Quebec AMF Broker flashcards
Quebec AMF Broker · Build recall with a focused review session.
33 cards. Read the term and the definition here. The deck at the top of this page is optional.
- AMF
- The Autorité des marchés financiers is Quebec's financial regulator; it issues mortgage broker certificates, supervises conduct, and enforces the ADFP.
- ADFP
- The Act respecting the distribution of financial products and services; it establishes the legal framework for mortgage brokerage in Quebec, including certification and discipline.
- Mortgage broker certificate
- A licence issued by the AMF authorizing an individual to act as a mortgage broker representative; requires training, exam, and good standing.
- Continuing education requirement
- AMF certificate holders must complete prescribed professional development units over a two-year reference period to maintain competence and certificate validity.
- Record retention period
- Quebec mortgage brokers must keep client files and transaction records for at least five years after the end of the business relationship, unless otherwise specified.
- Firm supervision
- Registered firms must supervise their representatives, ensure compliance with AMF rules, and are accountable for the conduct of their brokers.
- AMF inspection powers
- The AMF may inspect or investigate firms and representatives, request documents, and impose administrative penalties, including fines, suspension, or revocation.
- Registration of changes
- Brokers must notify the AMF of material changes such as address, control, or ownership within prescribed timeframes to keep registration current.
- Fixed-rate mortgage
- A mortgage where the interest rate remains constant for the term; payments are stable, but prepayment penalties may apply if the loan is closed.
- Variable-rate mortgage
- A mortgage where the interest rate fluctuates with the lender's prime rate; payments may change or remain fixed depending on the product terms.
- Open mortgage
- A mortgage allowing prepayment at any time without penalty; it typically carries a higher interest rate than a closed mortgage.
- Closed mortgage
- A mortgage with restrictions on prepayment; exceeding limits triggers a penalty, usually three months' interest or the interest-rate differential.
- Amortization period
- The total length of time needed to pay off the mortgage in full; common amortizations are 25 years, while the term is the current contract length.
- Loan-to-value ratio
- The mortgage amount divided by the property's appraised value; LTV above 80% typically requires mortgage default insurance in Canada.
- GDS ratio
- Gross debt service ratio = annual housing costs (mortgage principal and interest, taxes, heating, 50% condo fees) divided by gross annual income.
- TDS ratio
- Total debt service ratio = annual housing costs plus all other debt payments divided by gross annual income; lenders use it to assess affordability.
- Qualifying rate
- The stress-test rate used by federally regulated lenders: the greater of the contract rate or the benchmark rate (currently 5.25%) for uninsured mortgages.
- Minimum down payment
- In Canada, 5% on the first $500,000 of the purchase price and 10% on the portion above $500,000 up to $1.5 million; 20% for homes over $1.5 million.
- Prepayment privilege
- A feature allowing the borrower to pay down a closed mortgage ahead of schedule, often 10-20% of the original principal annually without penalty.
- Bridge financing
- A short-term loan covering the gap between the purchase of a new home and the sale of the existing one; it carries higher interest and fees.
- KYC rule
- Know-your-client: the broker must collect sufficient information on the client's financial situation, objectives, risk tolerance, and time horizon before recommending a product.
- Suitability determination
- The broker must ensure the recommended mortgage fits the client's needs, affordability, flexibility requirements, and cost over the term.
- Affordability analysis
- Assessment of whether the client can afford the mortgage, using GDS/TDS ratios, stress-test rate, residual income, and credit history.
- Conflict of interest disclosure
- The broker must disclose any commission, referral fee, or incentive from a lender that could influence the recommendation, before the client commits.
- Client file documentation
- The broker must maintain a file with the needs analysis, product comparison, disclosure forms, and signed consent, retained per AMF rules.
- Plain language communication
- The broker must explain product features, risks, and costs in clear language and provide written disclosure of fees and penalties before commitment.
- Periodic review
- The broker should reassess the client's needs at renewal or when there is a material change in circumstances, such as income or rate changes.
- Referral to professionals
- When a client needs tax, legal, or estate advice, the broker should recommend consulting a qualified professional rather than giving such advice.
- Vulnerable client protection
- Extra care is required to ensure understanding and voluntariness; the broker must document steps taken to verify capacity and suitability.
- Fiduciary duty
- The broker must act in the client's best interest, placing the client's interests ahead of the broker's own or the firm's interests.
- Integrity and honesty
- The broker must provide accurate information, never misrepresent products, rates, or penalties, and correct errors promptly.
- Confidentiality
- The broker must protect client personal and financial information and disclose it only with consent or as required by law.
- Competence
- The broker must only accept engagements within their knowledge and skill, refer out when necessary, and keep skills current through continuing education.