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Cemap 2 > Unit 6 > Flashcards

Unit 6 Flashcards

1
Q

What must lenders provide borrowers with outlining all costs for extra work post completion?

A

Tariff of charges

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2
Q

Where will a tariff of charges be?

A

Tucked in with your mortgages statement

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3
Q

Lenders have to write to clients within how long in regards to arrears?

A

15 working days of a lender being aware of a missed payment

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4
Q

What is the single financial guidance body called for arrears?

A

Problems paying your mortgage

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5
Q

How long should records be kept after arrears being cleared?

A

3 years after

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6
Q

For arrears, charges a a result of what?

A

Debt

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7
Q

Does arrears have anything to do with the FCA?

A

NOOOOO

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8
Q

What’s the first thing you should do when you have arrears?

A

Contact the lender

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9
Q

What will a lender come up with when you contact them about arrears?

A

Come up with an arrangement

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10
Q

How could you clear arrears?

A 
Make interest only payments 
Extend the term 
Capitalisation 
Trade down
Allow the suspension of payments(short term)
Surrender the repayment vehicle
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11
Q

When can a lender get in touch with you for arrears? What hours between

A

8:00am-9:00pm 7 days a week

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12
Q

Lenders shouldn’t take more than…….direct debits in a month?

A

2

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13
Q

What is the only advice we give on arrears?

A

Can you pay the arrears over an agreed period?

You got yourself in get yourself out

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14
Q

You have up to…..months to clear arrears?

A

12

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15
Q

What is classed as medium term arrears?

A

Up to 12 months

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16
Q

What does litigation mean?

A

the process of taking legal action

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17
Q

What are the potential drawbacks of surrendering the investment vehicle?

A

No means of repaying capital
Poor surrender values
May not be possible to obtain new life cover

Alternatives
Sale of endowments

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18
Q

Is it legal to just hand the keys back when you’re in arrears to clear the debt?

A

No

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19
Q

When your in arrears your credit rating will be what?

A

Blemished

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20
Q

What is the waiting time for SMI from a claim being made?

A

There is a 39-week waiting period from the time you claim SMI until your first payment is made (unless you’re getting Pension Credit, in which case you can get help immediately).

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21
Q

What is the max claim on a SMI?

A

£200,000

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22
Q

What is the claim on a SMI?

A

The claim is the mortgage amount

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23
Q

Is SMI means tested?

A

Yessssss

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24
Q

Is a SMI available to those claiming income based benefits?

A

Yes

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25
Q

No claim can be made on a SMI if the person has over how much in their savings?

A

£16,000

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26
Q

From what year was SMI a secured loan?

A

2018

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27
Q

SMI is now a what provided by the government?

A

A mortgage

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28
Q

For SMI, the loan is written off on death if?

A

There is no equity in the property

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29
Q

Clients can voluntarily make payments of how much for a SMI?

A

£100

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30
Q

When are SMI mortgages reviewed?

A

Every 6 months

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31
Q

Are SMI mortgages paid for arrears?

A

No

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32
Q

What is a mortgage interest run on for a SMI?

A

Benefit paid for further 4 weeks after obtaining employment

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33
Q

What is the 52 week linking rule for for a SMI?

A

If you’re made unemployed within a year of the ending of a successful claim, you don’t have to wait another 39 week period.

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34
Q

Is a SMI a repayment vehicle?

A

NO

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35
Q

How do you work out the standard rate for SMI?

A

Average of the top lenders rates

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36
Q

What does a mortgage rescue scheme do?

A

Help homeowners facing repossession

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37
Q

What is a shared equity loan in a mortgage rescue scheme?

A

A registered social landlord issues and equity loan between 25-75% of the total mortgage

They will then take a share of the equity on sale

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38
Q

A sale and rent back for a mortgage rescue scheme must be given a fixed tenancy agreement of how long?

A

5 years

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39
Q

What are the four actions a lender can take against a borrower in default?

A
  1. Sue on the personal covenant for the debt
  2. Appoint a receiver
  3. Foreclosure
  4. Repossession
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40
Q

What does appointing a receiver do for a lender who is dealing with a borrower with defaults?

A

Receiver collects the rent and applies it to the account in default

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41
Q

When can you ONLY appoint a receiver for legal remedies upon default?

A

Only if there is an income from the property

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42
Q

Who does the receiver act on behalf of when appointing a receiver for legal remedies upon default?

A

Lender

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43
Q

Who is the agent when it comes to appointing a receiver for legal remedies upon default?

A

The borrower

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44
Q

What does foreclosure mean in terms of legal remedies upon default?

When is this used?

A

Lender repossess property and keep all the proceeds

Never

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45
Q

Does the law allow foreclosure?

A

No even though it’s a legal remedy

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46
Q

Even when a property is being repossessed what does the lender have to the borrower?

A

Duty of care

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47
Q

Should the lender consider letting the borrower to stay in the property when it is going be repossessed?

A

Yes

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48
Q

When a property is being repossessed the lender wants the best price. Who should it go to first?

A

Estate agent

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49
Q

For repossession offers must be made?

A

Public

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50
Q

When a house is being repossessed the court can order the outright possession usually within how long?

A

28 days

51
Q

After a house has been repossessed the borrower has the right to get their property back if they clear all debts and arrears before the property is sold. What is this called?

A

Equity of redemption

52
Q

If debt remains after a property has been repossessed and sold the lender must inform the borrower within how long?

A

6 years of their intention to pursue them for these amounts

53
Q

When a house has been repossessed and sold who takes what and in what order?

A

First charge takes what’s owed and then passes residue on to any second charge. Only when all charges are cleared are monies given to client.

54
Q

If a clients been bankrupt they may lose their property through a sale forced by who?

A

Official receiver

55
Q

If a sale of a house is being done because of a bankruptcy, it can be delayed for up to how long to allow the family to find alternative accomodation?

A

12 months

56
Q

Can you have a higher lending charge on a 2nd charge?

A

No

57
Q

When does MIG kick in?

A

75%

58
Q

Is income protection short or long term?

A

Long

59
Q

Is an investment is taking place do you need a suitability report?

A

No

60
Q

Mcob requires a lender must send a statement to the borrower every how
Often?

A

Annually

61
Q

From what date were bridging loans covered by MCOB?

A

March 2016

62
Q

Will a bridging loan lender take into account affordability?

A

Yea

63
Q

What is meant by open bridging?

A

Buying a new property before you have found a buyer for the current property

64
Q

Is open bridging risky?

A

Yes

65
Q

What is closed bridging?

A

Buying a property with a firm buyer in place for the current property

66
Q

When does closed bridging usually start?

A

Starts at or just after exchange of contracts

67
Q

When do bridging loans become unregulated?

A

If they’re over 12 months

68
Q

Any extension on a bridging loan must be treated as what?

A

A new loan and subject to affordability assessment unless the customer is high net worth

69
Q

A mortgage deed that obliges the lender to make a further advance means further advances will what?

A

Take priority over other lenders charges

70
Q

MCOB rules cover requirements for an illustration for a further advance. What must this illustration be based on?

A

On the amount of the further advance only

71
Q

What is an advantage of a home reversion plan over a lifetime mortgage?

A

Probably receive more cash

72
Q

When you remortgage who will the new mortgage be regulated under?

A

mortgage credit directive

73
Q

What will a borrower need when remortgaging?

A

Need a redemption statement to ascertain what the amount outstanding is including redemption penalties

74
Q

Increasing the level of borrowing to a higher LTV could also trigger what?

A

Higher lending charge

75
Q

When does a transfer of equity arise?

A

Arises when a borrower is added in o or removed from The contract

76
Q

Will a lender charge a fee for a transfer of equity?

A

Yes

77
Q

Oliver and harriett are considering remortgaging their property values at £200,000 from the £160,000 variable rate to a £175,000 fixed rate deal in order to build a conservatory. What should they be wary of?

A

The conservatory is unlikely to add any value to the property

78
Q

What is the most likely reason for a lender requiring a nee valuation when a borrower applies for a further advance?

A

The original loan to value ratio was high

79
Q

A mortgage deed that obliges the lender to make a further advance mean what?

A

That the further advances will take priority over the lenders charges

80
Q

What must an illustration for a further advance be based on under MCOB rules?

A

Based on the amount of the further advance only

81
Q

What is an advantage or a home reversion scheme compared to the lifetime mortgage when wanting to
Raise capital from their home?

A

They will

Probably be able to receive more cash

82
Q

Where are early redemption fees found? What doc

A

Mortgage deed

83
Q

What costs are included on mortgage exit administration fees?

A

Deeds release fees
HM LANs registry
Staff processing costs
A reasonable proportion of staff processing costs

84
Q

A new adult occupant moves in to a house that is subject to a mortgage. What responsibility does that impose on the borrower at that stage in relation to the mortgabe?

A

None - like my Paul moving in

85
Q

If you want to get a partner on your mortgage (further advance) and they’re an undischarged bankrupt what should the lender do?

A

Insist that they sign a consent to mortgage form if the further advance is approved in principe

86
Q

What risk is a borrower taking by consolidating unsecured debts into a repayment mortgage?

A

The increased risk of negative equity at some point in the future

87
Q

When might a court set aside a mortgage lenders early redemption fee?

A

It was considered so large that it effectively prevented early
Redemption

88
Q

The action of a lender releasing a borrower from his covenants is known as what?

A

Vacation

89
Q

What is meant by the term a clog on the equity of redemption?

A

Where a lender includes a term in the mortgage deed that deliberately prevents a borrower from repaying a mortgage early

90
Q

What can the lender do if someone wants to make a part payment on his mortgage?

A

Stipulate a minimum amount

91
Q

What does the letter include that’s sent to a client in arrears? 4 things

A

Money advice service
List of overdue payments and the total arrears
Total outstanding debt balance
Charges likely to be incurred as a result of arrears

92
Q

What is not going to be on a letter of arrears?

A

Redemption charges

93
Q

When an arrangement is agreed for arrears what should the lender do?

A

Send written confirmation to the borrower to use as evidence should the arrangement be broken

94
Q

In the event that the borrower is unable

To repay the debt the lender has the legal right to?

A

Demand repayment and seek possession

95
Q

A lender will sometimes want to discuss alternatives to seeking possession. What are some alternatives? 5

A 
Using other capital 
Trading down 
Extending term
Choosing a RIO
Equity release
96
Q

Can contribution based Jobseeker’s Allowance people get SMI?

A

No

97
Q

How is the SMI loan secured?

A

Secured by a second charge

98
Q

When must a SMI loan be repaid?

A 
When property is sold 
Or
Owner does
Or
Can be repaid voluntarily
99
Q

Is there a time limit on a smi claim?

A

No

100
Q

What happens is there isn’t enough equity to repay a smi loan?

A

Balance is written off

101
Q

What rate is used for the payment of a SMI loan?

A

Standard interest rate

102
Q

If the standard interest rate is more than the actual interest rate what happens

A

The excess is credited to the account

103
Q

What is interest run on for SMI?

A

Benefit will run on for a further 4 weeks where the applicant returns to work for a period or at least 5 weeks

104
Q

What does SMI exclude payments towards?

A

Endowment
Life insurance
Home insurance

105
Q

Can a SMI claim be accepted for a further advance?

A

Yessss

106
Q

Who are SMI payments made direct too?

A

Lender

107
Q

SMI claims made for further advances can be taken out to carry what out?

A

Essential repairs or home improvements

To buy out an ex partners share

108
Q

Why do mortgage rescue schemes exist and what do they do?

A

These schemes exist to help the borrower by either selling the property to a registered social landlord and then staying on as a rent paying tenant
OR
Selling part of the equity to a registered social
Landlord who will take a share in the equity on sale

109
Q

What do some mortgage rescue schemes allow?

A

The former owner to repurchase the property if the situation improves

110
Q

Who are mortgage rescue schemes usually run by?

A

Local councils
Housing associations
Lenders

111
Q

On which type of mortgage would it be least likely that arrears could be dealt with by extending the term?

A

With profits endowment

112
Q

Under the right of subrogarion the insurance company can also sue who?

A

The borrower for the amount that it had to pay to the lender

113
Q

Why is surrendering an endowment policy not usually recommended as a way of reducing arrears ?

A

The return is often small in relation to premiums paid

114
Q

A building society has completed the sale of a property that it had repossessed, there is a surplus. There are three further mortgages what happens now in respect of the disposal of the remaining surplus?

A

The society’s only obligation is to pay any surplus to the second mortgagee.

115
Q

Is interest payable or charged on a home reversion scheme?

A

No

116
Q

What is a disadvantage of a roll

Up lifetime mortgage?

A

Taking out such plan could lead to reduced state benefits

117
Q

Does a second charge usually charge a higher rate of interest than a first charge?

A

Yessss

118
Q

Who has the right of subrogation as a result of a successful claim under a mortgage indemnity guarantee policy?

A

Insurer

119
Q

If you request a further advance from your lender, before agreeing to the request the lender must carry out what?

A

Property assessment

120
Q

If you want to convert a mortgage from a capital repayment to a interest only what can the lender do?

A

They’re not obliged to agree

121
Q

What is the significance of a no equity arrangement on a lifetime mortgage?

A

The mortgage plus rolled up interest cannot exceed the property value

122
Q

If you have an unsecured loan or £3800, what change to this loan could increase the risk of his home being repossessed?

A

Switching it to secured status

123
Q

If you consolidate your debts under a remortgage package, and this has a drawdown facility. What does it enable you to do?

A

Increased the amount borrowed

124
Q

What event under a mortgage can give rise to subrogation rights?

A

Payout under a higher lending charge policy

Cemap 2 (6 decks)

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