Unit 6 Topic 28&29 Flashcards
The Mortgage Conduct of Business Rules require a lender to make a record of
its dealings with a borrower whose regulated mortgage contract is in arrears.
For how long must this record be maintained?
A Three years from the date of their dealings.
B One year from the date the account went into arrears.
C Five years from the date on which the arrears were cleared.
D Five years from the date the account went into arrears.
A Three years from the date of their dealings.
On which type of mortgage would it be LEAST likely that arrears could be dealt with by extending the term? A Repayment B Unit-linked endowment C With-profits endowment D Pension
C With-profits endowment
If a court grants a lender the right to outright possession, the lender can take possession of the property in: A 7 days B 14 days C 28 days D 3 months
C 28 days
Following repossession & subsequent sale, a claim on a mortgage indemnity
guarantee can be made when the:
A outstanding loan exceeds 80% of the property value.
B property value exceeds 80% of the outstanding loan.
C outstanding loan exceeds the sale price.
D property value exceeds the outstanding loan.
C outstanding loan exceeds the sale price.
Under the MCOB rules regarding the automatic capitalisation of payment
shortfalls, the impact of such capitalisation, together with any previous
automatic capitalisations, is not considered to be material where:
A the borrower’s monthly payments will increase by less than £10
B the borrower’s mortgage is at a loan to value of less than 50%
C the total interest payable over the mortgage term will increase by less than £50
D the total of the capitalised payment shortfalls is less than £1,000
C the total interest payable over the mortgage term will increase by less than £50
Why is surrendering an endowment policy NOT usually recommended as a way
of reducing arrears?
A Benefits are in trust to the lender.
B The return is often small in relation to premiums paid.
C There is a tax charge of 20% for early encashment.
D A replacement investment vehicle will always be required.
B The return is often small in relation to premiums paid.
A borrower in arrears retains the right to settle the mortgage debt until the:
A property is sold.
B property is advertised for sale.
C lender takes possession.
D debt exceeds one year’s interest.
A property is sold
June and Tim have a capital repayment mortgage. They have built up a
significant sum of arrears on this mortgage owing to an illness sustained by Tim, a self-employed builder. Their lender has agreed to allow them to reschedule the arrears now that Tim is back in regular employment. What would be the effect
on their mortgage of this rescheduling?
A They will pay an increased rate of interest on their loan for an agreed period.
B They will pay a lower rate of interest on their loan for an agreed term.
C The term of the mortgage account will be extended to enable them to reduce
their monthly repayment.
D It would increase their monthly repayment for an agreed period while they clear the arrears.
D It would increase their monthly repayment for an agreed period while they clear the arrears.
Joanne’s property has recently been taken into possession by her mortgage
lender. What are the implications for Joanne?
A If the lender sells the property for more than the original loan taken out by
Joanne, then any difference between the original purchase price and the sale
price must be immediately passed to Joanne.
B Joanne can reclaim her property by redeeming her loan in full before the
property is sold.
C Joanne can only stop the lender selling the property by clearing the
outstanding arrears.
D The lender must delay the sale of the property until the sale price covers
Joanne’s original loan.
B Joanne can reclaim her property by redeeming her loan in full before the
property is sold.
Andy’s mortgage has recently gone into arrears. His first missed payment was
on Monday 1st July. His lender became aware of the missed payment on
Wednesday 3rd July. When is the latest date that the lender must write to warn
Andy of the situation?
A Monday 8th July
B Wednesday 10th July
C Wednesday 24th July
D Monday 15th July
C Wednesday 24th July
On a repossession hearing, the power of discretion is provided to the County
Courts to:
A Suspend or adjourn possession proceedings instigated by lenders.
B Allow lenders to capitalise mortgage arrears.
C Insist that lenders extend a mortgage term to assist borrowers in difficulty.
D Ensure that lenders do not increase interest payments on arrears.
A Suspend or adjourn possession proceedings instigated by lenders
A building society has completed the sale of a property that it had repossessed
and has realised a surplus of £25,000. If there are three further mortgagees,
which of the following statements in respect of the disposal of the surplus is
correct?
A It will be passed directly to the former borrower who will be asked to satisfy
any other debts they have directly with other lending institutions.
B The society only has an obligation to settle the debt of the second mortgagee.
It will return the remainder of the surplus to the former borrower.
C The society’s only obligation is to pay any surplus to the second mortgagee.
D The society will ask each subsequent mortgagee to confirm the amounts
owed and then distribute the surplus accordingly.
C The society’s only obligation is to pay any surplus to the second mortgagee
Advice given by the Citizens’ Advice Bureau to a borrower who is having
difficulty making his mortgage payments is:
A free of charge to both the borrower and the lender.
B free of charge to the borrower but not the lender.
C subject to a charge to the borrower that can be added to the mortgage
account.
D subject to a charge which the borrower can reclaim from the lender.
A free of charge to both the borrower and the lender.
Stuart has an interest-only mortgage supported by a low-cost with-profits
endowment policy. Through unemployment, his mortgage account is now three months in arrears. If Stuart is about to start a new job, which of the following options would be most appropriate?
A A suspension of the repayment of capital for an agreed period.
B A temporary extension of the mortgage term.
C An increase in monthly payment for an agreed period, subject to affordability.
D Capitalisation of the arrears.
C An increase in monthly payment for an agreed period, subject to affordability
Which of the following is true in relation to a lender appointing a receiver?
A The receiver acts on behalf of the lender but is an agent of the borrower.
B This remedy can be used only if the borrower has been declared bankrupt.
C The receiver must not be an employee of the lender.
D The receiver acts on behalf of the borrower but is an agent of the lender.
A The receiver acts on behalf of the lender but is an agent of the borrower.
