MR LEE - CANADA from FUR Trade to Confederation With Answers
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Course
FUR Trade to Confederation
Institution
FUR Trade To Confederation
MR LEE - CANADA from FUR Trade to Confederation With
Answers
The first European group to arrive in North America was the - ️️ -Vikings.
The original natural resource which attracted Europeans to the east coast of North
America was - ️️ -fish.
Indigenous peoples trading with the French ...
Mortgage - ✔️✔️-a legal method by which a borrower can pledge property to the lender
as security for a debt
Where does today's mortgage industry trace its origin from? - ✔️✔️-England
-power of royalty and lords diminished due to development of middle class
-loans secured by the right of ownership of the land became common
-Here, the seller of the land supplied the credit to the purchaser
Where does the term "mortgage" originate from? - ✔️✔️-French words "mort" meaning
dead or passive; and "gage" meaning pledge
Livegage - ✔️✔️-a pledge that was repaid solely from the fruits of a land- from what
could be generated by putting the land to use
--Crops giving money to vendor or money from the sale of the produce was used to pay
the debt
Equity of Redemption - ✔️✔️-Held that the borrower had the right, for a limited period
of time, to repay the loan and retain possession of a property even if default had taken
place
Interest-Only Mortgage - ✔️✔️--Long term loan where nothing but monthly interest paid
over the life of the loan
-When loan reached maturity the principal was due in full
-Why? At the time interest rates and property values were stable and inflation was low,
making them a safe investment for lenders
,-What changed this? The economic collapse of the North American Economy in 1920s-
1930s
Principal Risk - ✔️✔️-a risk to lenders associated with interest only loans resulting from
market fluctuations-- if the market property falls, the value might be less than the
principal amount of the loan due at the end of the mortgage term and the lender may be
unable to recover the entire principal
Fully amortized mortgage - ✔️✔️-each payment is the same for the life of the mortgage
and is comprised of both interest due plus partial repayment of the principal; at maturity
full amount of principal plus owing interest has been paid
-From the end of the depression until early 1970s
How did the federal government attempt to indirectly stimulate the damn and supply of
housing post WW2? - ✔️✔️--Created default insurance, to reduce risk of loss to
lenders in the face of default, motivating financial institutions to increase their
participation in mortgage lending
-created Canada Mortgage and Housing Corporation (CMHC) in 1946 to administer the
National Housing Act (NHA)
-Amended the Bank Act in 1954 so banks could make mortgage loans
-Created Mortgage Backed securities
-Created mortgage bonds
-Created the Home Buyer's Plan in 1992
-Focused on expanding housing options for a broader range of Canadians (seniors or
low income households)
,What is the minimum LTV Ratio on non-owner occupied residential rental properties? -
✔️✔️-80%--must have a downpayment of 20% or more
What is the current maximum amortization period in Canada? - ✔️✔️-25 years
At what LTV ratio is it mandatory to have default insurance? - ✔️✔️-LTV Ratios higher
than 80% require default insurance
What is a partially amortized mortgage? - ✔️✔️-Involves periodic payments of both
interest and principal over a long period of time (up to 25 years), however the loan
matures on a short-term basis, such as one, two, three, five, or seven years. At the end
of the term, the full balance must be repaid or refinanced
--Why? Protects both borrowers and lenders from unexpected interest fluctuations so
they are not locked into the same rate for the entire amortization period
What is the Home Buyer's Plan and When was it Created? - ✔️✔️--Created in 1992
-Allows Canadian's to borrow up to $25,000 from their RRSP on a tax-free basis to
purchase a first home
-Thy are required to either repay this loan over a 15-year period to replenish their RRSP
OR pay taxes on the amount not repaid
What is the maximum purchase price allowable for insured mortgages? - ✔️✔️-$1
Million
What is the minimum down payment for owner-occupied properties with 1-2 units below
$500,000? - ✔️✔️-5%
What is the minimum down payment for owner-occupied properties with 1-2 units above
$500,000? - ✔️✔️-5% for the first $500,000, and 10% for the amount above $500,000
, What is the minimum down-payment for owner occupied properties with 3-4 units? -
✔️✔️-10%
What is the minimum down payment for non-owner occupied properties? - ✔️✔️-20%
What is the maximum amount that can be borrowed for refinancing? - ✔️✔️-80% of the
property value
What is the maximum Gross Debt Servicing Ratio allowable? - ✔️✔️-39%
What is the maximum Total Debt Servicing Ratio allowable? - ✔️✔️-40%
During the last decade, residential credit in Canada has expanded at an average of
_________ per year - ✔️✔️-7.9%
Approximately what percentage of mortgages are held by Canada's Chartered Banks? -
✔️✔️-78%
What two major reports are produced each year by MPC on the behaviours and
attitudes of Canadian Mortgage Consumers? What is their information based on? -
✔️✔️--Fall Report
-Spring Report
-Based largely on surveys
What does the Fall Report review? - ✔️✔️--The state of the Canadian mortgage market
-Recent trends and forecasts the future activity in the housing and mortgage markets
*More about the market itself
What does the Spring Report review? - ✔️✔️--Profiles choices made by consumers in
the mortgage market
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