Module 2 - Stages of Private Mortgages
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Questions and Answers

What form should be used to submit an application to private lenders not equipped to receive applications electronically?

  • Form 1.2
  • Standard application
  • Form 2
  • Form 1 - Investor/Lender Disclosure Statement for Brokered Transactions (correct)

    • What happens if the lender agrees to issue a commitment letter in less than two days?

  • The waiting period is waived
  • The waiting period is extended to three days
  • The waiting period is reduced to one day (correct)
  • The waiting period remains two days

    • What should be done if the lender is not listed on the dropdown menu of the software platform or is a private lender?

  • Submit electronically without the credit report
  • Delay the submission of the application
  • Consult with a lawyer
  • Explain the credit history and any discrepancies to the lender (correct)

    • What should be done before submitting an application package?

    <p>Review all the documentation</p> Signup and view all the answers

    What should be done to speed up the response time from the lender if something in the application needs attention?

    <p>Indicate it in the notes or comments section</p> Signup and view all the answers

    How should the application be submitted if the lender is set up electronically?

    <p>Submit through your brokerage's software platform</p> Signup and view all the answers

    What should be provided to the private investor as part of the disclosure requirements?

    <p>&quot;Disclosure to the Investor&quot; disclosing all material risks of lending to your client</p> Signup and view all the answers

    Who cannot be the administrator for a private lender?

    <p>The brokerage unless someone within the brokerage has an administrator license</p> Signup and view all the answers

    After receiving the commitment letter, what should be validated?

    <p>The amount of the mortgage loan, interest rate, related fees, type of mortgage, conditions, and dates</p> Signup and view all the answers

    What does MBLAA specify about disclosures to the borrower?

    <p>The client must sign a written acknowledgement that they have received the required disclosures at least two business days before entering into a mortgage agreement or signing a mortgage instrument</p> Signup and view all the answers

    What must be disclosed to the borrower if the information provided is based on estimated values?

    <p>Total interest paid over the mortgage term</p> Signup and view all the answers

    What is a typical condition for a private lender?

    <p>A fire insurance policy that reflects the lender having a lien against the property</p> Signup and view all the answers

    What is important during the step of supporting closing of the transaction?

    <p>Fulfilling conditions promptly</p> Signup and view all the answers

    What form must be used when disclosing information to investors and lenders for private mortgages?

    <p>Investor/Lender Disclosure Statement for Brokered Transactions</p> Signup and view all the answers

    What must be included in every transaction with a private lender/investor according to FSRA?

    <p>Material risks of the mortgage or mortgage investment</p> Signup and view all the answers

    What is typically handled by the lawyer as part of the closing process?

    <p>Handling mortgage registration</p> Signup and view all the answers

    When must the client consent in writing to receive disclosures electronically?

    <p>At origination</p> Signup and view all the answers

    What must be submitted to the brokerage for auditing and payment after closing?

    <p>The file</p> Signup and view all the answers

    "Interest Reserve" refers to what concept in private lending?

    <p>$$$ payments built into the initial loan for a year</p> Signup and view all the answers

    What is required to be considered self-employed according to the text?

    <p>Ownership interest in a business 25% or greater and being paid 100% on commission</p> Signup and view all the answers

    What is the most accurate indicator of the borrower's ability and willingness to repay according to lenders?

    <p>Credit report</p> Signup and view all the answers

    What is the purpose of a credit report according to the text?

    <p>Provide information on past payment behavior</p> Signup and view all the answers

    What is necessary when dealing with private mortgages, according to the text?

    <p>A viable exit strategy</p> Signup and view all the answers

    How do many private lenders determine borrower eligibility instead of looking at GDS/TDS, according to the text?

    <p>By evaluating the exit strategy</p> Signup and view all the answers

    What should be checked when selecting a lender and preparing the application according to the text?

    <p>Amount of money the private lender has</p> Signup and view all the answers

    What is the obligation of a mortgage agent who works for both the borrower and the lender, according to the text?

    <p>To represent the best interests of both the borrower and lender at all times</p> Signup and view all the answers

    What must be documented in the client file after discussing the service agreement according to the text?

    <p>Acknowledgement of the service arrangement by the client</p> Signup and view all the answers

    What should not be submitted to the lender if there are inconsistencies or irregularities according to the text?

    <p>The mortgage loan application</p> Signup and view all the answers

    What type of information is a private lender likely to ask for during the mortgage application process?

    <p>Employment and income documentation, property tax and RRSP statements</p> Signup and view all the answers

    Why might a private lender request a limited-restricted appraisal for a property?

    <p>To assess the current market value of the property without an extensive inspection</p> Signup and view all the answers

    What action might a mortgage agent take to verify a borrower's income when dealing with a private lender?

    <p>Call the employer to confirm the accuracy of the income information</p> Signup and view all the answers

    Why is it especially important for a mortgage agent to record the details of income verification when dealing with a private lender?

    <p>To have a record in case of any future disputes or discrepancies</p> Signup and view all the answers

    What is one factor that mortgage lenders want to know about a borrower's income?

    <p>The amount of income earned by the borrower</p> Signup and view all the answers

    Why might it be important for a borrower to have 20% saved for a down payment when seeking a mortgage?

    <p>To reduce the risk for the lender and potentially avoid private mortgage insurance (PMI)</p> Signup and view all the answers

    What does 'RRSP' stand for in the context of mortgage documentation?

    <p>'Registered Retirement Savings Plan'</p> Signup and view all the answers

    What might be one reason why a private lender is more interested in income stability when compared to traditional mortgage lenders?

    <p>To assess the likelihood of consistent loan repayments</p> Signup and view all the answers

    Which document might be used to gather necessary information for a mortgage application?

    <p>Know Your Client (KYC) sheet</p> Signup and view all the answers

    Why is it important for a borrower to disclose their timeline for acquiring the mortgage?

    <p>To help the lender understand the urgency of the loan request</p> Signup and view all the answers

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