BC Sub-mortgage Broker flashcards
BC Sub-mortgage 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.
- BCFSA
- The BC Financial Services Authority is the provincial regulator that licenses and supervises mortgage brokers, submortgage brokers, and mortgage agents in British Columbia.
- Submortgage broker
- A licensed mortgage professional who works under a licensed mortgage brokerage and is restricted from dealing directly with the public without supervision.
- Continuing education requirement
- BCFSA mandates that licensees complete approved continuing education courses within specified cycles to maintain their licence and stay current.
- Errors and omissions insurance
- Professional liability coverage that mortgage licensees must maintain to protect against claims of negligence or errors in their services.
- Fixed-rate mortgage
- A mortgage product where the interest rate remains constant for the entire term, resulting in predictable principal and interest payments.
- Variable-rate mortgage
- A mortgage with an interest rate that fluctuates based on the lender's prime rate, potentially changing monthly payments or payment allocation.
- High-ratio mortgage
- A mortgage with a loan-to-value ratio exceeding 80%, requiring mortgage default insurance from an approved insurer such as CMHC.
- Home equity line of credit
- A secured revolving credit facility that allows homeowners to borrow against home equity, typically with interest-only minimum payments.
- Mortgage application
- A formal document capturing borrower identity, income, assets, liabilities, and property details used by lenders to assess creditworthiness.
- Down payment verification
- The process of confirming that a borrower's down payment comes from legitimate, verifiable sources such as savings, gifts, or sale proceeds.
- Title search
- A review of public land records to confirm ownership and identify encumbrances, liens, or other claims affecting the property.
- Mortgage commitment letter
- A lender's formal written offer outlining the approved mortgage terms, conditions, and obligations before closing.
- Gross Debt Service ratio
- A calculation comparing housing costs (principal, interest, taxes, heating, and half of condo fees) to gross annual income, expressed as a percentage.
- Total Debt Service ratio
- A measure of total debt obligations (housing costs plus all other debt payments) divided by gross annual income, used to assess affordability.
- Loan-to-Value ratio
- The ratio of the mortgage amount to the property's appraised value or purchase price, expressed as a percentage.
- Stress test
- A qualification rule requiring borrowers to qualify at the greater of the contract rate plus 2% or the Bank of Canada benchmark rate.
- Amortization period
- The total length of time required to pay off a mortgage completely through regular payments, assuming the interest rate remains constant.
- Prepayment penalty
- A fee charged by lenders when a borrower pays off a closed mortgage early, calculated as three months' interest or the interest rate differential.
- Fiduciary duty
- A legal obligation requiring mortgage brokers to act in the client's best interest, disclose conflicts, and avoid self-dealing.
- PIPEDA
- The Personal Information Protection and Electronic Documents Act governs how organizations collect, use, and disclose personal information, requiring consent.
- Anti-money laundering
- Legal requirements for brokers to verify client identity, monitor transactions, and report suspicious activities to authorities.
- Dual agency
- A situation where a broker represents both borrower and lender in the same transaction, requiring full written disclosure and consent.
- Client identification
- The process of verifying a client's identity using government-issued photo identification and cross-referencing with other documents.
- Red flags of fraud
- Warning signs such as inflated income, fake employment letters, undisclosed debts, or unusual pressure to close quickly.
- Document verification
- Confirming the authenticity of pay stubs, tax returns, and bank statements through third-party sources or direct employer contact.
- Identity theft protection
- Procedures to prevent identity fraud, including viewing original identification, checking for inconsistencies, and securing personal information.
- Client communication log
- A documented record of all advice, disclosures, and instructions exchanged with a client, maintained for compliance and reference.
- Suspicious transaction reporting
- The obligation to report unusual or potentially fraudulent transactions to the brokerage's compliance officer and relevant authorities.
- Vulnerable client
- A client who may have diminished capacity or be at risk of undue influence, requiring extra care to ensure understanding and protect interests.
- Mortgage agent
- A licensed mortgage professional with restricted activities, typically working under the supervision of a licensed mortgage broker or brokerage.
- Reverse mortgage
- A loan allowing homeowners aged 55 and older to access home equity without regular payments; interest accrues until the home is sold.
- Second mortgage
- A subordinate loan secured against a property, ranking behind the first mortgage, often used for debt consolidation or down payment.
- Mortgage default insurance
- Insurance required for high-ratio mortgages to protect lenders against borrower default, provided by CMHC, Genworth, or Canada Guaranty.