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?

<p>The mortgager provides property for another entity's benefit (C)</p> Signup and view all the answers

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

<p>A record of regular income (C)</p> Signup and view all the answers

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

<p>When the creditworthiness is confirmed (A)</p> Signup and view all the answers

Which of the following parties is considered the mortgagee?

<p>The bank or financial institution lending the money (C)</p> Signup and view all the answers

What is a key aspect of direct mortgages?

<p>The mortgager and borrower are the same person or entity (C)</p> Signup and view all the answers

What is typically included in a report on title?

<p>Details on restrictive covenants or easements (D)</p> Signup and view all the answers

Which document sets out the major terms of a loan?

<p>The letter of offer (B)</p> Signup and view all the answers

What format do most modern mortgages typically embrace?

<p>An open or all monies format (A)</p> Signup and view all the answers

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

<p>An assignment of rental proceeds (C)</p> Signup and view all the answers

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

<p>To register the mortgage (C)</p> Signup and view all the answers

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

<p>The obligations of the mortgager (A)</p> Signup and view all the answers

In which scenario might the bank require additional collateral?

<p>When there is a charge on fixed deposits (D)</p> Signup and view all the answers

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

<p>Plain English (A)</p> Signup and view all the answers

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

<p>It secures the loan by the property (D)</p> Signup and view all the answers

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

<p>The guarantee by another person (B)</p> Signup and view all the answers

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

<p>The mortgage contains detailed terms and conditions not found in the letter of offer. (B)</p> Signup and view all the answers

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

<p>Covenants relating to the maintenance of the property. (D)</p> Signup and view all the answers

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

<p>The correct form of mortgage such as direct, indirect, etc. (C)</p> Signup and view all the answers

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

<p>Prevent exercise of the right to recall all monies on demand. (D)</p> Signup and view all the answers

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

<p>To set out the priorities of distribution of sale proceeds in the event of a mortgage default. (D)</p> Signup and view all the answers

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

<p>They are assigned to the bank. (C)</p> Signup and view all the answers

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

<p>First outstanding, CPF first outstandings, CPF second outstandings, refinancing. (D)</p> Signup and view all the answers

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

<p>To ensure the mortgager understands their payment obligations. (C)</p> Signup and view all the answers

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

<p>The outstanding housing loan amount plus interest on that loan. (D)</p> Signup and view all the answers

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

<p>A unique identifier for the recorded mortgage. (D)</p> Signup and view all the answers

What is a supplemental deal in the context of mortgages?

<p>An agreement that outlines specific loan conditions. (D)</p> Signup and view all the answers

What condition typically necessitates a mortgagger to refinance their mortgage?

<p>To find a bank offering lower interest rates than the current mortgage. (B)</p> Signup and view all the answers

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

<p>To ensure good condition for potential sale upon default. (D)</p> Signup and view all the answers

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

<p>A new letter of confirmation of priority arrangements. (D)</p> Signup and view all the answers

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

<p>To act solely as security for the loan (B)</p> Signup and view all the answers

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

<p>The director's resolution authorizing the mortgage (D)</p> Signup and view all the answers

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

<p>30 days of the charge's creation (A)</p> Signup and view all the answers

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

<p>Sign a letter of authorization, declaration, and consent (A)</p> Signup and view all the answers

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

<p>He must declare he is not a bankrupt (B)</p> Signup and view all the answers

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

<p>It becomes void against creditors (D)</p> Signup and view all the answers

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

<p>The entire estate of the land (D)</p> 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?

<p>English (C)</p> Signup and view all the answers

What type of properties can CPF monies be used for?

<p>Only residential properties (C)</p> Signup and view all the answers

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

<p>Sanction of the court (B)</p> Signup and view all the answers

Flashcards

Mortgage

A loan secured by a property, where the property acts as collateral.

Mortgager

The person who provides the property as security for a loan.

Borrower

The person who receives the loan.

Mortgagee

The lender, typically a bank or financial institution.

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Direct Mortgage

A mortgage where the borrower and mortgager are the same person.

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Indirect/Third Party Mortgage

A mortgage where the borrower and mortgager are different people.

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CPF Charge

Using CPF savings to secure a loan on a property.

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Loan Application Process

Steps involved in obtaining a loan, including income verification and credit assessment.

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Mortgage letter

A letter that provides details about a property, its ownership, and any limitations (like covenants or easements).

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Security documents (mortgage)

Documents securing a loan against a property, including the letter of offer, terms and conditions, the mortgage itself and memorandum, and possible additional documents (like assignment or rental proceeds).

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Letter of offer (loan)

A document outlining the key terms of a loan, including the type, interest rate, repayment schedule, and prepayment penalties.

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Standard terms and conditions (loan)

Pre-set rules for a loan, provided by the bank, usually in a printed format.

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Mortgage (legal document)

A legal document securing a loan by using the property as collateral.

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Open or all monies mortgage

Modern mortgage type where the agreement doesn't specify loan amounts or durations. The bank has flexibility.

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Collateral (loan)

Additional assets or guarantees given to secure a loan.

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Term loan

A loan for a fixed duration (e.g., 10 or 30 years).

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Overdraft loan

A loan that allows for borrowing up to a certain limit, with repayments based on usage.

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Conditions precedent

Requirements that must be met before a loan is approved and disbursed.

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Priority Arrangements

The order in which different creditors get paid when a property is sold to settle a loan default. This ensures the mortgagee receives the most, followed by CPF funds, and then other debts.

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First Outstanding

The total amount due on a housing loan, including both the principal (original loan amount) and any accrued interest.

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CPF Second Outstandings

Remaining CPF funds used for stamp duty, legal fees, and leftover interest owed after the mortgagee is paid.

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Refinancing

Replacing an existing mortgage with a new one, typically to secure lower interest rates.

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Letter of Confirmation of Priority Arrangements

Document outlining the priority of payment when a property is sold to settle a loan default, particularly during refinancing.

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Mortgager's obligations

The mortgager (borrower) promises to pay the bank (lender) all amounts owed, including interest, on demand.

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Difference between offer and mortgage

A letter of offer outlines the loan terms, while the mortgage is the legally binding agreement reflecting those terms.

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Mortgage terms (Memorandum of Mortgage)

The memorandum of mortgage (MM) contains additional rules that bind the mortgager and are essential for registering the mortgage.

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Property maintenance in mortgage

Lenders want the property to be in good condition to secure their loan (in case of default for later sale).

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Supplemental loan documents

Additional agreements can refine loan terms, such as payment installments, changing interest rates and the assignment of rental income.

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Assignment of rental proceeds

For investment properties, the borrower agrees to transfer (assign) rental income to the lender.

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Mortgage types (direct, indirect, etc.)

Different mortgage structures exist, reflected in official paperwork.

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Mortgage registration

Mortgages are registered under land laws (e.g., Land Titles Act), with precise steps required.

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Solicitor's role

Solicitors (lawyers) analyze loan offers, mortgage forms, and adapt/adjust the mortgage document to match the offer specifications

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Draconian

Very strict or harsh measures.

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Land Titles Act Mortgage

A mortgage where the mortgager retains ownership of the property, but the mortgagee has a security interest. The land isn't transferred.

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Equity of Redemption

The right of a mortgager to regain full ownership of their property by repaying the mortgage debt.

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Common Law Mortgage

A mortgage under the Registration of Deeds Act, where the mortgager actually transfers full ownership to the mortgagee until the debt is repaid.

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Conveyancing and Law of Property Act

This act dictates the legal requirements for transferring ownership of land, including mortgages. It requires a deed in English.

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Company as Mortgagor

When a company takes a mortgage, the process involves additional checks on the company's documents and approvals.

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Statement of Charge

Companies filing a mortgage must submit a 'Statement of Charge' to ACRA within 30 days, otherwise the charge is void against potential creditors.

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CPF Monies for Property

CPF savings can be used for residential property purchases and mortgages, but not for commercial properties.

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CPF Withdrawal Procedure

A CPF member needs to sign a letter of authorization, declaration, and consent to withdraw funds for property transactions.

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Security Documents for CPF Withdrawal

These documents include an application to notify the charge, essentially informing the CPF board about the mortgage.

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CPF Mortgage Charge

This type of charge refers to using CPF savings as security for a mortgage loan on a property.

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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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Related Documents

REP 5 - Mortgage PDF

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.

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