REP 5 - Mortgage and CPF Withdrawal

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Questions and Answers

Who is referred to as the mortgager in a mortgage transaction?

The person providing the security in the form of property (correct)

The legal representative preparing the mortgage documents

The person or entity receiving the loan

The financial institution providing the loan

Which document is NOT typically involved in a mortgage application process?

Caveat

Building inspection report (correct)

Letter of offer

Notice of assessment

What is the primary purpose of the caveat lodged by the solicitor in a mortgage process?

To protect the lender's interest in the property (correct)

To formally document the terms of the loan

To ensure compliance with loan conditions

To initiate the loan application

In an indirect mortgage scenario, which best describes the roles of the mortgager and borrower?

The mortgager provides property for another entity's benefit Signup and view all the answers

What must a customer provide to the bank when applying for a loan?

A record of regular income Signup and view all the answers

When can a bank issue a letter of offer to a customer during the mortgage process?

When the creditworthiness is confirmed Signup and view all the answers

Which of the following parties is considered the mortgagee?

The bank or financial institution lending the money Signup and view all the answers

What is a key aspect of direct mortgages?

The mortgager and borrower are the same person or entity Signup and view all the answers

What is typically included in a report on title?

Details on restrictive covenants or easements Signup and view all the answers

Which document sets out the major terms of a loan?

The letter of offer Signup and view all the answers

What format do most modern mortgages typically embrace?

An open or all monies format Signup and view all the answers

Which of the following documents may accompany the letter of offer?

An assignment of rental proceeds Signup and view all the answers

What is the role of the bank solicitor after the loan is dispersed?

To register the mortgage Signup and view all the answers

What is usually stated within the standard terms and conditions attached to a loan?

The obligations of the mortgager Signup and view all the answers

In which scenario might the bank require additional collateral?

When there is a charge on fixed deposits Signup and view all the answers

What language is the letter of offer and standard terms and conditions generally written in?

Plain English Signup and view all the answers

What is a key characteristic of a mortgage as a legal document?

It secures the loan by the property Signup and view all the answers

What might be considered a condition precedent in a loan agreement?

The guarantee by another person Signup and view all the answers

What is the primary difference between the letter of offer and the mortgage?

The mortgage contains detailed terms and conditions not found in the letter of offer. Signup and view all the answers

What is typically included in the Memorandum of Mortgage (MM)?

Covenants relating to the maintenance of the property. Signup and view all the answers

What should a solicitor confirm regarding the type of mortgage being set up?

The correct form of mortgage such as direct, indirect, etc. Signup and view all the answers

What action does the bank take if the mortgager makes timely payments?

Prevent exercise of the right to recall all monies on demand. Signup and view all the answers

What is the primary purpose of the letter of confirmation of priority arrangements?

To set out the priorities of distribution of sale proceeds in the event of a mortgage default. Signup and view all the answers

What typically happens to rental proceeds in a scenario involving a mortgage for investment properties?

They are assigned to the bank. Signup and view all the answers

In what order will the outstanding amounts be prioritized according to the confirmation of priority arrangements?

First outstanding, CPF first outstandings, CPF second outstandings, refinancing. Signup and view all the answers

What is the purpose of including further terms and conditions in the mortgage?

To ensure the mortgager understands their payment obligations. Signup and view all the answers

What is meant by 'first outstanding' in the context of mortgage agreements?

The outstanding housing loan amount plus interest on that loan. Signup and view all the answers

What does the registration number of the Memorandum of Mortgage signify?

A unique identifier for the recorded mortgage. Signup and view all the answers

What is a supplemental deal in the context of mortgages?

An agreement that outlines specific loan conditions. Signup and view all the answers

What condition typically necessitates a mortgagger to refinance their mortgage?

To find a bank offering lower interest rates than the current mortgage. Signup and view all the answers

What is the main concern of the bank regarding the property’s condition?

To ensure good condition for potential sale upon default. Signup and view all the answers

What documentation is required from the CPF Board when discharging an existing mortgage and executing a new one?

A new letter of confirmation of priority arrangements. Signup and view all the answers

What is the primary function of a mortgage under Section 68-3 of the Land Titles Act?

To act solely as security for the loan Signup and view all the answers

Which document must be verified when acting for a company in a mortgage transaction?

The director's resolution authorizing the mortgage Signup and view all the answers

What is the timeframe for filing a statement of charge under Section 131 of the Companies Act?

30 days of the charge's creation Signup and view all the answers

What action must a CPF member take to initiate a withdrawal of CPF monies for property transactions?

Sign a letter of authorization, declaration, and consent Signup and view all the answers

What condition must the CPF member fulfill when applying for the withdrawal of his CPF monies?

He must declare he is not a bankrupt Signup and view all the answers

What happens if the statement of charge is not filed within the required timeframe?

It becomes void against creditors Signup and view all the answers

Under common law mortgages, what is conveyed from the mortgager to the mortgagee?

The entire estate of the land Signup and view all the answers

Which language must the deed of conveyance be in, according to Section 53 of the Conveyancing and Law of Property Act?

English Signup and view all the answers

What type of properties can CPF monies be used for?

Only residential properties Signup and view all the answers

In the event of a late registration at ACRA, what must be obtained for it to be permissible?

Sanction of the court Signup and view all the answers

Study Notes

Mortgage and CPF Withdrawal

Objectives: To describe how a purchaser finances a property, mortgage transactions, required documents, CPF savings application procedures, and how a property is charged to the CPF Board.

Parties to a Mortgage

Mortgagor: The person providing property security.
Borrower: The person obtaining a loan.
Mortgagee: The lending bank or financial institution.
Same or different: Mortgagor and borrower may be the same or different.

Types of Mortgages

Direct: Borrower and mortgagor are the same person/entity.
Indirect (Third-party): Borrower and mortgagor are different. Example: A director mortgages property for their company.

Mortgage Process

Customer application: Requires proof of income (e.g., notice of assessment, CPF contribution history).
Bank credit assessment: Conducted on the customer.
Letter of offer: Issued to the customer if creditworthiness is satisfactory.
Solicitor instructions: Bank instructs its solicitor who lodges a caveat and prepares the mortgage documents.
Title report: Bank's lawyer submits a report on the property's title.
Disbursement: Loan disbursed, followed by mortgage registration.

Security Documents

Letter of offer: Includes loan terms, conditions, interest rates, etc.
Standard terms and conditions: Each bank has its own, usually in printed format.
Mortgage document: Legal document, secures the loan with the property.
Memorandum of mortgage: Additional conditions, protection and maintenance of property.
Other documents: May include assignment of rental proceeds or guarantee/charge on fixed deposits.

CPF Withdrawal and Mortgages

CPF Act, section 21: Charge arises when monies are withdrawn for property purchase.
Priority arrangement letter: Outlines priorities in case of sale proceeds during mortgage default.
CPF first outstanding: Housing loan interest, plus principal sum up to valuation limit and fees.
CPF second outstanding: Remaining interest, plus accrued interest.

Registration and other information

Land Titles Act: Mortgages under the Land Titles Act don't transfer the land; mortgages under the Registration of Deeds Act do transfer the entire estate to the mortgagee.
Memorandum of Mortgage (MM): Contains conditions related to property maintenance.
Company's memorandum and articles of association: Required if borrower is a company.
Directors' resolution: Autoization for mortgage.
ACRA filing: Statement of charge needs filing within the 30-day limit to be valid against creditors (compliance with section 131 of Companies Act).
CPF completion period: Typically 6-8 weeks.

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Description

This quiz covers the essential aspects of mortgage transactions, including buyer financing, necessary documentation, and CPF savings application procedures. Understand the various parties involved in a mortgage and the types of mortgages. Learn about the complete mortgage process from application to approval.