Mortgage Exam Ontario Cheatsheet

Mortgage Brokering In Ontario Cheat Sheet
by utkarsh121 via cheatography.com/127347/cs/24773/
Introduction Basic mortgage concepts (cont)
MBLAA Mortgage Brokers, Lenders and Administrators Act, Interest Calculated semi-annually, not in advance
2006 rate
Mortgage A licensed individual to broker a mortgage - lowest in J1 = Annually
Agent hierarchy - works under a mortgage broker J2 = Semi-annually

J4 = Qualrterly
Mortgage A licensed individual to broker a mortgage - mid-level in
J12 = Monthly
Broker hierarchy - may work under a principal broker (top guy
J26 = Bi-weekly >>DO NOT Fuck this one up - never
at a brokerage - overseeing all operations and respon‐
do (biweekly paymt. x2)x12 for annual conversion
sible/ accountable for them and to ensure compliance
in calculations - you will miss on 2 weeks
with legislations and regulations)
J52 = Weekly
FSRA Financial Services Regulatory Authority of Ontario
J365 = Daily
Ontario
Compound 100000 borrowed for 1 year at 6% :
FSCO Financial Services Commission of Ontario
interest
Regulator of mortgage brokering in Ontario changed from FSCO example for first six months:
to FSRA on June 8 2019
$100000 x 3% = 3000 (Interest)
Basic mortgage concepts Principal+interest= $103000
Use of Purchase, refinance, equity take-outs (ETO), bridge
mortgage financing for second half of year:
HBP - First-time home buyers can use up to $35k from their

103000 x 3% = 3090 Interest)
home RRSPs as a down payment without paying tax on withdr‐
Principal+interest=$106090
buyer's awal. Repayment in 15 years. Spouses/partners can
program withdraw $70k in total. Standard The Standard Charge Terms is a document that is
Charge created by the lender and must be registered with the
HBTC- Enacted in 2009, the federal government provides a
Terms Director of Titles under the Land Titles Act.
Home non-refundable tax credit, based on an amount of
buyer's $5,000, for certain home buyers that acquire a qualifying
This document is the mortgage contract. It contains
tax home.
detailed information on the lender’s and borrower’s
credit
obligations, referred to as covenants, as well as the
remedies available to the lender if the borrower does
not meet these obligations. A covenant is a promise to
do or not do something. In a mortgage contract, both
the mortgagee, who is the lender, and mortgagor, the
borrower, have covenants that each must abide by.
By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Last updated 18th October, 2020. Everyone has a novel in them. Finish
Page 1 of 22. Yours!
https://apollopad.com
cheatography.com/utkarsh121/
Basic mortgage concepts (cont) Mortgage options (cont)
Borr‐ 1. Repay the loan Repayment Periodic payment increase - borrower can increase
ower's 2. Insure the property options payment
covena‐ 3. Maintain the property Accelerated mortgage payment - only difference
nts 4. Not to commit waste from periodic payment is that this can start even
5. Pay property taxes before the first payment is made
6. Follows the Standard Charge Terms Lump sum payment - paying a large amount in parts
Lender's 1. Certificate of discharge or whole - towards payment if the principal
covena‐ 2. Assignment of mortgage Extended amortization - Increasing mortgage
nts 3. Provide quiet possession duration to ease payments (e.g. from 25 to 30 years)
Mortgage 1st mortgage, 2nd mortgage and so on. 2nd becomes Cash back Borrower receives some cash back on closing - cash-
ranks 1st as soon as the first one gets paid off option back requires repayment
High ratio LTV>80% Combin‐ Combining mortgage with another product - e.g. Line
mortgage Need to be default insured unless provided by a non ed/bundles of credit. Scotiabank currently offers a STEP
federally regulated bank. option Mortgage
Portability Allows current homeowner to to take his/her current
Self-insured lender- does not use default insurance option mortgage to new home
but charges a lender's fee and pools this money for Assuma‐ Allows a purchaser to take over a borrower's current
insurance. bility option homeowner's debt
Conven‐ LTV<=80%
tional Property ownership in Ontario
mortgage
Real vs. Real property - land and everything affixed to it.
personal Personal property - everything else than real. Short
Mortgage options
property lived and movable. E.g. cars. Personal property is also
Prepayment Fully open - allows borrower to repay, whole or in called as chattels.
options part, anytime without penalty or notice. Flexible but Ownership Every piece of real property is owned by the crown. We
higher rate. pay taxes to use the property in our title.
Partially open - allows to pay whole with a penalty of
either 3 month's worth of interest or the interest rate
differential
Closed - Doesn't allow full prepayment at anytime
unless property being sold at arm's length. You can
still increase monthly payment amounts.

Property ownership in Ontario (cont) Property ownership in Ontario (cont)
Fee The fee simple estate is the most common form of Encumb An encumbrance is an interest in property that has the
simple ownership in Ontario and provides the holder with the rances effect of limiting the rights of fee simple ownership of real
estate widest breadth of rights available. Fee refers to the fact property. Typical encumbrances are mortgages,
that the estate may be inherited while simple refers to easements, and restrictive covenants.
the fact that there are no prohibitions against who may Mortgage- A mortgage is registered on title and has
inherit it. contractual obligations that prohibit the fee simple owner
Leasehold The leasehold estate, commonly referred to as a lease, from having full control of his or her property.
estate is an interest in land created by a landlord and tenant, Easements- Easements are rights acquired for the
most commonly by a lease. benefit of real property, granting rights to use another
property. The land giving the right is called the servient
Life A life estate is defined as the right to use or occupy real
tenement while the land receiving the right is called the
estate/Life property for the duration of one’s life. At the end of that
dominant tenement, where the term tenement simply
lease person’s life, the life estate is over, and the fee simple
refers to the real property. E.g. - Access to lake example
ownership goes to the remainderman.
in the book.
Condom‐ Condominiums combine fee simple ownership of
Restrictive covenants- A restrictive covenant is a restri‐
inium individual units, referred to as strata lots, including all of
ction of use placed on title of the servient tenement for the
ownership the rights attached to that ownership, with a combined
benefit of the dominant tenement. E.g. - not creating a
ownership of common areas, referred to as common
structure taller than Mount Royal.
elements. These common elements include the
Building Schemes- A building scheme is a group of
hallways, recreational facilities, elevators, lobby, and so
restrictive covenants registered against several properties
on.
in a development plan that is binding on all purchasers of
Each unit pays a condominium maintenance fee on a
a property within that development. E.g. limit the number
monthly basis to the condominium corporation.
of stories of properties in sub division.

Property ownership in Ontario (cont) Insurance in mortgage industry (cont)
Co-own‐ Tenancy in common- Shared ownership (distributed Mortgage There are two types of mortgage creditor insurance.
ership of and individually owned shares) creditor • The first is typically a life insurance policy provided to
real Joint tenancy- Collectively owning a property - insurance a borrower by an institutional lender.
property demise of one passes the property to other. E.g. - • The second is a life insurance policy provided to a
Spouses usually own jointly. borrower through a third party, such as the Mortgage
Judgements A judgment, as it relates to a debt, is a judge’s Protection Plan (MPP), which is not affiliated with an
decision that a debt is owed by a debtor to a creditor. institutional lender
In Ontario a creditor can, after obtaining a judgment, Property Property insurance is a policy of insurance that provides
file a Writ of Seizure and Sale of land against a debtor insurance coverage for the homeowner against covered risks.
in any county or district in which the debtor owns Types of Home insurance and Condominium insurance
land. The writ will encumber any currently owned land Insurance
in any county or district, or land which is purchased in
Home Covers for:
the future by the debtor, by way of placing a lien
Insura‐ - Building coverage
against the property.
nce - Named-Perils converage
Liens A lien is security against a property, either real or - Contents
personal, for a debt. Legislation allows for the placing A standard house policy provides for the Actual
of a lien on a property for construction costs not paid, Cash Value (ACV) replacement of belongings.
which is commonly referred to as a mechanic’s lien. Replacement value coverage means that the
contents of the policy owner’s house are insured
Insurance in mortgage industry for the amount it costs to replace them.
Benefits To lender- Allows the lender to make loans in excess of - Detached private structure
80% loan to value and recover insured losses by making - Additional living expenses
a claim to the insurer. - Personal liability
To borrower- Allows the borrower to receive a high ratio - Voluntary Payments for Medical Expenses
mortgage with favourable terms and a favourable interest - Rental Loss Insurance
rate.

Insurance in mortgage industry (cont) Insurance in mortgage industry (cont)
Cond‐ Reduced insurance liabilities for the owner. Title • Defence of title
ominium A "master policy" is purchased and provided by the insurance • Fraud and forgery (including title fraud, the regist‐
insura‐ condominium board. This covers the common areas protects ration of a fraudulent mortgage, etc)
nce shared with others in the building like the roof, against - • Unenforceability of the insured mortgage
basement, elevator, heating room, lobby, swimming • Defects that would have been revealed by an up to
pool, parking garage, etc. for both liability and physical date Survey
damage. • Errors in the Survey
Title Title insurance is a policy of insurance that provides • Legal services, including lawyer negligence, lawyer
insura‐ coverage for the title-related risks associated with real fraud, lawyer death, disbarment or retirement
nce estate transactions. It is designed to cover the unpred‐ • Defects in title such as liens, executions, adverse
ictable or undetectable issues such as forgery, fraud, claims, encroachments, unregistered easements,
missing heirs, etc. that can affect rights of ownership. mortgages and other encumbrances
Types of policies- • Unmarketability of title
- Lender policy: This policy is normally taken at the • Hydro, tax, water and gas arrears
request of the lender upon closing of a refinancing • Executions against prior owners
transaction. These policies may provide coverage to • Condominium status certificates
both the lender and the homeowner, which is recomm‐ • Septic system violations
ended. • Work orders, non-conforming zoning
- Homeowner's policy: This policy is normally taken by • Restrictive covenants
the new homeowner when purchasing a property; • Municipal work orders and permits
however, title insurance can be purchased at any time • Unregistered hydro easements
during the homeowner’s ownership of the property. • Other risks covered by the policy.

Insurance in mortgage industry (cont) Insurance in mortgage industry (cont)
Title • Title issues that arise after the policy date that were IMPO‐ As FSRA states, “All mortgage brokerages and administr‐
insurance not present before (other than fraud and other covered RTANT ators are required by law to carry errors and omissions
doesn't risks) (E&O) insurance in a form approved by the FSRA, with
protect • Title defects that the homeowner was aware of and to extended coverage for fraudulent acts. This E&O
against - which the homeowner agreed insurance must cover a minimum of $500,000 in respect
• Title defects that the homeowner was aware of and of any oneoccurrence and $1 million in respect of all
about which the homeowner did not inform the insurer occurrences in a given year. The legal requirements about
• Environmental hazards, unless noted on title E&O insurance are in Ontario Regulations 188/08 and
• Legality or rents 189/08 under the Mortgage Brokerages, Lenders and
• Fire retrofit compliance Administrators Act, 2006 (MBLAA).
• Costs of moving fences or boundary walls
• Losses from failing to make a claim in a timely Chapter 10: Getting your first client
fashion
Ask open ended questions
• Other exclusions included in the policy.
Read through the inbound/outbound scripts in the textbook
Solicitor’s A “Solicitor’s Opinion on Title” is a report by the
This chapter is NOT IN THE EXAM but is good to help with real-life
Opinion lender’s real estate lawyer outlining the condition of the
scenarios
on Title title of the mortgaged property and covers issues up to
closing.
Initial Consultation
Errors and Errors and Omissions insurance is an insurance policy
Required Documentation for all Transactions
Omissions that covers the professional from claims made against
docume‐ • Employment Verification
Insurance him or her due to negligence in the form of errors
ntation
(E&O) committed in a transaction. Insurance policies prior to
Employment documentation requirements vary from
2008 did not have a fraud provision.
lender to lender; however, the following is a list of
documentation that is typically acceptable for an
employee:
- T4
- Pay Stubs
- NOA (Notice of Assessment – often requested when
there is commission income)
- Letter of employment
- Tax Return (also may be requested when there is
commission income)
For a self-employed individual the following may be

required:
- Financial Statements
- Business License
- Business Cheque
• PIPEDA Consent
This document allows the mortgage agent to use the
applicant’s personal information for the purposes
contained within the consent form.
• Photo Identification
Photo identification is required to prove the identity of
the applicant. The original document should be viewed,
and a photocopy obtained for the file.
• Divorce/Separation Agreement (if applicable)
If applicable this document outlines the terms and
conditions of the separation or divorce and will typically
include any payments that are required to be made for
alimony.
• Child Support Order/Agreement (if applicable)

If applicable this document outlines the terms and
conditions of child support, including any payments that
are required to be made.
Specific Documentation for a Purchase

The following is a list of documentation that is typically
required when a client is purchasing a property:
- Purchase and Sale Agreement
- MLS Listing (for resale properties)
- Proof of Down payment
- Rental Letter (if applicable)
- Real estate salesperson Information
Specific documentation for a Refinance, Equity

Take-Out and Switch The following is a list of
documentation that is typically required when a
client is refinancing his or her current mortgage,
taking equity out of his or her property or switching
lenders on renewal:
• Current mortgage statement
• Charge/Mortgage
• Transfer/Deed
• Property tax statement
• Property insurance policy
• Mortgage repayment history (if applicable)

Initial Consultation (cont) Application analysis - RATIOS (cont)
Meeting the client There are three basic places where a GDS The GDS is designed to determine if the potential borrower
mortgage agent can meet a client: can afford the proposed mortgage payment based on his or
• The client’s home her income (or a combined income, if there is more than one
• The mortgage agent’s office applicant). The GDS combines the costs that a potential
• Another outside location. borrower has regarding shelter and divides that cost by his or
her gross income (the income before taxes are deducted).
Read through the textbook on how to
handle and steer conversations Industry Standard – 35% (as per July 2020)
Application form Must read through the textbook to GDS [(PITH + ½ Condo Maintenance fee) / Gross Income] x
understand = 100
Determining the Must read through the textbook to TDS Like the GDS the TDS is designed to determine if the
applicant's needs understand borrower can afford the potential mortgage payment,
however this calculation also includes all other debts that the
Application analysis - RATIOS borrower has.
LTV loan/value
The TDS has two main functions. It can be used to:
=
1. Pre-qualify the borrower by determining the maximum
Max LTV x Value of property
mortgage payment that the borrower can afford.
Mtgg.
2. Verify that the payment qualifies by determining if the
from
potential mortgage payment falls within the lender’s TDS
LTV
ratio.
=
LTV (1st mtgg amt. + propposed 2nd mtgg.) / Value Industry Standard - 42%
of
For Maximum Mortgage Payment = (Income x Max TDS / 100)
2nd
pre- – (Property Taxes + Heat + ½ Condo Maintenance Fee +
Mtgg.
qu‐ Other Debts)
=
ali‐
GDS The GDS and TDS are debt service ratios that are designed fic‐
and to determine whether a mortgage payment can be afforded ation
TDS by the potential borrower. A debt service ratio is the ratio of
debt to income expressed as a percentage. While these
ratios have not changed in several decades, they remain
the fundamental calculations in determining affordability.
PITH Principal + Interest + Property Taxes + Heat

Application analysis - RATIOS (cont) Application analysis - Borrower Credit
TDS • Loans Credit Equifax and Transunion

includes • Mortgage payments Bureaus
• Credit cards Sample Report Examples
• Child support credit https://www.canada.ca/en/financial-consumer-
• Alimony reports agency/services/credit-reports-score/understand-credit-
• Any payment that, if discontinued, would result in a report.html
balance owing.
Credit Interpreting a Credit Report
TDS • Child care expenses (that are not court ordered) analysis https://youtu.be/QfS6G0ex-vU
does • Food
NOT • Clothing Application analysis - The property
include • Entertainment
Purpose of • The cost to rebuild the home in case of damage,
• RRSP contributions
appraisal - To such as by fire (insurable value)
• Car insurance
determine: • A value so that a municipality can apply its
• Property insurance
property tax rate (taxation purposes)
• Life insurance
• The price that a real estate investor would pay for
• Any expense or payment that, if discontinued, would
a property based on his or her preferred rate of
not result in a balance owing
return (investment value)
Outsta‐ Lenders will typically use 3% of the outstanding balance
• The amount that the property can obtain if sold
nding on a credits cards and other types of unsecured revolving
(selling price)
balance credit as the payment amount when calculating the TDS,
• The future value of a property under construction
or credit although this can vary from lender to lender. For secured
(future price)
limit in debts CMHC suggests lenders calculate what the
• The value of a property being expropriated by the
the monthly payment would be if the debt was amortized
Crown (expropriation value)
TDS? over 25 years. It is important to know how a lender
• The market value of a property for a lender to
calculates the TDS before submitting an application to
decide on an appropriate loan amount for mortgage
that lender.
financing.
TDS TDS = [(PITH + ½ Condo Maintenance fee + Other
(interpol‐ Debts) / Income] x 100
ation of
the given
formula)

Application analysis - The property (cont) Borrower disclosure
Accredita‐ • Appraisal Institute of Canada (AIC) - Offers AACI Borrower's disclosure is NOT a contract
tions and CRA Borrower's The MBLAA states that the borrower disclosure
- Accredited Appraiser Canadian Institute, Professional disclosure should must include the following information:
Appraiser (AACI, P.App) - Highest - can assess all include 1. Fees and payments associated with the
types of properties - residencial, commercial, rural. mortgage
- Canadian Residential Appraiser (CRA) - Has 2. The relationship between the brokerage and
completed the reqiorements of being AIC. Can only lender under the proposed mortgage
assess and valuate individual or undeveloped reside‐ 3. The role of the brokerage
ntial dwellings 4. The number of lenders the brokerage
represented during the previous year
• Appraisal Institute of Canada (AIC) - Offers AACI 5. Potential conflicts of interest
and CRA 6. Risks associated with the proposed
- DAR (Designated Appraiser Residential) mortgage
- DAC (Designated Appraiser Commercial) 7. Terms and conditions of the proposed
- DAC (with a Specialty in Agricultural) mortgage
- CMAR (Certified Mortgage Appraisal Reviewer) 8. Estimated costs
- CAR (Certified Appraisal Reviewer) 9. The cost of borrowing
<< Read this chapter from the book - crucial details covered >>
• Appraisal Institute of Canada (AIC) - Offers AACI
and CRA
Closing the transaction
- Fellow of the Real Estate Institute (FRI)
Common Closing - Mortgage default insurance
Calcul‐ Income approach
Costs - Land Transfer Tax (All of Ontario)
ating Cost approach
- Municipal Land Transfer Tax (City of
Market Direct comparison approach
Toronto)
value of a
- Home inspection - purchase
property
- Appraisal fee
Types of Desktop Apprasisals - uses AVMs and MLS
- Legal Fees (read chapter for breakd‐
appraisals Drive-by Apprasisals
own)
Full Apprasisals
- Registration of a Mortgage Only
- Title Insurance
- Property InsuranceInterest Adjustment
Amount
- New Home Warranty
- New Hydro Account
- Status Certificate Fee - Condos only
- Closing adjustment - (due taxes, utilities,
bills etc.)
- HST (on
- a new home)
- PST on Default insurance

Closing the transaction (cont) Key Participants
Electronic The province of Ontario, through the Province of Ontario Mortgage The mortgage brokerage is the licensed mortgage
Land Land Registration Information System (POLARIS), in Brokerage brokering entity.
Regist‐ partnership with Teranet Land Information Services Inc., Principal The Principal Broker is a licensed mortgage broker who
ration a private sector corporation created in 1991, has Broker is designated by the brokerage to be its chief
developed e-reg. 1994 saw the provincial legislature compliance officer. Under the MBLAA, the brokerage is
pass legislation creating the statutory framework for e- licensed, and it must have one licensed mortgage
reg, and Teranet has developed the software, called broker designated as the Principal Broker.
Teraview, used to access and use the e-reg system.
Instit‐ Institutional lenders consist of Schedule 1, 2 and 3
Through the lawyer can complete the following pre-closing and utional banks, credit unions, loan and trust companies, finance
Teraview, closing procedures: lender companies or other corporations constructed to lend
• Automated title searching money on real estate.
• Writ searching
Private A Private lender is typically an individual investor with
• Subsearching
lender funds who would like to invest in mortgages.
• Creation of drafts and documents ready to be
Borrower The borrower is called the mortgagor and is the
registered
individual or individuals who are taking the mortgage
• Calculation and payment of land transfer taxes
loan and pledging their property as security.
• Electronic registration of documents, as well as other
procedures. Mortgage The Mortgage Default Insurer provides mortgage
Default default insurance policies to lenders typically offering
ENDING CHAPTERS Insurer high ratio mortgages, although default insurance can
be provided on a mortgage loan of any loan to value.
Contract law Requires detailed Study from the book
Mortgage Power of sale/foreclosure - requires detailed
Canada Mortgage and Housing Corporation (CMHC)
remedies Study from the book
and the two private insurers, Genworth Financial
Mortgage fraud Types of fraud and fraud prevention - requires Canada and Canada Guaranty Mortgage Insurance
detailed Study from the book Company (Canada Guaranty).
Ethics and Applying core value principles to the profes‐
mortgage broker‐ sional activities :
ing

Key terms Repayment plans (cont)
Mort‐ “Any charge on any property for securing money or Partially Same as above, rate varies through the term.
gage money’s worth.” However, the more common definition Amortized, As the payment is constant (fixed amount), the
of a mortgage states that: a mortgage is defined as a Blended Constant times when interest rate is low, more money
loan secured by real property. Payment goes towards the principal payout.
Collateral a promissory note with a lien on the property for the total Mortgage - Merits
mortgage amount registered. You can register more debt against Variable rate •Savings - good for risk takers - interest rates
the property than the property is worth since normal are usually lower than fixed type
regulatory limitations on loan to values do not apply. •Ability to switch to a fixed rate
Risks
Line of Is an amount of credit made available to a borrower but
•Volatility - rates might increase and cause
credit not advanced on closing.
stress
(LOC)
•Negative Amortization - if rate goes high, the
B20 From Jan 1 2018, OSFI is setting a new minimum
payment might increase to cover the excess
Stress qualifying rate, or “stress test,” for uninsured mortgages.
interest
Test Guideline B-20 now requires the minimum qualifying rate
Partially Similar to above, but payment will vary each
for uninsured mortgages to be the greater of the five-
Amortized, time.
year benchmark rate published by the Bank of Canada
Blended Variable Merits
or the contractual mortgage rate +2%.
Payment •Savings - Lowest rates in the market - more
Loan to *MOST IMPORTANT *: Sum of loan(s) and borrowings
Mortgage - savings if rates drop further
value divided by the value of the property
Variable rate • Maintain amortization - helps borrower to
finish off paying mortgage in a fixed number of
Repayment plans
years irrespective of rate
Blended payment means each payment instalment goes Risks
towards both principal and interest (in •Volatility
different proportions) •Payemnt fluctuations
Partially Amortized, Partially amortized: There is a term Interest Only Paying the interest only.
Blended Constant (usually 5 years) involved. Rate of Mortgage Merits - Increased cash flow, increased
Payment Mortgage - interest remains throughout the term purchasing power, good for investments.
Fixed rate Merits Risks - no principal reduction
Security - buyer can plan the budget. Home equity line OSFI limits interest only HELOCs to LTV of
Good for 1st timers of credit (HELOC) 65%
Risks
Potential lack of savings

Repayment plans (cont) Regulation and legislation (cont)
Interest Nothing is paid ever. Borrower needs to be super MBLAA • Mortgage Brokerages
accruing sure of the increase in value of property. Good for regula‐ 408/07 Mortgage Brokerages: Licensing
mortgage investments only. tions 188/08 Mortgage Brokerages: Standards of Practice
Merits - Cash flow • Principal Brokers
Risks - increasing debt, reduced equity over time 410/07 Principal Brokers: Eligibility, Powers and Duties
Reverse Provided to seniors (55 or older), given 55% of the • Mortgage Brokers and Agents
mortgage value of property in lump sum cash. Tax free 409/07 Mortgage Brokers and Agents: Licensing
187/08 Mortgage Brokers and Agents: Standards of
Straight line Fixed amount of principal paid each time. Not
Practice
principal common in Ontario and Canada
• Cost of Borrowing and Disclosure
reduction
191/08 Cost Of Borrowing and Disclosure to borrowers
mortgage
• Mortgage Administrators (note: this is not covered on
Graduated Lower payments in the beginning, increasing
the exam as it does not apply to mortgage agents)
payment later.
406/07 Regulated Activities: Additional Prescribed
mortgage
Activities
411/07 Mortgage Administrators: Licensing
Regulation and legislation
189/08 Mortgage Administrators: Standards of Practice
Disc‐ The act of revealing something, or making something • Licensing Exemptions
los‐ evident. Several types of disclosure are required under the 407/07 Exemptions from the Requirement to be Licensed
ure MBLAA and Regulations. • Reporting Requirements
Regu To govern or direct according to rule, to make regulations 193/08 Reporting Requirements for Licensees
late for or concerning an industry. • General
190/08 General
FSRA Financial Services Regulatory Authority of Ontario is
• Penalties
responsible for enforcing the current legislation and
192/08 Administrative Penalties
regulating the mortgage brokerage industry, among others.

Regulation and legislation (cont) Regulation and legislation (cont)
Activities The MBLAA regulates the following activities: Advance As per Sections 37 – 39 of Regulation 188/08, a
that are • dealing in mortgages in Ontario payment brokerage cannot accept an advance payment from the
Regulated • trading in mortgages in Ontario regulation borrower on transactions where the principal amount of
• carrying on business as a lender in Ontario, and the mortgage is $400,000 (as of January 1, 2016; it
• carrying on the business of administering mortgages in was previously $300,000) or less.
Ontario READ THERE ARE DETAILS WHICH WOULD HAVE MADE
Lice‐ 1. a brokerage license CHAPTER THE CHEAT SHEET UNNECESSARILY LONG,
nsure 2. a mortgage broker’s license 5 FROM HENCE INSTEAD OF COPY-PASTING THE WHOLE
3. a mortgage agent’s license THE CHAPTER, I SUGGEST TAKING A THOROUGH
4. mortgage administrator’s license. BOOK READING.
Vendor A vendor take-back, also known as a VTB, is where the
take-back seller of the property provides all or some of the Transaction Overview
financing to the purchaser in order to sell the property Mortgage A practicing professional who assesses a borrower’s
Trust Trust funds are those monies received by a brokerage broker financial goals with respect to real estate financing and
funds* or Administrator on behalf of or payable to another after detailed analysis provides solutions to meet those
party. goals by acting as an intermediary with the appropriate
lending source. a mortgage agent has two clients: the
Adminis‐ An administrative penalty may not exceed $10,000 in
borrower and the lender.
trative the case of a contravention or failure to comply by a
penalties mortgage broker or agent or $25,000 in the case of a Lender 1. Provide borrowers who are suitable for the lender
contravention or failure to comply by a brokerage, Expect‐ 2. Provide appropriate protection against fraud
Mortgage Administrator or any other person or entity, or ations 3. Facilitate the transaction to its successful completion
such lower amounts as may be prescribed. (funding).
Borrower 1. Act in the borrower’s best interests
Expect‐ 2. Completely analyze the borrower’s needs
ations 3. Make appropriate recommendations based on the
borrower’s needs
4. Facilitate the transaction to its successful completion
(funding).

Transaction Overview (cont) Calculate Mortgage Payment (cont)
Steps in a 1. Attracting a client Future For the purposes of mortgage finance both the future
brokered 2. First contact Value (FV) value and outstanding balance is the monetary value of
transaction 3. The initial consultation (and a loan at a future point in time. The main difference is
4. File creation and management Outsta‐ simply that the future value is the value of the mortgage
5. Application analysis: Borrower income and nding as an asset to the lender, while the outstanding
GDS/TDS ratios Balances) balance is what is owing at a point in time by the
6. Application analysis: Borrower Credit borrower. For our purposes the future value and outsta‐
7. Application analysis: The property and LTV ratio nding balance will typically be the same number.
(includes ordering an appraisal if applicable) Amorti‐ The amortization period tells us how long it will take to
8. Choosing a lender zation fully repay the mortgage amount. The amortization
9. Submitting the application Period period is expressed in years. A fully amortized
10. Obtaining the commitment mortgage is one in which there is no term, and a
11. Preparing disclosure documents partially amortized mortgage is one in which there is a
12. Presenting the commitment and disclosure term.
documents
Interest The interest rate tells us how much the lender is
13. Meeting conditions
Rate receiving in interest in return for providing the
14. Instructing the lawyer
mortgage amount.
15. The lawyer/client meeting
Compou‐ The compounding frequency tells us how often the
16. Funding the transaction
nding annual rate of interest compounds, which in turn tells
17. File submission to the brokerage
Frequency us the precise amount of interest that is being charged.
18. Receiving commissions
This exact amount must be known to be able to
19. Record keeping
calculate the mortgage payment.
Calculate Mortgage Payment

*Revisit the J1, J2, J4 ...
Balloon Outstanding balance
payment
=
Mortgage This software performs the calculations required to
origin‐ determine a borrower’s mortgage payment and various
ation other financial components of a mortgage without the
software broker having to perform these calculations manually.
Present For the purposes of mortgage finance, the present value
Value is the monetary value of a loan at a specific point in time.
(PV)

Calculate Mortgage Payment (cont) Marketing (cont)
CHAPTER Mortgage Payment Calculation - This chapter is based MUST be included in all To summarize, the following must be
8 In the on HP, SHARP and Texas Instruments Calculator Public Relations included in all public relations materials
textbook models. This same calculation can be done using Materials of Agents and that an agent or broker is using.
algebra too. Calculators on the websites are based on Brokers 1. Brokerage name (if a franchise state
these formulas. that it is independently owned and
operated)
This chapter can be skipped as it is not on the 2. Brokerage license number
online proctored exam 3. Agent or Broker Name as registered
with FSRA
Marketing 4. Agent or Broker title – for example,
mortgage agent or mortgage broker
Introdu‐ The activities available to attract a client are numerous,
ction and many are impacted by legislation and other industry False advertising and
guidelines. Legislation and industry guidelines are misleading terms Have access to all / work with all lenders
designed to prevent such practices as misleading - impossible: RBC and BMO don't deal
advertising, the bait and switch (providing a consumer with brokers
with an attractive offer to obtain him or her as a client Access to over 50 lenders
but being unable to provide the product or service at the No job? No credit? No problem!”, “Good
indicated price), false advertising and so on. credit, bad credit or no credit...all are
approved!, “Guaranteed approval”
Public (a) any advertisement by the broker or agent in
Lowest rates in town
Relations connection with his or her status as a licensee or his or
Quoting teaser or discounted rates
Materials: her dealing or trading in mortgages that is published,
without advising of other costs or details
Agents circulated or broadcast by any means, or
Quoting payments based on extended
and (b) any material that a broker or agent makes available
amortizations that appear to be less
Brokers to the public in connection with his or her status as a
expensive than regular amortized
licensee or his or her dealing or trading in mortgages.
mortgage
O. Reg. 187/08, s. 1 (2).
Bait and switch

Marketing (cont) Application analysis : Borrower's documents
PIPEDA Personal Information Protection and Electronic Income Documentation Validate to prevent potential fraud
Documents Act *requires you to:
• obtain the clear consent of an individual before you
collect, use or disclose personal information about that
individual
• use the information only for the purposes for which you
have consent
• protect the information from unauthorized access and
use
• keep the information up to date and correctly filed so
that decisions are based on correct information
• destroy information when you no longer need it for the
original purpose and
• implement accountability mechanisms in your organi‐
zations to ensure compliance with the above.
CASL Canadian Anti-Spam Law
Application file checklist

Application analysis : Borrower's documents (cont) Application analysis : Borrower's documents (cont)
T4A A T4A is a document provided to an individual by his or her T4 A T4 is a document provided to an individual by his or
employer which summarizes income from various sources and her employer to summarize income for a given one-year
is used by the individual for submitting an annual income tax period. This document is typically obtained by a
return. broker/agent when the applicant has employment
income such as salaried or hourly income. {{NL}}
The types of income that are reflected in a T4A include: Every employer (resident or non-resident) must provide
• pension or superannuation; a T4 slip to employees if it has paid its employees any
• lump-sum payments; of the following types of income:
• self-employed commissions; • employment income
• annuities; • taxable allowances and benefits
• retiring allowances; • fishing income or any other payments for services
• patronage allocations; rendered during the year
• registered education savings plan (RESP) accumulated • salary, wages (including pay in lieu of termination
income payments; notice,) tips or gratuities, bonuses, vacation pay,
• RESP educational assistance payments; employment commissions, gross and insurable earnings
• fees or other amounts for services; or of self-employed fishers, and all other remuneration paid
• other income such as research grants, payments from a to employees during the year
Registered disability savings plan (RDSP); wage-loss replac‐ • deductions withheld by the employer during the year
ement plan payments if you were not required to withhold and
Canada Pension Plan (CPP) contributions and employment • pension adjustment (PA) amounts for employees who
insurance (EI) premiums, death benefits, or certain benefits accrued a benefit for the year under the employer’s
paid to partnerships or shareholders registered pension plan (RPP) or deferred profit-sharing
plan (DPSP)
Employers must also prepare a T4A slip if they provided Job See examples in the book
group term life insurance (taxable benefits) for former Letter,
employees, or retirees, even if the total of all benefits paid in Paystub,
the calendar year was $500 or less. In addition, the employer Stated
must prepare a T4A slip if they are theAdministrator or income
trustee of a multi-employer plan and they provided taxable declar‐
benefits under the plan to employees, former employees, or ation
retirees, if the total of all benefits paid exceeded $25. letter

Notice of An NOA is issued by the federal government when a Acceptable Primary identification
assessment personal tax return has been completed and filed. forms of • A valid driver's licence issued in Canada;
(NOA) This document provides a breakdown of the year’s identific‐ • Current Canadian Passport;
income along with the balance owing or refund due. ation • Nexus/ CANPASS card;
See example in the book • A Federally issued Firearms Licence A Certificate of
Financial Read the examples from the book. Canadian Citizenship (containing your photograph) or
Statements Certification of Naturalization (containing your photog‐
Assets = Liabilities + Owner’s Equity raph);
• A Federally issued Permanent Resident Card;
Net income = Revenues - Expenses • A Certificate of Indian Status issued by the
Government of Canada;
• or A Provincial Government issued Photo ID Card.
Secondary identification
• An employee identity card with a photograph from an
employer well known in the community; A signed
automated banking machine (ABM) card or client card
issued by a member of the Canadian Payments
Association;
• A signed credit card issued by a member of the
Canadian Payments Association;
• A signed Canadian Institute for the Blind (CNIB) client
card with a photograph;
• A birth certificate issued in Canada;
• A Social Insurance Number (SIN) card issued by the
Government of Canada;
• A Certificate of Canadian Citizenship;
• Métis Nation ID Card;
• or FAST ID Card.

Multiple MLS allows real estate salespeople to see properties Other • Gift letter - indicating monetary gifts received
Listing being sold by other agents, a benefit to both buyers docume • Property assessment - indicating assessed value of the
Service and sellers of real estate. The Multiple Listing Service ntation porperty
(MLS) efficiently distributes information so that, when a real • Mortgage statement - detailing the current financial
estate salesperson is introduced to a potential home standing of the mortgage, including its outstanding
buyer, the salesperson may search the MLS system balance, interest rate, time remaining in the term and
and retrieve information about all homes for sale in a other important financial information
given area or price range, whether under a listing • Tax bill - A tax bill is a document provided to a
contract by that salesperson’s brokerage or by any of homeowner by the municipal tax authority in the jurisd‐
the other participating brokers. iction in which the property is located.
Agreement The agreement of purchase and sale is a document • Condo status certificate - A Status Certificate, formerly
of used when real estate in Ontario is being purchased or known as an Estoppel Certificate, is a document provided
purchase sold. In all cases, where the applicant is applying for a by a condominium corporation (the entity that runs the
and sale mortgage to purchase a new or resale home, the condominium) to the owner of the condominium unit. This
lender will require a fully completed purchase and sale document is required by lenders to confirm that the
agreement. condominium corporation has sufficient reserve funds for
its continued operation; and reveals the amount of the
condominium maintenance fee, and whether there are
any legal proceedings against the condominium corpor‐
ation, among other information.
• Certificate of Independent Legal Advice (ILA) - states
that the lawyer has met with the client, explained the
terms and conditions of the mortgage, and that the client
attests that he or she is not taking the mortgage under
duress or undue influence.
• Creditor insurance application - This is a document
used by an Insurance Company to determine the eligibility
of an applicant for creditor insurance.

Choosing a lender Submitting application and obtaining commitment (cont)
Types Prime mortgage lending - for prime customers (having a Credit If the applicant has any derogatory credit such as missed
of good and verifiable credit/income) - usually comprises of payments in the past or is currently in arrears on any of his
lenders chartered banks and financial institutions or her debts, the mortgage agent must inquire as to the
Sub-prime mortgage lending - Also called as Self-i‐ reason for this derogatory credit and include this explan‐
nsured lending ation in his or her notes. Explanations are required if the
Private lending applicant’s credit report contains:
Product A product sheet is designed to inform the mortgage agent • Current or previously missed payments
sheets of the terms and conditions that must be met for approval, • Current accounts currently listed as an R9 with or without
as well as the features of the mortgage being described, an outstanding balance
including the maximum LTV, the amortization and so on. • Accounts closed by the credit grantor
• Account balances exceeding credit limits
Rate A rate sheet is designed to inform the mortgage agent of
• Excessive recent inquiries
sheets the rate charged on a product, based on such factors as
• Any judgments
the LTV and the Beacon or credit score.
• One or more previous bankruptcies
• Any accounts now or previously in collections
Submitting application and obtaining commitment
• Any accounts currently listed as an R7 (which indicate a
Only Once an application has been submitted, the lender will, if consumer proposal)
submit everything goes according to plan, approve the application • Any accounts rated a 2 or higher (i.e. R2 or higher, or I2
to one and provide a commitment letter. If declined, the mortgage or higher)
lender agent must choose a different lender and begin the
process anew. Given an approval, the commitment letter
will contain conditions that must be met. This chapter will
discuss meeting those conditions and preparing for the
closing process.
How to Using Origination Software
submit
Areas Credit, Property, Employment
of
review:

Submitting application and obtaining commitment (cont) Submitting application and obtaining commitment (cont)
Prop If there are any issues with the property, the mortgage agent Employm‐ The applicant’s employment affects his or her ability
erty must note them in his or her application submission. The ent to repay the mortgage. Items requiring explanation
property provides the lender with security for its loan. If that include:
security is compromised, the lender’s position is weakened. • Having several jobs over the past two or three years
If the property has been valued by an AVM or through • Any periods of unemployment
CMHC’s or Genworth’s automated underwriting systems and • Additional income
no physical inspection of the property has occurred, any • If the mortgage agent cannot verify employment.
defects in the property will have been omitted. If the INVESTOR / IMPORTANT SEGMENT - please read in the book
mortgage agent learns of any defects, he or she must invest‐ LENDER - crucial information to cover - cannot be
igate and include that information in the application submis‐ DISCLO‐ summarized here
sion. Possible defects or areas of concern may include: SURE
• The property having renters or boarders (if the client has
Commitment This document explains the terms and conditions of
not indicated that this is a rental)
Letter the mortgage that the lender is committed to
• Water damage in the basement – this may be a sign of a
providing along with the conditions that must be met
crack in the foundation
before the lender will fund the mortgage.
• Water damage in the ceiling or walls - this may be a sign of
The following is a list of information commonly found
a burst water pipe
in a commitment letter:
• Excessive interior or exterior wear and tear that might
• Applicants’ names
impact the value of the property
• Property address (address of the security)
• Evidence of UFFI or insulbrick
• Mortgage amount
• Signs of insect or rodent infestation
• Interest rate
• Signs of improper use of the property such as the presence
• Payment amount
of commercial machinery in or on the property that may
• Payment frequency
indicate that the property is being used for business
• Term
purposes.
• Closing date
• Prepayment privileges
• Conditions of approval
• Terms of the approved mortgage (such as fees,
appraisal requirements, etc.).


Mortgage Exam Ontario Cheatsheet

Uploaded by

Copyright:

Available Formats

Mortgage Exam Ontario Cheatsheet

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Mortgage Exam Ontario Cheatsheet

Uploaded by

Copyright:

Available Formats

What are the basic concepts discussed in the document?

What are the basic concepts discussed in the document?

What are some of the options available for mortgage repayment?

What are some of the options available for mortgage repayment?

Mortgage Brokering In Ontario Cheat Sheet

by utkarsh121 via cheatography.com/127347/cs/24773/

Introd​uction Basic mortgage concepts (cont)

Agent hierarchy - works under a mortgage broker J2 = Semi-a​nnually

HBP - First-time home buyers can use up to $35k from their

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Basic mortgage concepts (cont) Mortgage options (cont)

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Property ownership in Ontario (cont) Property ownership in Ontario (cont)

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Property ownership in Ontario (cont) Insurance in mortgage industry (cont)

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Insurance in mortgage industry (cont) Insurance in mortgage industry (cont)

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Insurance in mortgage industry (cont) Insurance in mortgage industry (cont)

For a self-e​mployed individual the following may be

• Child Support Order/​Agr​eement (if applic​able)

Specific Docume​ntation for a Purchase

Specific docume​ntation for a Refinance, Equity

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Initial Consul​tation (cont) Applic​ation analysis - RATIOS (cont)

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Applic​ation analysis - RATIOS (cont) Applic​ation analysis - Borrower Credit

TDS • Loans Credit Equi​fax and Tran​sun​ion

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Applic​ation analysis - The property (cont) Borrower disclosure

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Closing the transa​ction (cont) Key Partic​ipants

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Key terms Repayment plans (cont)

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Repayment plans (cont) Regulation and legisl​ation (cont)

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Regulation and legisl​ation (cont) Regulation and legisl​ation (cont)

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Transa​ction Overview (cont) Calculate Mortgage Payment (cont)

Calculate Mortgage Payment

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Calculate Mortgage Payment (cont) Marketing (cont)

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Marketing (cont) Applic​ation analysis : Borrower's documents

Applic​ation file checklist

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

Choosing a lender Submitting applic​ation and obtaining commitment (cont)

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

By utkarsh121 Published 18th October, 2020. Sponsored by ApolloPad.com

You might also like

Introduction Basic mortgage concepts (cont)

Agent hierarchy - works under a mortgage broker J2 = Semi-annually

For a self-employed individual the following may be

• Child Support Order/Agreement (if applicable)

Specific Documentation for a Purchase

Specific documentation for a Refinance, Equity

Initial Consultation (cont) Application analysis - RATIOS (cont)

Application analysis - RATIOS (cont) Application analysis - Borrower Credit

TDS • Loans Credit Equifax and Transunion

Application analysis - The property (cont) Borrower disclosure

Closing the transaction (cont) Key Participants

Repayment plans (cont) Regulation and legislation (cont)

Regulation and legislation (cont) Regulation and legislation (cont)

Transaction Overview (cont) Calculate Mortgage Payment (cont)

Marketing (cont) Application analysis : Borrower's documents

Application file checklist

Choosing a lender Submitting application and obtaining commitment (cont)