MORTGAGE EXAM UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS
Question:
1. Your client, who has a Beacon Score of 640, wishes to purchase a property valued at $450,000 using a
down payment of $20,000. Assuming that your client meets all of the other Lender's guidelines, what
statement would best reflect this scenario? Select one:
a. Your client must provide a down payment of at least $22,500 to qualify
b. Your client must provide a down payment of at least $90,000 to qualify
c. Your client must have at least a 650 Beacon Score to qualify
d. Your client qualifies based on this down payment and Beacon Score
Answer:
Your client must provide a down payment of at least $90,000 to qualify. B is the correct answer since a
credit score under 650 requires a down payment of at least 20%, which is $90,000 ($450,000 x 20% =
$90,000).
Question:
2. Your client currently has a mortgage with an outstanding balance of $350,000. This client wishes to
refinance his home by increasing this mortgage to $405,000. If the value of his home is appraised at
$425,000, and assuming that your client meets all of the other Lender's guidelines what statement would
best reflect this scenario? Select one:
a. Your client qualifies based on this mortgage amount
b. Your client would qualify for a maximum increase of $53,750
c. Your client would qualify for a maximum increase of $32,500
d. This lender does not offer refinancing
Answer:
Answer: C This lender does provide refinancing up to 90%. Therefore 90% of $425,000 is $382,500 less
the outstanding balance of $350,000 equals an increase of $32,500. The correct answer is: Your client
would qualify for a maximum increase of $32,500
Question:
3. Your client, who cannot prove her income, would like to obtain 90% LTV financing to purchase a single
family dwelling. Her Beacon Score is 678 and she is requesting a 2 year term with a rate not exceeding
6.7%. Given this case study, what would you tell your client? Select one:
a. This Lender does not offer this requested product
b. She must increase her down payment to 15%
c. She must have a Beacon Score of at least 680
d. She does not qualify for the requested rate
Answer:
Answer: A Because the lender doesn't have a 2 year product no other option can be correct. The correct
answer is: This Lender does not offer this requested product
,Question:
4. Your client wishes to obtain a mortgage in the amount of $250,500. Given this Lender's program and
assuming that your client meets all of the other Lender's guidelines, what statement would best reflect this
scenario? Select one:
a. Your client must pay a Lender's fee of $5,000 from his own funds on closing
b. Your client must pay a Lender's fee of $5,010 from his own funds on closing
c. Your client must pay a Lender's fee which may be included in the mortgage
d. Your client need not pay a Lender's fee if his Beacon Score is over 650
Answer:
Answer: C Although the amount of the Lender's fee in b is correct, while a is not, the client does not have
to pay it from his own funds on closing. D is incorrect because all Borrowers must pay this Lender's fee.
The correct answer is: Your client must pay a Lender's fee which may be included in the mortgage
Question:
5. Your client would like to refinance his home by increasing his current mortgage to $285,700. Since his
home is appraised at $336,000 and his Beacon Score is 632, he would qualify for: Select one:
a. A rate of 7.5% because of the loan to value and Beacon Score
b. A rate of 7.3% because of the loan to value and Beacon Score
c. A rate of 7.2% because of the loan to value and Beacon Score
d. It depends, since you do not know if this is Stated or Full Doc
Answer:
Answer: A A is correct because 285,700/336,000 = 85.03% LTV and coupled with a Beacon Score of 632
equals a rate of 7.5%. The correct answer is: A rate of 7.5% because of the loan to value and Beacon Score
Question:
6. Your client has come to you requesting a mortgage in the amount of $157,500 and is providing you with
an appraisal that is acceptable to your Lender showing an appraised value of $350,000. Given this case
study, which one of the following statements is most correct? Select one:
a. You must find another Lender as this Lender has a minimum LTV of 60%
b. You must contact the Lender to determine the rate as the chart has a minimum LTV of 60%
c. The rate will be based on whether this is a Full Doc or Stated Doc application
d. The rate will be based on your client's current Beacon Score
Answer:
Answer: D A and b are incorrect as the chart does not reflect a minimum LTV, but reflects the rate for
mortgages with an LTV up to 60%. C is incorrect since if you review both sets of rates they are identical
regardless of whether it is Full Doc or Stated Doc. The correct answer is: The rate will be based on your
client's current Beacon Score
Question:
7. Brad and Angelina are applying for a mortgage with you, their local Mortgage Agent, to purchase a new
home. After reviewing their application you have decided that they do not qualify for an institutional
lender and therefore you are going to submit their application to a private lender. In submitting this
application to the private lender using the proper disclosure, which one of the following statements best
accurately reflects information that must be disclosed to the investor? Select one:
a. If you are charging Brad and Angelina a fee
b. If a realtor is charging them a fee
c. If they are paying for title insurance
d. If they are paying for a new survey
, Answer:
Answer: A Only fees payable by the borrowers to obtain the mortgage must be disclosed. B is not
applicable. C and d are not applicable since they are not required by the investor and therefore not required
to be paid to obtain the mortgage. The correct answer is: If you are charging Brad and Angelina a fee
Question:
8. You are arranging a mortgage for your client and the lender has given you the option to offer her client a
rate of 6%, in which case the lender will pay a finder's fee of 70 Bps, or a rate of 6.2%, in which case the
lender will pay a finder's fee of 80 Bps. If you choose to offer your client the higher rate, which one of the
following statements regarding disclosing this information, as legislated by the MBLAA, is most accurate?
Select one:
a. You must provide written disclosure and the borrower must reply in writing.
b. You may provide either written or verbal disclosure and the borrower must reply in writing.
c. You should disclose this information but it is not required by the MBLAA.
d. You must provide written disclosure to the borrower and the borrower does not need to reply.
Answer:
Answer: A As of January 1, 2009, the brokerage must disclose to a borrower, lender or investor in the
transaction any potential conflict of interest that the brokerage may have. This includes where the
brokerage/broker/agent has sold the borrower a higher rate than the lender's lowest rate to obtain some
benefit. The correct answer is: You must provide written disclosure and the borrower must reply in
writing.
Question:
9. When presenting the Investor/Lender disclosure to a prospective investor the Mortgage Agent is also
required to provide him or her with: Select one:
a. An amortization schedule
b. Proof of the value of the property
c. A Creditor Insurance Request or Waiver
d. A PIPEDA consent form
Answer:
Answer: B A, c and d are required to be given to a borrower, not a potential investor.
The correct answer is: Proof of the value of the property
Question:
10. Pauline Navratalova has a variable rate mortgage with a 3 year term. 24 months into this term she
decides that she would like to refinance this loan with another lender who is offering her a much lower
rate. However her mortgage broker has told her that she cannot repay the mortgage unless she sells the
house in an arm's length transaction. That is because this type of mortgage is a: Select one:
a. Constant payment mortgage
b. Reverse mortgage
c. Closed mortgage
d. Straight-line principal reduction mortgage
Answer:
Answer: C C is the correct answer as this type of mortgage does not allow for early repayment, even with a
penalty unless the home is sold.
The correct answer is: Closed mortgage
CORRECT ANSWERS
Question:
1. Your client, who has a Beacon Score of 640, wishes to purchase a property valued at $450,000 using a
down payment of $20,000. Assuming that your client meets all of the other Lender's guidelines, what
statement would best reflect this scenario? Select one:
a. Your client must provide a down payment of at least $22,500 to qualify
b. Your client must provide a down payment of at least $90,000 to qualify
c. Your client must have at least a 650 Beacon Score to qualify
d. Your client qualifies based on this down payment and Beacon Score
Answer:
Your client must provide a down payment of at least $90,000 to qualify. B is the correct answer since a
credit score under 650 requires a down payment of at least 20%, which is $90,000 ($450,000 x 20% =
$90,000).
Question:
2. Your client currently has a mortgage with an outstanding balance of $350,000. This client wishes to
refinance his home by increasing this mortgage to $405,000. If the value of his home is appraised at
$425,000, and assuming that your client meets all of the other Lender's guidelines what statement would
best reflect this scenario? Select one:
a. Your client qualifies based on this mortgage amount
b. Your client would qualify for a maximum increase of $53,750
c. Your client would qualify for a maximum increase of $32,500
d. This lender does not offer refinancing
Answer:
Answer: C This lender does provide refinancing up to 90%. Therefore 90% of $425,000 is $382,500 less
the outstanding balance of $350,000 equals an increase of $32,500. The correct answer is: Your client
would qualify for a maximum increase of $32,500
Question:
3. Your client, who cannot prove her income, would like to obtain 90% LTV financing to purchase a single
family dwelling. Her Beacon Score is 678 and she is requesting a 2 year term with a rate not exceeding
6.7%. Given this case study, what would you tell your client? Select one:
a. This Lender does not offer this requested product
b. She must increase her down payment to 15%
c. She must have a Beacon Score of at least 680
d. She does not qualify for the requested rate
Answer:
Answer: A Because the lender doesn't have a 2 year product no other option can be correct. The correct
answer is: This Lender does not offer this requested product
,Question:
4. Your client wishes to obtain a mortgage in the amount of $250,500. Given this Lender's program and
assuming that your client meets all of the other Lender's guidelines, what statement would best reflect this
scenario? Select one:
a. Your client must pay a Lender's fee of $5,000 from his own funds on closing
b. Your client must pay a Lender's fee of $5,010 from his own funds on closing
c. Your client must pay a Lender's fee which may be included in the mortgage
d. Your client need not pay a Lender's fee if his Beacon Score is over 650
Answer:
Answer: C Although the amount of the Lender's fee in b is correct, while a is not, the client does not have
to pay it from his own funds on closing. D is incorrect because all Borrowers must pay this Lender's fee.
The correct answer is: Your client must pay a Lender's fee which may be included in the mortgage
Question:
5. Your client would like to refinance his home by increasing his current mortgage to $285,700. Since his
home is appraised at $336,000 and his Beacon Score is 632, he would qualify for: Select one:
a. A rate of 7.5% because of the loan to value and Beacon Score
b. A rate of 7.3% because of the loan to value and Beacon Score
c. A rate of 7.2% because of the loan to value and Beacon Score
d. It depends, since you do not know if this is Stated or Full Doc
Answer:
Answer: A A is correct because 285,700/336,000 = 85.03% LTV and coupled with a Beacon Score of 632
equals a rate of 7.5%. The correct answer is: A rate of 7.5% because of the loan to value and Beacon Score
Question:
6. Your client has come to you requesting a mortgage in the amount of $157,500 and is providing you with
an appraisal that is acceptable to your Lender showing an appraised value of $350,000. Given this case
study, which one of the following statements is most correct? Select one:
a. You must find another Lender as this Lender has a minimum LTV of 60%
b. You must contact the Lender to determine the rate as the chart has a minimum LTV of 60%
c. The rate will be based on whether this is a Full Doc or Stated Doc application
d. The rate will be based on your client's current Beacon Score
Answer:
Answer: D A and b are incorrect as the chart does not reflect a minimum LTV, but reflects the rate for
mortgages with an LTV up to 60%. C is incorrect since if you review both sets of rates they are identical
regardless of whether it is Full Doc or Stated Doc. The correct answer is: The rate will be based on your
client's current Beacon Score
Question:
7. Brad and Angelina are applying for a mortgage with you, their local Mortgage Agent, to purchase a new
home. After reviewing their application you have decided that they do not qualify for an institutional
lender and therefore you are going to submit their application to a private lender. In submitting this
application to the private lender using the proper disclosure, which one of the following statements best
accurately reflects information that must be disclosed to the investor? Select one:
a. If you are charging Brad and Angelina a fee
b. If a realtor is charging them a fee
c. If they are paying for title insurance
d. If they are paying for a new survey
, Answer:
Answer: A Only fees payable by the borrowers to obtain the mortgage must be disclosed. B is not
applicable. C and d are not applicable since they are not required by the investor and therefore not required
to be paid to obtain the mortgage. The correct answer is: If you are charging Brad and Angelina a fee
Question:
8. You are arranging a mortgage for your client and the lender has given you the option to offer her client a
rate of 6%, in which case the lender will pay a finder's fee of 70 Bps, or a rate of 6.2%, in which case the
lender will pay a finder's fee of 80 Bps. If you choose to offer your client the higher rate, which one of the
following statements regarding disclosing this information, as legislated by the MBLAA, is most accurate?
Select one:
a. You must provide written disclosure and the borrower must reply in writing.
b. You may provide either written or verbal disclosure and the borrower must reply in writing.
c. You should disclose this information but it is not required by the MBLAA.
d. You must provide written disclosure to the borrower and the borrower does not need to reply.
Answer:
Answer: A As of January 1, 2009, the brokerage must disclose to a borrower, lender or investor in the
transaction any potential conflict of interest that the brokerage may have. This includes where the
brokerage/broker/agent has sold the borrower a higher rate than the lender's lowest rate to obtain some
benefit. The correct answer is: You must provide written disclosure and the borrower must reply in
writing.
Question:
9. When presenting the Investor/Lender disclosure to a prospective investor the Mortgage Agent is also
required to provide him or her with: Select one:
a. An amortization schedule
b. Proof of the value of the property
c. A Creditor Insurance Request or Waiver
d. A PIPEDA consent form
Answer:
Answer: B A, c and d are required to be given to a borrower, not a potential investor.
The correct answer is: Proof of the value of the property
Question:
10. Pauline Navratalova has a variable rate mortgage with a 3 year term. 24 months into this term she
decides that she would like to refinance this loan with another lender who is offering her a much lower
rate. However her mortgage broker has told her that she cannot repay the mortgage unless she sells the
house in an arm's length transaction. That is because this type of mortgage is a: Select one:
a. Constant payment mortgage
b. Reverse mortgage
c. Closed mortgage
d. Straight-line principal reduction mortgage
Answer:
Answer: C C is the correct answer as this type of mortgage does not allow for early repayment, even with a
penalty unless the home is sold.
The correct answer is: Closed mortgage
