements I, III, and VI

Answer 14

C) Statements I, II, and VI

Question 15

Which of the following is a trend in mortgage fraud?

A) Technology is making mortgage fraud easier
B) Mortgage fraud impacts residential properties only
C) Fraudsters typically do not seek accomplices for schemes
D) Mortgage fraud is prevalent only in rising real estate markets

Answer 15

A) Technology is making mortgage fraud easier

Question 16

Zack wants to buy a house, but does not have enough of his own funds to cover the gap between the required down payment and the amount for which he qualifies. He notices an ad offering houses for sale with ‘low down payments’ and calls the number. Herbert, a mortgage investor, answers the call and tells Zack that he can advance him the required funds and register a mortgage once the title transfers. He tells Zack this is a private arrangement and not to mention it to any mortgage lenders. What is this scheme called?

A) False deposit
B) Secret second
C) Equity access
D) Debt-consolidation

Answer 16

B) Secret second

Question 17

Tia, who rents an apartment, wants to buy a townhouse, but does not earn enough money to qualify for the mortgage. Her uncle agrees to provide an employment verification letter stating that she works at his store part-time. Using this letter, Tia obtains the mortgage and buys the townhouse. Which statement best describes this situation?

A) Tia did not commit mortgage fraud because she provided an employment verification letter
B) Tia did not commit mortgage fraud because she fully intends to make the mortgage payments
C) Tia committed mortgage fraud because she misrepresented her employment income
D) Tia committed mortgage fraud because she manipulated the value of the townhouse

Answer 17

C) Tia committed mortgage fraud because she misrepresented her employment income

Question 18

Susan has been unable to work due to a recent illness and has missed making her mortgage payments for the last two months. Steve contacts Susan and claims to be a mortgage specialist working on behalf of the lending institution who provided Susan the mortgage loan. Steve advises Susan that his company can make the mortgage payments until she can get back to work but requires an upfront fee of $500 to transfer the title of the property. As Susan does not want to default on her mortgage, she agrees to forward Steve the funds. Which mortgage fraud scheme has Steve perpetrated?

A) Equity access
B) Private financing
C) Vendor cash-back
D) Debt consolidation or foreclosure

Answer 18

D) Debt consolidation or foreclosure

Question 19

Flo, a new real estate associate with ABC Real Estate Services Ltd., is meeting with a potential buyer who is interested in purchasing an investment property. The buyer is a well-known businessman and considered wealthy. Flo asks him how he plans to finance the purchase. He tells Flo not to worry as he has income from various sources but does not want to disclose them due to tax considerations. What is the best course of action for Flo?

A) Flo should contact the Canada Revenue Agency
B) Flo should contact RECA regarding the buyer
C) Flo should proceed with the buyer’s instructions
D) Flo should ask more questions about financing the purchase

Answer 19

D) Flo should ask more questions about financing the purchase