Unit 4 Topic 11&12 Flashcards
Which one of the following, in relation to bankruptcy, is correct?
A An individual who has been an undischarged bankrupt for over one year is not legally obliged to declare this to a mortgage lender.
B Bankruptcy always means the loss of any family home if it is a mortgaged
property.
C The forced sale of a mortgaged property is often delayed in situations where
only one of the partners is bankrupt.
D The previous credit history of a discharged bankrupt must not prejudice a
mortgage lender’s decision to grant a mortgage.
C The forced sale of a mortgaged property is often delayed in situations where
only one of the partners is bankrupt
When verifying the identity of a mortgage applicant, a lender has a legal
obligation to adhere to regulations of the prevention of money laundering. To
which of the following does this obligation relate?
A The Financial Services & Markets Act 2000
B The Proceeds of Crime Act 2002
C The Data Protection Act 1998
D The Theft Act 1968
B The Proceeds of Crime Act 2002
Ben is completing a mortgage application form and notices that he must disclose
that he is subject to an individual voluntary arrangement (IVA). How might this
affect his application?
A He is legally prevented from borrowing until the IVA has expired.
B The lender might consider granting a mortgage but he may be regarded as a
poor risk.
C He will need to obtain agreement from all his creditors before he can take out
a mortgage.
D He is legally prevented from borrowing unless the insolvency practitioner
agrees.
B The lender might consider granting a mortgage but he may be regarded as a
poor risk.
Under the provisions of the Fraud Act, a lender can prosecute an applicant who
attempts to obtain a mortgage by deception:
A irrespective of whether a mortgage is actually completed.
B only if any mortgage granted falls into arrears.
C only if a mortgage is completed.
D if a loss is incurred on sale of the property following possession by the
lender.
A irrespective of whether a mortgage is actually completed
A guarantor should always be:
A advised to seek independent financial advice first.
B prepared to put up collateral security for the loan.
C advised to seek independent legal advice first.
D a body with a separate legal entity
C advised to seek independent legal advice first.
A guarantee will be rendered invalid in which of the following circumstances?
A If the guarantor can prove that he is not able to meet a substantial liability.
B When undue influence or misrepresentation can be proven.
C Where a borrower can show that a proposed new guarantor would be more
suitable.
D Where the term of a mortgage loan is to be extended
B When undue influence or misrepresentation can be proven
In which of the following circumstances would a mortgage lender be most likely
to agree to release a personal guarantor from his agreement?
A If the lender is satisfied that the guarantee is no longer required.
B If it is proved that he no longer has the means to guarantee payments.
C If the mortgage is nearing the end of its term.
D If the guarantor can prove that he did not receive independent legal advice.
A If the lender is satisfied that the guarantee is no longer required.
Alan has offered to provide a limited liability guarantee for his daughter’s
mortgage. The lender:
A Will be required to assess whether Alan could afford to take on the
mortgage payments should his daughter fail to make the payments.
B Will be required to explain that Alan will be responsible for the whole
mortgage if his daughter fails to make the payments.
C Will insist that Alan becomes party to the mortgage for the period of the
guarantee.
D Will take a charge over Alan’s residential property.
A Will be required to assess whether Alan could afford to take on the
mortgage payments should his daughter fail to make the payments.
Which of the following is most likely to apply in relation to a guarantor
mortgage?
A A third party deposits an agreed cash amount with the lender, who then holds
the funds for an agreed period as security.
B The guarantee can be provided by any form of additional security held be a
third party.
C The guarantee can be used to cover any increases in mortgage repayments
that occur when interest rates rise.
D The lender can call on the guarantee at any point during the mortgage term.
A A third party deposits an agreed cash amount with the lender, who then holds
the funds for an agreed period as security
In what circumstances, if any, is it acceptable for a specialist sub-prime
lender to recommend a sub-prime mortgage to a client with a good credit
history?
A It is not acceptable in any circumstances.
B Only if the adviser can demonstrate that the client will not be disadvantaged
in comparison with suitable standard mortgages.
C Only if the adviser states in writing before the recommendation is made that
the firm can only recommend sub-prime products.
D Only if the client signs a disclaimer confirming they understand that they
may be able to obtain a better deal from an alternative lender.
B Only if the adviser can demonstrate that the client will not be disadvantaged
in comparison with suitable standard mortgages.
Which of the following types of mortgage is generally most appropriate for a risk averse customer? A A low cost endowment mortgage B A unit-linked endowment mortgage C An ISA mortgage D A capital & interest mortgage
D A capital & interest mortgage
Kevin is 43 years of age and arranging a 25-year repayment mortgage. He
expects to retire at age 60. What specific matter needs to be raised by Kevin’s
mortgage adviser?
A Whether income protection insurance cover can continue until the end of the
mortgage term.
B What level of income Kevin is likely to have in retirement.
C Whether a personal pension life assurance policy would be preferable to
mortgage protection insurance.
D The extent to which the monthly payment will be reduced if the term is
extended.
B What level of income Kevin is likely to have in retirement.
When considering a suitable term for a capital and interest mortgage, what
guiding principle should the mortgage adviser adopt?
A The longest appropriate term should usually be recommended.
B The shortest appropriate term should usually be recommended.
C Where possible the term should always run until after the borrower’s intended
retirement age.
D Where possible the term should always run until the borrower’s state pension
age.
B The shortest appropriate term should usually be recommended
Sam, a mortgage advisor, is seeking to establish if his customer is able to manage
his finances effectively. The most likely initial requirement would be for Sam to:
A approach an organisation such as Experian.
B do a search for county court judgements.
C review a number of bank statements.
D write to the customer’s accountant
C review a number of bank statements.
Polly, a mortgage adviser, has recommended a product to Sean that carries early
repayment penalties. In order to confirm that this product matches his
immediate needs, as well as those for the longer term, as a priority she should:
A assume Sean will not repay the mortgage early.
B check Sean’s understanding and acceptance of the implications.
C emphasise the longer term advantages.
D refer Sean to the key facts illustration.
B check Sean’s understanding and acceptance of the implications.
