Fundamentals of Mortgage Brokerage
practice questions
Mortgage - ANS-The pledging of real property to a creditor or lender as a security for a debt
Mortgage - ANS-An interest in land that is created by a contract (mortgage document) that is
security for a loan made by the lender to the borrower
Mortgage - ANS-The security over property given to the lender for repayment of the loan
Mortgagee - ANS-The individual or entity that lends the funds secured by real property for which
they receive specified payments as stated in the mortgage contract
Lender - ANS-Another name for mortgagee
Mortgagor - ANS-The individual or entity that borrows the funds secured by real property for
which they make specified payments according to the mortgage contract
Borrower - ANS-Another name for mortgagor
Real property - ANS-land, substances in or under the land other than mines or minerals and all
buildings, fixtures, structures affixed to the land
Real property - ANS-Examples include acreages, hospitals, houses, garages, sheds, driveways,
fences, crops, trees and landscaping
Chattels - ANS-Personal property is often referred to as this
Chattels - ANS-May include items such as furniture, clothing, household goods, some
appliances, and some window coverings
Dealing in mortgages - ANS-The activities undertaken by a mortgage brokerage industry
member that requires an authorization from RECA
Mortgage financing - ANS-Can be broadly divided into 3 specialty areas with each field requiring
specific knowledge and expertise
Residential mortgages - ANS-Occurs where borrowed funds are used for the purchase of real
property, for the construction of a new residence, for the purchase of a new or existing
residence, to refinance an existing mortgage or to finance a renovation or consolidate a debt
,Commercial and/ or industrial mortgages - ANS-Involve properties associated with commerce or
trade
Commercial and/ or industrial mortgages - ANS-Examples include buildings, retail operation
stores, medical and/ or dental buildings and industrial and/ or warehouse facilities
Agri-business mortgages - ANS-Consists of the production, processing and supply of
agricultural goods. It arises from such operations as farming, ranching and feed lot operations
and generally finances the acquisition or improvements of ___ operations, purchase of farm
property, or allows for the restructure of existing capital
Private lenders - ANS-Include any individual(s), entity or corporate body other than a financial
institution who advances funds
Mortgage investment corporations - ANS-Investment and lending companies designed
specifically for loaning money secured by a mortgage
Syndicated mortgages - ANS-Two or more investors who participate directly or indirectly as
lenders in a debt obligation secured by a mortgage
Dominion Housing Act - ANS-Canada's first national housing legislation. Originally intended as a
job creation measure to reduce unemployment during the depression years, it effectively
assisted in the construction of residential housing by increasing the availability of first mortgage
financing and effectively enabling the federal government to make join mortgage loans with
approved lending institutions
National Housing Act - ANS-Replaced the Dominion Housing Act. Its purpose was to promote
the construction of new houses, the maintenance and upgrade of existing houses and the
improvement of housing and living conditions
Loan to value ratio - ANS-The amount of the mortgage loan compared to the sale value of the
property
Partially amortized mortgages - ANS-Loans with periodic payments of principal and interest but
have an amortization period that exceeds the term of the mortgage. At the mortgage term's
maturity, the remaining balance must either be paid out or renewed at the interest rate then in
effect
NHA mortgage-backed securities - ANS-combination of direct investment in an undivided
interest of a bundle of mortgages insured through CMHC and sold to investors who receive the
monthly payments of interest and principal. These securities are comparable to top-quality
government bonds that are backed not only by the overall strength of Canada's housing market,
but also by the Federal Government's guarantee
,High ratio mortgage - ANS-Occurs when the loan amount exceeds 80% of the property value or
sale price whichever is less
Primary mortgage market - ANS-Consumers and investors are able to access the common
sources of financing made available through many lenders such as chartered banks, treasury
branches, credit unions, loan corporations, trust corporations, insurance companies, mortgage
investment corporations, syndicated mortgages or any person engaged in the business of
making loans secured with mortgages
Primary mortgage market - ANS-The lenders supply funds directly to the borrowers and hold the
mortgage until the debt is paid, thus this provides the necessary structure to allow borrowers
and lenders to transfer funds. It determines both the cost and availability of mortgage funds
Secondary mortgage market - ANS-Involves the purchase and sale of existing mortgages. In
this market, mortgage loans are purchased from primary lenders, bundled together then pooled
and traded as mortgage backed securities to investors. A mortgage backed security is an
investment that is based on a pool of underlying mortgages
Secondary mortgage market - ANS-The investor in a mortgage is buying the right to receive the
stream of payments, which the borrower had agreed to make to the original lender
Lender risk - ANS-The level of risk the mortgage transaction presents can also affect the
interest rate
Institutional lenders - ANS-Initiate the largest share of mortgage loans and are usually
conservative by nature. Generally prefer mortgage transactions that meet their typical lending
requirements. They include chartered banks, life insurance companies, trust and loan
corporations, credit unions, finance companies and treasury branches
Private lenders - ANS-An individual lender, or group of individuals who advance funds in return
for a mrotgage with agreed to repayment terms and conditions. When a borrower has a unique
need that may not meet a financial institution's lending criteria, this may be the solution. They
use MICs, syndicated mortgages, or their own money to fund mortgages
Mortgage Investment Corporations (MICs) - ANS-Funded pools of mortgages designed
specifically for lending money secured by more than one property
Disclosure requirements - ANS-The Rules require that all mortgage brokerage industry
members disclose to borrowers in writing the following information: The nature of their
relationship with the borrower, the nature of their relationship with the lender, the range of
lenders whose products it offers, how the brokerage will be compensated, the nature of any
other benefits
, RECA's mandate - ANS-To protect consumers and to provide services that enhance and
improve the industry and the business of industry professionals
Real Estate Assurance Fund - ANS-Compensates consumers who suffer financial loss as a
result of fraud, breach of trust, or a failure to disburse or account for money held in trust by an
industry member with respect to a trade in real estate or deal in mortgages. It is funded entirely
by industry members and administered by RECA
Council - ANS-Ultimately accountable for all aspects of RECA's activities. Provides the overall
leadership and strategic direction for the organization. It then delegates authority and
responsibility to the Executive Director in a manner that provides a broad degree of freedom to
exercise creativity and judgment to achieve its goals
Alberta Mortgage Brokers Association (AMBA) - ANS-Independent, non-profit provincial trade
association for mortgage brokerage industry members and lenders
Canadian Association of Accredited Mortgage Professionals (CAAMP) - ANS-The national trade
association and a collective voice of the mortgage industry in Canada. It is the largest network
of mortgage professionals in Canada with over 12,000 members represented by mortgage
lenders, mortgage brokers, insurers and other industry stakeholders
Provincial government - ANS-At this level, Service Alberta works to ensure a fair marketplace
for consumers.
It investigates consumer complaints, enforces consumer protection legislation, licenses and
registers regulated businesses and charitable organizations
Provincial government - ANS-Includes the Fair Trading Act (FTA), the Personal Information
Protection Act (PIPA) and the Law of Property Act
Fair Trading Act - ANS-Protects consumers from unfair business practices before, during or
after a consumer transaction
Personal Information Protection Act - ANS-The legislation governing the collection, use and
disclosure of personal information by private sector organizations in a manner recognizing both
the right of the individual to have his/ her personal information protected, and the need of
organizations to collect, use or disclose personal information for reasonable purposes
Law of Property Act - ANS-Provides legal principles in regard to property rights which are
subject of instruments such as contracts, conveyances and mortgages
Alberta Real Estate Foundation (the Foundation) - ANS-Supports real estate initiatives which
benefit the industry, the communities and people of Alberta
Mandate and authority are derived from the Act and is administered by a board of governors
appointed in accordance with the regulations
practice questions
Mortgage - ANS-The pledging of real property to a creditor or lender as a security for a debt
Mortgage - ANS-An interest in land that is created by a contract (mortgage document) that is
security for a loan made by the lender to the borrower
Mortgage - ANS-The security over property given to the lender for repayment of the loan
Mortgagee - ANS-The individual or entity that lends the funds secured by real property for which
they receive specified payments as stated in the mortgage contract
Lender - ANS-Another name for mortgagee
Mortgagor - ANS-The individual or entity that borrows the funds secured by real property for
which they make specified payments according to the mortgage contract
Borrower - ANS-Another name for mortgagor
Real property - ANS-land, substances in or under the land other than mines or minerals and all
buildings, fixtures, structures affixed to the land
Real property - ANS-Examples include acreages, hospitals, houses, garages, sheds, driveways,
fences, crops, trees and landscaping
Chattels - ANS-Personal property is often referred to as this
Chattels - ANS-May include items such as furniture, clothing, household goods, some
appliances, and some window coverings
Dealing in mortgages - ANS-The activities undertaken by a mortgage brokerage industry
member that requires an authorization from RECA
Mortgage financing - ANS-Can be broadly divided into 3 specialty areas with each field requiring
specific knowledge and expertise
Residential mortgages - ANS-Occurs where borrowed funds are used for the purchase of real
property, for the construction of a new residence, for the purchase of a new or existing
residence, to refinance an existing mortgage or to finance a renovation or consolidate a debt
,Commercial and/ or industrial mortgages - ANS-Involve properties associated with commerce or
trade
Commercial and/ or industrial mortgages - ANS-Examples include buildings, retail operation
stores, medical and/ or dental buildings and industrial and/ or warehouse facilities
Agri-business mortgages - ANS-Consists of the production, processing and supply of
agricultural goods. It arises from such operations as farming, ranching and feed lot operations
and generally finances the acquisition or improvements of ___ operations, purchase of farm
property, or allows for the restructure of existing capital
Private lenders - ANS-Include any individual(s), entity or corporate body other than a financial
institution who advances funds
Mortgage investment corporations - ANS-Investment and lending companies designed
specifically for loaning money secured by a mortgage
Syndicated mortgages - ANS-Two or more investors who participate directly or indirectly as
lenders in a debt obligation secured by a mortgage
Dominion Housing Act - ANS-Canada's first national housing legislation. Originally intended as a
job creation measure to reduce unemployment during the depression years, it effectively
assisted in the construction of residential housing by increasing the availability of first mortgage
financing and effectively enabling the federal government to make join mortgage loans with
approved lending institutions
National Housing Act - ANS-Replaced the Dominion Housing Act. Its purpose was to promote
the construction of new houses, the maintenance and upgrade of existing houses and the
improvement of housing and living conditions
Loan to value ratio - ANS-The amount of the mortgage loan compared to the sale value of the
property
Partially amortized mortgages - ANS-Loans with periodic payments of principal and interest but
have an amortization period that exceeds the term of the mortgage. At the mortgage term's
maturity, the remaining balance must either be paid out or renewed at the interest rate then in
effect
NHA mortgage-backed securities - ANS-combination of direct investment in an undivided
interest of a bundle of mortgages insured through CMHC and sold to investors who receive the
monthly payments of interest and principal. These securities are comparable to top-quality
government bonds that are backed not only by the overall strength of Canada's housing market,
but also by the Federal Government's guarantee
,High ratio mortgage - ANS-Occurs when the loan amount exceeds 80% of the property value or
sale price whichever is less
Primary mortgage market - ANS-Consumers and investors are able to access the common
sources of financing made available through many lenders such as chartered banks, treasury
branches, credit unions, loan corporations, trust corporations, insurance companies, mortgage
investment corporations, syndicated mortgages or any person engaged in the business of
making loans secured with mortgages
Primary mortgage market - ANS-The lenders supply funds directly to the borrowers and hold the
mortgage until the debt is paid, thus this provides the necessary structure to allow borrowers
and lenders to transfer funds. It determines both the cost and availability of mortgage funds
Secondary mortgage market - ANS-Involves the purchase and sale of existing mortgages. In
this market, mortgage loans are purchased from primary lenders, bundled together then pooled
and traded as mortgage backed securities to investors. A mortgage backed security is an
investment that is based on a pool of underlying mortgages
Secondary mortgage market - ANS-The investor in a mortgage is buying the right to receive the
stream of payments, which the borrower had agreed to make to the original lender
Lender risk - ANS-The level of risk the mortgage transaction presents can also affect the
interest rate
Institutional lenders - ANS-Initiate the largest share of mortgage loans and are usually
conservative by nature. Generally prefer mortgage transactions that meet their typical lending
requirements. They include chartered banks, life insurance companies, trust and loan
corporations, credit unions, finance companies and treasury branches
Private lenders - ANS-An individual lender, or group of individuals who advance funds in return
for a mrotgage with agreed to repayment terms and conditions. When a borrower has a unique
need that may not meet a financial institution's lending criteria, this may be the solution. They
use MICs, syndicated mortgages, or their own money to fund mortgages
Mortgage Investment Corporations (MICs) - ANS-Funded pools of mortgages designed
specifically for lending money secured by more than one property
Disclosure requirements - ANS-The Rules require that all mortgage brokerage industry
members disclose to borrowers in writing the following information: The nature of their
relationship with the borrower, the nature of their relationship with the lender, the range of
lenders whose products it offers, how the brokerage will be compensated, the nature of any
other benefits
, RECA's mandate - ANS-To protect consumers and to provide services that enhance and
improve the industry and the business of industry professionals
Real Estate Assurance Fund - ANS-Compensates consumers who suffer financial loss as a
result of fraud, breach of trust, or a failure to disburse or account for money held in trust by an
industry member with respect to a trade in real estate or deal in mortgages. It is funded entirely
by industry members and administered by RECA
Council - ANS-Ultimately accountable for all aspects of RECA's activities. Provides the overall
leadership and strategic direction for the organization. It then delegates authority and
responsibility to the Executive Director in a manner that provides a broad degree of freedom to
exercise creativity and judgment to achieve its goals
Alberta Mortgage Brokers Association (AMBA) - ANS-Independent, non-profit provincial trade
association for mortgage brokerage industry members and lenders
Canadian Association of Accredited Mortgage Professionals (CAAMP) - ANS-The national trade
association and a collective voice of the mortgage industry in Canada. It is the largest network
of mortgage professionals in Canada with over 12,000 members represented by mortgage
lenders, mortgage brokers, insurers and other industry stakeholders
Provincial government - ANS-At this level, Service Alberta works to ensure a fair marketplace
for consumers.
It investigates consumer complaints, enforces consumer protection legislation, licenses and
registers regulated businesses and charitable organizations
Provincial government - ANS-Includes the Fair Trading Act (FTA), the Personal Information
Protection Act (PIPA) and the Law of Property Act
Fair Trading Act - ANS-Protects consumers from unfair business practices before, during or
after a consumer transaction
Personal Information Protection Act - ANS-The legislation governing the collection, use and
disclosure of personal information by private sector organizations in a manner recognizing both
the right of the individual to have his/ her personal information protected, and the need of
organizations to collect, use or disclose personal information for reasonable purposes
Law of Property Act - ANS-Provides legal principles in regard to property rights which are
subject of instruments such as contracts, conveyances and mortgages
Alberta Real Estate Foundation (the Foundation) - ANS-Supports real estate initiatives which
benefit the industry, the communities and people of Alberta
Mandate and authority are derived from the Act and is administered by a board of governors
appointed in accordance with the regulations
