30 Questions
What is the maximum penalty for an individual failing to disclose any potential conflicts of interest to a private lender?
$500,000
What is the maximum administrative penalty for a brokerage that fails to disclose any potential conflicts of interest to a private lender?
$1,000,000
How does FSRA define a material risk in the mortgage industry?
A risk that may result in loss and significantly influences investor/lender decisions
What is the maximum administrative penalty for an individual licensee?
$100,000
What must be disclosed to enable an investor/lender to make an informed decision according to the text?
All potential risks, especially material risks
What is the purpose of disclosing material risks according to the text?
To ensure transparency and help investors/lenders make informed decisions
What is one way to reduce the risk of default for investors?
Verify the value of security
How can changing market conditions be mitigated to reduce risk?
Use conservative LTVs
What does having the mortgage administered help reduce?
Default risk
How does diversification help minimize risk in an investment portfolio?
By investing in several different vehicles
Why is it important to have an understanding of potential exit strategies?
To reduce the risk of loss
What factor helps in determining an acceptable loan-to-value limit for investors?
Understanding market conditions
What is the importance of dealing with issues in a timely manner?
To ensure that issues can be resolved before they escalate
In what situation might an investor prepay mortgage payments for a borrower?
When the borrower has just lost their job and is seeking new employment
What could happen if a mortgage does not improve the borrower’s position?
The borrower may file a complaint or sue the investor
How can an investor help a borrower who misses a payment?
By immediately contacting the borrower to discuss remedial actions
Why is being innovative important in investing?
To provide sound investment opportunities based on unique circumstances
What can prevent a borrower from becoming disgruntled with an investment?
The investment benefiting both the borrower and investor
What is the purpose of a commitment letter?
To outline major terms and conditions of the lender's offer
What does a postponement agreement allow a mortgage lender to do?
Refinance without losing their position
What is the significance of a postponement agreement in mortgage refinancing?
It changes the order of mortgage ranking
In what scenario would a new mortgage be registered after a second mortgage?
With a postponement agreement
What does 'pari-passu' mean in relation to mortgages?
Sharing equal rights with other mortgages
Why must a postponement agreement be authorized by the second mortgage lender?
To ensure that the first mortgage remains unchanged
What is the primary definition of a conflict of interest in the context of mortgage transactions?
When the mortgage broker or agent has a personal interest that could influence their professional judgment
Which legislation outlines the disclosure requirements for conflicts of interest in mortgage transactions?
Regulation 188/08: Mortgage Brokerages: Standards of Practice
Which of the following is an example of a potential conflict of interest?
The mortgage broker is related to the appraiser
In which situation does a conflict of interest NOT arise?
The mortgage broker provides full disclosure of all relevant information to the client
If a mortgage broker receives a higher commission for working with a specific lender, what type of conflict of interest does this represent?
A conflict of interest due to monetary reasons
Which of the following situations would NOT require disclosure as a conflict of interest?
The mortgage broker provides the client with multiple lender options and rates
Test your knowledge on conflict of interest, disclosure requirements, and different types of conflicts that may arise in a transaction. This quiz covers concepts related to investor/lender disclosure and commitment according to Reg. 188/08: Mortgage Brokerages: Standards of Practice.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
