Alberta Mortgage Associate key terms

A business licensed to arrange mortgage financing for borrowers with lenders, typically acting for several lenders rather than a single institution. In Alberta it must hold a licence and operate under a designated broker.

An individual licensed to deal in mortgage transactions on behalf of borrowers or lenders, including assessing needs, presenting applications, and disclosing costs. The licence is held through a licensed brokerage and supervised by its designated broker.

A licensed individual who may deal in mortgage transactions but works under a brokerage and designated broker, often with conditions on the licence. Associates generally cannot supervise others or operate independently until further authorization is granted.

The licensed individual responsible for the overall supervision and conduct of a brokerage, including compliance, record keeping, and oversight of its brokers and associates. The regulator must be notified of who holds this role.

The regulator's authorization to carry on mortgage brokering activity, granted after an application, background checks, and education requirements are met. Operating without a valid licence is an offence under Alberta's mortgage broker legislation.

The periodic process of extending a licence before it expires, which usually requires continuing education, fees, and confirmation that conduct and suitability requirements remain satisfied. Lapsed licences stop the holder from dealing in mortgages.

Mandatory ongoing coursework that licensees complete during each licensing cycle to maintain and update their knowledge of products, law, and conduct standards. Completion is typically verified at renewal and can be audited.

The government body that administers mortgage broker legislation, issues licences, investigates complaints, and imposes discipline. In Alberta, mortgage brokering oversight sits with the provincial financial regulator designated under the statute.

Alberta legislation that sets out licensing, conduct, disclosure, and record-keeping duties for mortgage brokerages and their licensees. It is supplemented by regulations and rules that add detail on how obligations are met.

A legal obligation to act in another party's best interests ahead of one's own, including loyalty, good faith, and full disclosure of conflicts. Whether it applies depends on the relationship, but licensees must always act honestly and in good faith.

A situation where a licensee's personal interest, outside business, or lender relationship could influence advice or recommendations to a client's detriment. It must be identified, disclosed in writing, and managed, and some conflicts require avoidance.

The duty to give clients complete, timely, and understandable written information about costs, compensation, conflicts, and the terms of a proposed mortgage. Disclosure must occur early enough for the client to make an informed decision.

A written statement of the key costs and terms of a proposed mortgage, such as the interest rate, fees, payment schedule, and prepayment privileges. It lets the borrower compare offers and understand total obligations before committing.

Payment made to a third party for sending a client to a brokerage or licensee. It must be disclosed to the client and recorded, and undisclosed referral arrangements are prohibited because they hide a conflict of interest.

A fee charged to or received from a party for arranging an introduction or locating financing. Licensees must disclose who pays it and its amount, and may not collect undisclosed compensation from lenders or other parties.

A person or entity to whom a licensee provides mortgage services under an agreement and to whom duties of good faith, disclosure, and confidentiality are owed. The relationship is established through a written service agreement.

A written contract between a brokerage and a client setting out the services to be provided, fees payable, and the scope of the relationship. It must be signed before or at the time services begin.

Federal and provincial laws governing how personal information such as income, credit history, and identification is collected, used, stored, and disclosed. Licensees need consent, must limit collection to what is needed, and must safeguard records.

A client's informed permission to collect, use, or disclose personal information for stated purposes, such as submitting an application to lenders. Consent can be express or implied depending on sensitivity, and its scope must be respected.

Laws and procedures requiring reporting entities to identify clients, verify identity, monitor transactions, and report suspicious or large cash activity. Mortgage brokers fall within the federal regime and must maintain a compliance program.

The process of gathering and verifying information about a borrower's identity, financial situation, goals, and risk tolerance before recommending a mortgage. It underpins suitability of advice and identity verification duties.

The standard that a recommended mortgage product and term reasonably fit the borrower's documented needs, capacity, and objectives. Licensees must be able to justify why the recommendation is appropriate for that client.

A structured review of a borrower's circumstances, including income stability, debts, savings, future plans, and tolerance for payment change. Its results drive product selection and must be documented in the file.

A loan secured by a home or other dwelling, typically one to four units, where the property serves as collateral. Terms, default remedies, and disclosure rules differ from those for commercial lending.

A mortgage where the loan amount is at or below the standard maximum loan-to-value threshold, so no government-backed default insurance is required. Lenders may still impose their own qualifying rules.

A mortgage exceeding the standard loan-to-value threshold, which requires mortgage default insurance. The insurance protects the lender, and its premium is usually added to the loan balance or paid by the borrower.

Coverage that protects the lender if a high-ratio borrower defaults and the property sale does not repay the debt. It is not the same as mortgage life insurance, which protects the borrower's family.

The loan amount divided by the property's appraised value or purchase price, expressed as a percentage. It determines whether default insurance is needed and affects pricing, limits, and refinancing options.

The total period over which a mortgage is scheduled to be fully repaid through regular payments. A longer amortization lowers payments but raises total interest, and insured mortgages cap the maximum allowed.

The length of time a mortgage's rate, payment terms, and conditions are fixed before renewal or renegotiation. A term is usually shorter than the amortization and ends with a renewal decision.

The process at the end of a mortgage term when the borrower and lender agree on new terms, rate, and payment schedule for the remaining balance. Borrowers may renew with the existing lender or transfer to another.

Replacing an existing mortgage with a new one, often to change the rate, term, or amortization, or to access equity. Refinancing may involve payout penalties, new qualifying, and fresh disclosure.

A contractual right allowing a borrower to pay down principal beyond regular payments without a penalty, within stated limits. Generous privileges reduce interest cost and are an important comparison point between products.

A charge imposed when a borrower pays off or pays down a mortgage beyond allowed limits before the term ends. For fixed-rate mortgages it is often the greater of three months' interest or an interest-rate differential calculation.

A penalty calculation comparing the lender's lost interest, based on the difference between the contract rate and a current comparable rate, over the remaining term. It can greatly exceed three months' interest when rates have fallen.

A mortgage that permits the borrower to prepay all or part of the principal at any time without a penalty, usually at a higher interest rate. It suits borrowers expecting a lump sum or an early sale.

A mortgage that restricts prepayment beyond stated privileges and charges a penalty for early payout. Most fixed-rate residential mortgages are closed, and the restrictions must be explained to borrowers.

A mortgage whose interest rate moves with a reference rate, so payments or the principal portion change over the term. Some versions keep payments fixed while the amortization fluctuates, which borrowers must understand.

A mortgage whose interest rate stays the same for the entire term, giving predictable payments. The certainty usually comes at a price compared with variable options and may carry higher break penalties.

A qualifying rule requiring borrowers to show they could afford payments at a higher rate than the contract rate, or at the contract rate plus a buffer. It limits maximum borrowing and applies to most insured and uninsured mortgages.

The share of gross monthly income consumed by housing costs such as mortgage principal and interest, taxes, heating, and half of condo fees. Lenders use it with total debt service to judge affordability.

The share of gross monthly income needed to cover housing costs plus all other debt payments, such as loans, credit cards, and leases. It is a primary affordability measure alongside the gross debt service ratio.

An independent professional estimate of a property's market value, used by lenders to support the loan amount and loan-to-value ratio. It may be a full report or a streamlined valuation depending on the file.

A policy protecting a lender or owner against losses from title defects, fraud, or certain registration problems, often used instead of a solicitor's opinion. It is separate from property insurance covering physical damage.

The obligation to create, retain, and produce accurate records of client dealings, disclosures, and transactions for the period set by regulation. Files must let the regulator reconstruct what was recommended and why.

The regulator's process for addressing licensee misconduct, ranging from warnings and conditions to suspension, revocation, and administrative penalties. It is separate from civil liability or criminal prosecution.

A transaction that a licensee has reasonable grounds to suspect is related to money laundering or terrorist financing, which must be reported to the federal financial intelligence unit. The client must not be tipped off about the report.