RECA Fundamentals of Mortgage Brokerage Exam Practice Test Bank
- Alberta Real Estate Council Verified Questions & Case Rationales
[Graded A+]
Pass your official Alberta licensing exam on the very first attempt with this
comprehensive RECA Fundamentals of Mortgage Brokerage practice test bank.
Master critical provincial industry domains, including the Real Estate Act of Alberta,
mortgage underwriting math, land titles registration analysis, contract law
provisions, and ethical professional conduct standards. Every verified practice
question features a highly detailed legal and financial rationale to sharpen your client
assessment precision, eliminate test anxiety, and secure your professional brokerage
license.
Question 1: A mortgage associate is reviewing a client's file and notices that the client's
driver's license has a different address than the one on the mortgage application. What
should the associate do?
A) Ignore the discrepancy since addresses change frequently
B) Ask the client to provide additional identification and update the address if necessary
C) Report the client to the police immediately
D) Submit the application with the driver's license address
Answer: B) Ask the client to provide additional identification and update the
address if necessary
Rationale: Discrepancies in identification must be clarified to prevent identity fraud. The
associate should ask the client to provide additional identification and update the address
on the application if the client has recently moved.
Question 2: What is the maximum loan-to-value ratio for a mortgage on a rental
property in Canada?
A) 65%
B) 75%
C) 80%
D) 95%
,Answer: C) 80%
Rationale: The maximum loan-to-value ratio for a rental property is 80%, requiring a
minimum down payment of 20%. Mortgage default insurance is not available for rental
properties.
Question 3: A mortgage associate is working with a client who has been divorced for 2
years. The client's credit report shows a joint credit card with the ex-spouse that has a
balance. How should the associate address this?
A) Ignore the joint credit card since the client is divorced
B) Include the joint credit card debt in the client's TDS calculation
C) Exclude the joint credit card debt since the ex-spouse is responsible
D) Advise the client to close the joint account immediately
Answer: B) Include the joint credit card debt in the client's TDS calculation
Rationale: Joint debts remain on both parties' credit reports until the account is closed or
refinanced. The associate must include the joint debt in the client's TDS calculation unless
the client can provide documentation showing the ex-spouse is solely responsible.
Question 4: What is the purpose of a mortgage broker's anti-money laundering (AML)
compliance program?
A) To detect and prevent money laundering and terrorist financing
B) To increase the broker's profits
C) To reduce the client's costs
D) To comply with lender requirements
Answer: A) To detect and prevent money laundering and terrorist financing
Rationale: Mortgage brokers are required to have an AML compliance program to detect
and prevent money laundering and terrorist financing, as required by FINTRAC.
,Question 5: A mortgage associate is explaining the concept of a blanket mortgage to a
client. Which statement is correct?
A) A blanket mortgage covers multiple properties under one agreement
B) A blanket mortgage covers a single property
C) A blanket mortgage has no collateral
D) A blanket mortgage is for commercial properties only
Answer: A) A blanket mortgage covers multiple properties under one agreement
Rationale: A blanket mortgage is a single mortgage that covers more than one property. It
is commonly used by developers and investors.
Question 6: What is the minimum down payment for a property priced at $1,200,000 in
Canada?
A) $60,000
B) $120,000
C) $240,000
D) $300,000
Answer: C) $240,000
Rationale: Properties priced at $1,000,000 or more require a minimum down payment of
20%. 20% of $1,200,000 = $240,000.
Question 7: A mortgage associate is working with a client who wants to purchase a
property with a 15% down payment. What type of mortgage will the client require?
A) Conventional mortgage
B) High-ratio mortgage with mortgage default insurance
C) Vendor take-back mortgage
D) Reverse mortgage
Answer: B) High-ratio mortgage with mortgage default insurance
, Rationale: A 15% down payment means the loan-to-value ratio is 85%, which exceeds
80%. This requires mortgage default insurance and is classified as a high-ratio mortgage.
Question 8: What is the purpose of a mortgage broker's FINTRAC reporting
obligations?
A) To report suspicious transactions and large cash transactions
B) To report the broker's income
C) To report the client's credit score
D) To report the property value
Answer: A) To report suspicious transactions and large cash transactions
Rationale: Mortgage brokers are required to report suspicious transactions and large cash
transactions to FINTRAC as part of Canada's anti-money laundering regime.
Question 9: A mortgage associate is explaining the concept of a collateral mortgage to
a client. Which statement is correct?
A) A collateral mortgage allows the lender to secure additional debts against the
property
B) A collateral mortgage is secured by the property only
C) A collateral mortgage has no security
D) A collateral mortgage is for personal property only
Answer: A) A collateral mortgage allows the lender to secure additional debts
against the property
Rationale: A collateral mortgage allows the lender to register a charge against the
property that can secure not only the mortgage but also other debts or future advances.
Question 10: What is the maximum amortization period for a mortgage on a rental
property in Canada?
- Alberta Real Estate Council Verified Questions & Case Rationales
[Graded A+]
Pass your official Alberta licensing exam on the very first attempt with this
comprehensive RECA Fundamentals of Mortgage Brokerage practice test bank.
Master critical provincial industry domains, including the Real Estate Act of Alberta,
mortgage underwriting math, land titles registration analysis, contract law
provisions, and ethical professional conduct standards. Every verified practice
question features a highly detailed legal and financial rationale to sharpen your client
assessment precision, eliminate test anxiety, and secure your professional brokerage
license.
Question 1: A mortgage associate is reviewing a client's file and notices that the client's
driver's license has a different address than the one on the mortgage application. What
should the associate do?
A) Ignore the discrepancy since addresses change frequently
B) Ask the client to provide additional identification and update the address if necessary
C) Report the client to the police immediately
D) Submit the application with the driver's license address
Answer: B) Ask the client to provide additional identification and update the
address if necessary
Rationale: Discrepancies in identification must be clarified to prevent identity fraud. The
associate should ask the client to provide additional identification and update the address
on the application if the client has recently moved.
Question 2: What is the maximum loan-to-value ratio for a mortgage on a rental
property in Canada?
A) 65%
B) 75%
C) 80%
D) 95%
,Answer: C) 80%
Rationale: The maximum loan-to-value ratio for a rental property is 80%, requiring a
minimum down payment of 20%. Mortgage default insurance is not available for rental
properties.
Question 3: A mortgage associate is working with a client who has been divorced for 2
years. The client's credit report shows a joint credit card with the ex-spouse that has a
balance. How should the associate address this?
A) Ignore the joint credit card since the client is divorced
B) Include the joint credit card debt in the client's TDS calculation
C) Exclude the joint credit card debt since the ex-spouse is responsible
D) Advise the client to close the joint account immediately
Answer: B) Include the joint credit card debt in the client's TDS calculation
Rationale: Joint debts remain on both parties' credit reports until the account is closed or
refinanced. The associate must include the joint debt in the client's TDS calculation unless
the client can provide documentation showing the ex-spouse is solely responsible.
Question 4: What is the purpose of a mortgage broker's anti-money laundering (AML)
compliance program?
A) To detect and prevent money laundering and terrorist financing
B) To increase the broker's profits
C) To reduce the client's costs
D) To comply with lender requirements
Answer: A) To detect and prevent money laundering and terrorist financing
Rationale: Mortgage brokers are required to have an AML compliance program to detect
and prevent money laundering and terrorist financing, as required by FINTRAC.
,Question 5: A mortgage associate is explaining the concept of a blanket mortgage to a
client. Which statement is correct?
A) A blanket mortgage covers multiple properties under one agreement
B) A blanket mortgage covers a single property
C) A blanket mortgage has no collateral
D) A blanket mortgage is for commercial properties only
Answer: A) A blanket mortgage covers multiple properties under one agreement
Rationale: A blanket mortgage is a single mortgage that covers more than one property. It
is commonly used by developers and investors.
Question 6: What is the minimum down payment for a property priced at $1,200,000 in
Canada?
A) $60,000
B) $120,000
C) $240,000
D) $300,000
Answer: C) $240,000
Rationale: Properties priced at $1,000,000 or more require a minimum down payment of
20%. 20% of $1,200,000 = $240,000.
Question 7: A mortgage associate is working with a client who wants to purchase a
property with a 15% down payment. What type of mortgage will the client require?
A) Conventional mortgage
B) High-ratio mortgage with mortgage default insurance
C) Vendor take-back mortgage
D) Reverse mortgage
Answer: B) High-ratio mortgage with mortgage default insurance
, Rationale: A 15% down payment means the loan-to-value ratio is 85%, which exceeds
80%. This requires mortgage default insurance and is classified as a high-ratio mortgage.
Question 8: What is the purpose of a mortgage broker's FINTRAC reporting
obligations?
A) To report suspicious transactions and large cash transactions
B) To report the broker's income
C) To report the client's credit score
D) To report the property value
Answer: A) To report suspicious transactions and large cash transactions
Rationale: Mortgage brokers are required to report suspicious transactions and large cash
transactions to FINTRAC as part of Canada's anti-money laundering regime.
Question 9: A mortgage associate is explaining the concept of a collateral mortgage to
a client. Which statement is correct?
A) A collateral mortgage allows the lender to secure additional debts against the
property
B) A collateral mortgage is secured by the property only
C) A collateral mortgage has no security
D) A collateral mortgage is for personal property only
Answer: A) A collateral mortgage allows the lender to secure additional debts
against the property
Rationale: A collateral mortgage allows the lender to register a charge against the
property that can secure not only the mortgage but also other debts or future advances.
Question 10: What is the maximum amortization period for a mortgage on a rental
property in Canada?
