Alberta Mortgage Associate flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Mortgage Brokerage Act

Alberta statute that sets licensing, conduct, disclosure, and record-keeping requirements for mortgage brokerages, mortgage brokers, and associate brokers operating in the province.

Designated broker

The licensed individual responsible for a brokerage's overall compliance with the Act and regulations, including supervision of brokers and file quality.

Associate broker

A licensed broker who supervises broker conduct and file quality within a brokerage and may carry delegated compliance responsibilities from the designated broker.

Disclosure of remuneration

Requirement that all brokerage fees, lender-paid compensation, and third-party charges be disclosed in writing to the borrower before the client commits to the mortgage.

Conflict of interest disclosure

Written notice to the client of any relationship or compensation that could bias the broker's recommendation, given at the earliest practicable opportunity.

File documentation standard

A complete file contains the application, income and down payment verification, credit authorization, disclosure forms, lender commitment, and signed client consents.

Suitability assessment

Documented analysis showing the recommended mortgage matches the borrower's objectives, financial capacity, and risk tolerance, with the rationale recorded on file.

Record retention

Brokerages must keep records of dealings for the period set by the regulator and produce them on request during an audit or investigation.

GDS ratio formula

Gross debt service ratio equals principal, interest, property taxes, and heating costs divided by gross annual income; conventional guideline is 32 percent or less.

TDS ratio formula

Total debt service ratio equals housing costs plus all other debt payments divided by gross annual income; conventional guideline is 40 percent or less.

High-ratio mortgage

A mortgage with a loan-to-value above 80 percent, which requires default insurance and typically has the premium added to the mortgage balance.

Insured mortgage amortization

Default-insured mortgages are limited to a maximum 25-year amortization; uninsured mortgages may run longer subject to individual lender policy.

Mortgage stress test

Qualifying rate for insured mortgages is the greater of the contract rate plus two points or the benchmark; uninsured mortgages use a similar buffer.

Fixed versus variable rate

A fixed rate locks the payment and amortization schedule for the term; a variable rate moves with the lender's prime or reference rate, changing payment or amortization.

Term versus amortization

The term is the length of the current contract, commonly one to five years; amortization is the full repayment period, commonly 25 to 30 years.

Prepayment privilege

A closed mortgage allowance permitting a set percentage of original principal repaid annually plus payment increases, without triggering a prepayment penalty.

Prepayment penalty

Charge for repaying beyond the privilege, typically three months' interest on a variable rate or the greater of three months' interest and the interest rate differential on a fixed rate.

Refinance loan-to-value

Maximum loan-to-value for refinancing an owner-occupied property is generally 80 percent, with lender-specific limits for rentals and secondary suites.

Loan-to-value ratio

Mortgage amount divided by the property's appraised value, expressed as a percentage; it drives insurance requirements and pricing.

Alberta mortgage regulator

The Alberta Superintendent of Real Estate and the Real Estate Council of Alberta administer licensing, complaints, and discipline for the mortgage brokerage industry.

Licensing requirement

A person must not deal in mortgages or hold out as a mortgage broker without a valid licence; renewal and continuing education are conditions of registration.

Trust account rule

Client money such as deposits or fees held pending completion must be kept in a designated trust account, separate from brokerage operating funds.

PIPEDA and Alberta PIPA

Mortgage application personal information is protected by Alberta's Personal Information Protection Act, requiring consent, limited collection, and reasonable safeguards.

Anti-money-laundering duties

Federal proceeds-of-crime and terrorist-financing rules require client identification, record-keeping, and reporting of suspicious transactions by brokerages.

Advertising standards

Advertising must not be false or misleading; rates and terms must be current with required disclaimers, and the licensed brokerage name must be identified.

Regulatory discipline powers

The regulator may impose conditions, suspend or cancel a licence, and levy penalties for misconduct; brokers must cooperate with investigations.

Fiduciary duty

The broker must act in the client's best interest, disclose conflicts, and place the client's interest above the broker's own compensation.

Confidentiality duty

Client financial and personal information may not be disclosed to third parties without consent, except as required by law or by the regulator.

Honesty in dealings

Brokers must not make false or misleading statements about rates, terms, approval likelihood, or their own qualifications when serving clients.

Competence and referral

A broker must decline or refer a matter outside their knowledge or licence scope rather than proceed without adequate expertise.

Dual agency disclosure

Representing both borrower and lender in one transaction requires full written disclosure and informed consent, without favouring either party's interest.

Referral fee disclosure

Any referral arrangement involving a fee or benefit must be disclosed to the client in writing before the client acts on the referral.