Reca Fundamentals Of Mortgage
Brokerage 2024 Questions And Answers
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Which of the following is part of RECA's commitment to consumer protection? -
ANSWER✔✔
What are some benefits that mortgage brokerage trade associations offer their
members? - ANSWER✔✔ Licensing Standards for mortgage industry members
Which entity has the authority to amend the Act? - ANSWER✔✔ Provincial
Legislators
Which of the following represents an accountability mechanism that RECA must
comply with under the Act? - ANSWER✔✔ Previous Fiscal year
In addition to mortgage brokerage trade associations, other organizations are
involved with the industry. Choose the answer below that includes these other
organizations. - ANSWER✔✔ Provincial Government, Alberta Real Estate
Foundation
Law Society of Alberta
Federal Government
Which of the following is an advantage to the borrower when assuming an
existing mortgage? - ANSWER✔✔ Advantages. If the assumable interest rate is
lower than current market rates, the buyer saves money straight away
,Most mortgages provide for a penalty that the borrower pays to the lender for
early payment of the debt. Which best describes the penalty that most mortgages
have? - ANSWER✔✔ the greater of interest rate differential or three months
interest
Which statement is correct when calculating the Total Debt Service (TDS) Ratio? -
ANSWER✔✔ While the guidelines state that your GDS should be no more than
32% and your TDS should be no more than 40%,
Which of the following is included in the definition of 'amortization period'? -
ANSWER✔✔ The amortization period is the length of time it would take to pay off
a mortgage in full,
Which statement best describes the difference between the mortgage term and
the amortization period of a mortgage? - ANSWER✔✔ The mortgage term is the
length of time for which the lender loans the funds, while the amortization period
is the time required to repay the loan.
Rodney has applied for a mortgage through ABC Mortgage Brokers Ltd. The
mortgage associate there explains that the term of the mortgage is for 3 years
and Rodney is in agreement. While signing the mortgage document with the
lawyer, Rodney sees that the term is for 5 years. A mistake has occurred. Based
on an understanding of contracts, what type of mistake is this? - ANSWER✔✔
Common mistake
Common mistake - ANSWER✔✔ Both parties to the agreement share the same
fundamental mistake.
,Mutual Mistake - ANSWER✔✔ both parties have a common but erroneous belief
forming the basis of the contract; renders the contract voidable by either party
Unitateral - ANSWER✔✔ Occurs when one party holds an erroneous belief and
the other party, knowing to be erroneous does NOT correct the understanding
The Ogami's have just completed their first English as a Second Language (ESL)
course. They want to start a family business and take out a mortgage on their
small townhouse to get funds for the business. However the business fails and
they must repay the mortgage. Since the Ogami's struggle with English, they did
not understand the mortgage contract. If they challenge the contract, what term
describes the possible result? - ANSWER✔✔ Voidable Because One party
challenges the contract regarding a lack of more or more of the essential
elements
Morgan agrees to buy a property from Jeff. On closing day, Morgan's lawyer
transfers the funds to Jeff and Morgan is registered as the property owner on the
title. Which term describes the state of this contract? - ANSWER✔✔ Discharged
When the borrower is funding a property purchase, the Real Estate Purchase
Contract will typically include a finance condition. Which statement is a possible
outcome regarding a finance condition? - ANSWER✔✔ D All of above
A) The finance condition is satisfied because a mortgage has been approvedB) The
finance condition is not satisfied because a mortgage was not approvedC) The
finance condition is extended because more time is needed to secure a
mortgageD) All of these statement are correct
, Elizabeth, a real estate professional, is meeting with first-time buyers Manuel and
Maria who have recently moved to Alberta from Panama. While explaining her
business services, she realizes that they do not comprehend many of the terms or
concepts. If Manuel and Maria proceed with the written service agreement, which
essential element of contracts may be missing? - ANSWER✔✔ Capacity of a party
Which of the following statements is NOT true regarding a condominium? -
ANSWER✔✔ Condominium and Cooperative are the essentially the same is false
Why should mortgage brokerage industry members be aware of Alberta's
Environmental Protection and Enhancement Act in terms of their practice? -
ANSWER✔✔ A basic Audit level is becoming more prevalent in Commercial and
Industrial transactions
5 C's of Credit - ANSWER✔✔ 1. Character (employment, length of employment)2.
Capital (amount of own money investing)3. Capacity (ability of borrower to repay,
GDS, TDS)4. Collateral (property to secure the loan)5. Credit (past record of loan
and repayment)
In a condominium, what is the purpose of a 'special assessment'? - ANSWER✔✔
To pay for the common area and future
Under current privacy legislation, which does NOT qualify as personal information
and may be disclosed without an individual's consent? - ANSWER✔✔ Business
Phone number
Under federal legislation what is defined as a criminal rate of interest? -
ANSWER✔✔ A criminal rate of interest is defined as an effective annual rate of
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