Mock Exam 100-0

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Question 1

1

Federally regulated financial institutions require mortgage insurance on loans with loan-to-value ratios higher than:

0.75

0.8

0.85

0.9

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Review Math 6 - Law

• conventional mortgages - a loan UP TO a maximum of 80% of the lending value
• if a mortgage loan has a loan-to-value ratio of MORE than 80%, it is known as a high-ratio or insured mortgage and typically needs to be insured

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Question 2

2

Which of the following are powers of the Registrar of Mortgage Brokers under the Mortgage Brokers Act? A. The Registrar has the power to investigate any complaints regarding a breach of the Mortgage Brokers Act. B. The Registrar has the same powers as a court to summon and enforce the attendance of witnesses and compel them to give evidence and produce documents, property, assets, etc. C. The Registrar’s powers of investigation allow him or her to enter, inspect all books of account and other records, and seize any relevant information from a mortgage broker. D. The Registrar has the power to freeze the trust funds of any mortgage broker pending the outcome of an investigation.

Only A, C and D

Only A and C

Only A, B and C

All of A, B, C and D

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Review The Mortgage Brokers Act

• the Registrar’s powers of investigation are broad: Registrar's staff are allowed to enter brokerage offices, inspect all books of account and other records, and to seize any relevant information; the Registrar can summon and enforce the attendance of witnesses and compel them to give evidence and produce documents, property, assets, etc. Withholding/Failure to cooperate makes that person liable to be convicted for contempt by a court; the Registrar is also given authority to freeze the trust funds of any mortgage broker pending the outcome of an investigation; the Registrar CAN investigate criminal fraud - this is done largely through relicensing and the need for a criminal record
  check

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Question 3

3

Loan to Value Ratio is:

Maximum Loan divided by Lending Value

Minimum Loan multiplied by Gross Debt Service Ratio

Maximum Loan divided by Debt Coverage Ratio

Minimum Loan multiplied by Lending Value

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Review Math 6 - Law

• rearrange M = LV x LTV% to solve for LTV% : LIV% = M/LV

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Question 4

MB3.2049

Which of the following are possible sources of discipline that a mortgage broker may attract for a single act of misconduct?

Regulatory sanctions from a government body, such as the British Columbia Financial Services Authority

Criminal penalties if the misconduct is serious enough to breach the Criminal Code

Civil lawsuits from members of the public who have suffered a loss as a result of the broker’s actions

All of the above may be attracted concurrently

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Review Professionalism & Code of Ethics

• regulatory sanctions, criminal penalties, and civil lawsuits are all possible sources of discipline for a single act of misconduct (“attracted concurrently” means that they could all be imposed at the same time for a single infraction)

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Question 5

5

A mortgage loan with a face value of $250,000 is arranged through a mortgage broker. A commission of $5,000, appraisal fees of $250, as well as survey and legal fees totalling $500 will be deducted from the face value before the funds are advanced to the borrower. Calculate the cost of funds advanced to the borrower, expressed as an effective annual rate, if the loan is written at 5% per annum, compounded semi-annually, with monthly payments over a 25 year amortization period and a 5 year term.

5.645617 %

7.004266 %

5.504594 %

7.233556 %

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Review Math 4 - PIPI

P: find PMT round up and plug back in
J2=5
PMT = 12
NPEPN: 5#NOM, 2#PYR, #EFF, 12#PYR, #NOM = 4.9486...
Enter: 25# N ; 250000 PV ; 0 +/- FV
Press PMT = -1454.012... = 1454.02 +/- PMT
|: Apply Term, N + F
5#N, press FV = 221268.256...

P: 250000 - 5000 - 250 - 500 PV (should be 244250)

I: press IYR = 5.5045... = J12
Convert? YES, asking for J1 (Effective), press #EFF = 5.6546...

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Question 6

6

Tanner has put his house up for sale for $260,000. Jerome has made an offer consisting of $95,000 cash and a mortgage loan for the balance. The mortgage loan has a 15 year amortization period with monthly payments over a 5 year term. The rate is J2 = 6%. The market rate for similar mortgages is J2 = 7.5%. What is the market value of Jerome’s offer?

$ 251582.17

$ 251483.01

$ 251016.87

$ 245547.47

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Review Math 5 - PIMPO

J2=6

PMT = 12 , do NPEPN = 5.9263...
15#N

16500 PV (260000 - 95000)

0 +/- FV
P: Press PMT = -1385.806... = 1385.81+/-PMT
I: 5#N, press FV = 125240.992...+/-
M: J2 = 7.5 , do NPEPN = 7.3854...
P: Press PV = 156016.872...
O: +95000 = 251016.872......

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Question 7

7

Which of the following statements about the criminal offence of misleading advertising in section 52 of the Competition Act is FALSE?

The offence involves the making of a representation to the public that is false or misleading in a material respect, for the purpose of promoting any business interest.

To escape liability, one must show that he or she honestly believed that the representations were not false or misleading and exercised due diligence in making sure that was the case.

A “representation” to the public includes print and digital representations, but not oral representations.

The requirement that the representation be false in a material respect refers to the whether the representation would have a real effect on an ordinary consumer’s buying decision.

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Note

• the representations covered by section 52 can be by “any means whatsoever” and can include oral/verbal representations (and are not limited to just print and digital representations)

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Question 8

8

Your client wants to purchase a home that is on the market for $650,000. She has gone to her bank and asked about the maximum loan available to her. The lending value of her house has been determined to be $630,000. She earns $110,000 per year and annual taxes on the property are $3,200. Subject to a loan-to-value ratio of 80% and a gross debt ratio of 32%, the bank is willing to lend your client money at J12 = 4% with 25 amortization and monthly payments. What is the maximum loan (rounded to the nearest dollar) that your client will be able to arrange?

$ 505207

$ 504000

$ 497605

$ 520000

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Review Math 6 - residential, find max loan amount

Step 1: Find M, check if it is lowest answer in answer list
M = LV x LTV% = 630000 x 80% = 504000 (not lowest answer)

Step 2: Find PMT, and use PMT to find PV

PMT = 1x GDS% - tax = 110000/yr x 32% - 3200/yr = 32000/yr

Divide by 12 to convert annual payment to monthly: 32000/yr / 12 = 2666.67
J12=4

PMT = 12

NPEPN: 4#NOM, 12#PYR, #EFF, 12#PYR, #NOM = 4.0000...

Enter: 25# N ; 2666.67 +/- PMT ; 0 +/- FV

Press PV = 505207.252..., round to nearest dollar = 505207

Step 3: Compare M and PV
M = 504000, correct answer because it is lower than PV
PV = 505207

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Question 9

REM1.2051

Which of the following items, if found in a house, is most likely to be considered a chattel?

New carpeting in the hallways.

A large pear tree growing in the backyard.

Old tools in the garage.

A new sink in the bathroom.

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Review Estates and Interests in Land

• carpeting, trees, sinks are all fixtures

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Question 10

REM7.2018

Which one of the following statements is TRUE?

When calculating legal fees, the purchaser is responsible for the portion of the year after and including the adjustment date.

Taxes will never appear as a credit item on the vendor’s statement of adjustments and as a debit item on the purchaser’s statement of adjustments.

Where the licensee acts only for the vendor, Real Estate commission always appears as a debit on the vendor’s statement of adjustments and does not appear on the purchaser’s statement of adjustments.

Under the standard form contract of purchase and sale, risk always passes to the purchaser at 12:01am on the possession date.

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Review From Contract to Completion

• legal fees are usually not split; the whole amount is either debited from the buyer or the seller
• if the adjustment date is after July 1, then the buyer’s portion is calculated and is credited to the seller (and debited from the buyer)
• under current laws (the standard CPS contract is from current laws), the buyer becomes responsible for loss or damage to the property as of the completion date (when title can be put in their name); this does NOT refer to property tax calculations

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Question 11

REM4.3010

Under the common law of agency, which of the following statements is TRUE?

Where the agent does not disclose that she is an agent and then enters into a contract with a third party, the principal will have no liability for the contract.

An agent who does not have capacity to enter a contract herself may be able to make a valid contract on her principal’s behalf.

An agency relationship is created when one person unilaterally acts on behalf of another.

An agency agreement that is not fully in writing will never be enforceable.

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Review Law of Agency

• if the agent has the ability to contract on their principal’s behalf, the principal is liable for any contracts formed by that agent with 3rd parties
• under the general common law category of agent, the agents do not need capacity to contract on their own behalf (they get contracts for their brokerage and the brokerage’s clients)
• when you are an agent, you need to get permission to act as agent; act unilaterally = to act in a way that involves doing or deciding something without first asking the other person
• all agency agreements should be in writing but they can be verbal and still be enforceable

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Question 12

12

Section 52 of the Competition Act prohibits false or misleading advertising and creates an offence punishable by imprisonment or a fine. Which of the following statements is FALSE concerning this offence?

This offence punishes misleading statements in various forms, including oral and written.

All false advertisements made to the public will constitute an offence under the provisions of the Competition Act, even if the misrepresentation is not misleading in a material respect.

Both the general impression of the representation as well as its literal meaning are relevant in determining whether a breach of the Act has taken place.

The person making the representation can escape liability if he or she can show that they honestly believed the statement was not false or misleading and exercised due diligence in making sure that was the case.

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Note

• the forms of advertising covered by section 52 are extremely broad, and include representations in print, oral, and digital form
• it is only an offence under section 52 of the Competition Act if the false advertisement IS misleading in a material respect (the answer says is NOT misleading)
• the courts will consider both the literal meaning and general impression of the advertisement to determine whether the representation is false or misleading in a material respect
• an accused may escape liability under section 52 if they honestly believed that the representation or advertisements were not false or misleading (were true) and that they exercised due diligence in making sure that was the case (exercised all the care of a reasonable person that they were true/not misleading)

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Question 13

13

An offer of $625,000 is accepted, comprised of a cash down payment of $150,000 and a vendor supplied mortgage of $475,000 at J2 = 7.5%. The loan has an amortization period of 20 years, a term of 4 years and calls for monthly payments rounded up to the next higher dollar. Market rates for an equivalent mortgages are currently J2 = 8.5%. The market value of the offer is:

$ 672614.10

$ 591903.13

$ 576555.07

$ 610108.94

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Review Math 5 - PIMPO

J2=7.5

PMT = 12 , do NPEPN = 7.3854...
20# N

475000 PV

0 +/- FV

P: Press PMT = -3,793.359... = 3,794 +/-PMT
Il: 4#N, press FV = -426,555.07..
M: J2 = 8.5 , do NPEPN = 8.3532...
P: Press PV = 460,108.94...

O: +150000 = 610,108.94...

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Question 14

14

A mortgage loan with a face value of $160,000 is arranged through a mortgage broker. A commission of $7,000, appraisal fees of $250, as well as survey and legal fees totaling $1,000 will be deducted from the face value before the funds are advanced to the borrower. Calculate the cost of funds advanced to the borrower, expressed as an effective annual rate, if the loan is written at 4.75% per annum, compounded semi-annually with monthly payments over 15 year amortization and a 5 year term.

6.05832 %

9.12607 %

10.935526 %

6.229407 %

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Review Math 4 - PIPI

P: find PMT round up and plug back in

J2 = 4.75

PMT = 12

NPEPN: 4.75#NOM, 2#PYR, #EFF, 12#PYR, #NOM = 4.7036...
Enter: 15# N ; 160000 PV ; 0 +/- FV

Press PMT = -1240.709... = 1240.71 +/- PMT

|: Apply Term, N + F

5#N, press FV = 118588.518...

P: 160000 - 7000 - 250 - 1000 PV (should be 151750)

I: press IYR = 6.0583... = J12
Convert? YES, asking for J1 (Effective), press #EFF = 6.2294...

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Question 15

MM8.045

Which of the following statements regarding a credit report is TRUE?

Credit reports can be requested from, and are provided by, all major federally chartered financial institutions.

A credit report never provides information on credit balances in terms of credit limits.

The applicant’s credit score accurately reflects their credit history.

Companies must follow the legislation put forth by the provincial and federal government in order to gain access to an applicant’s credit report.

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Review Math 8

• a credit report is created when financial institutions lend funds/provides credit and gives credit reporting agencies info regarding their financial relationships with these applicants
• info included on a credit report: date on which accounts were opened, whether payments were on-time or late, and credit balances and credit limits

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Question 16

REM3.3020

The ComfyClothes Company places an ad in the local newspaper offering to give one of its new, fall season Work Wonnies garments to anyone who visits its mall kiosk on Sunday between 11am and 1pm and who can demonstrate how the product works to a crowd, as it has done for the last two years. Leesa arrives at 11:11am and is ready to demonstrate the new product but finds that she is the third person to arrive and that the first volunteer is in the middle of his demonstration. Which of the following statements is TRUE?

Because the first volunteer accepted the company’s offer, Leesa cannot now accept it.

Because Leesa has provided no consideration to the company, she cannot enforce its promise to give her a Work Wonnie.

Because Leesa is responding to an invitation to treat, she will not be able to accept the offer.

This is an example of a standing offer which Leesa may still accept.

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Review Law of Contract

• the ad is an offer exception (it is NOT an offer) because it is open to anyone and is not limited to one person being able to perform the requirement because it is a standing offer
• this is a standing offer and does not require anything other than performing the requested task
• this is a standing offer and it is not an invitation to treat or an offer
• this is a standing offer and is not limited to only one person being able to perform the requirement

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Question 17

17

Consider the following statements regarding mortgage loans:

A. A short-term partially amortized mortgage permits readjustment of mortgage interest rates by the lender at maturity, allowing the lender to match the interest rates on its assets to the rates on its liabilities. B. With a fully amortized loan, the amortization period is always longer than the term of the loan. C. In a reverse annuity mortgage, the borrower makes a series of payments or advances to the lender over the term of the loan. D. The amortization period must always be expressed in months because most loans have monthly payments.

Which of the above statements is/are TRUE?

A only.

B and D only.

A, B, and C only.

A, B, C, and D.

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Review Mortgage Law and Math 7

• fully amortized means: Amortization = Term; and within that term contract length with the bank, the loan will be completely paid
• partially amortized loans means: term is shorter than the amort; and the loan will not be completely paid off at the end of the term
• if the Lender gives a loan where Amort = Term and interest rates go up a lot then the bank will be paying more interest on their own liabilities while not being able to charge their borrowers more interest because they are locked in for the full Amort length at whatever rate is in the contract
• RAM mortgage: lender makes payments to borrower
• rates are usually expressed as a J1 or a J2; and payments can have many frequencies: monthly, annual, quarterly, weekly, etc

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Question 18

18

A mortgage loan has a face value of $400,000, an interest rate of J2 = 3%, an amortization period of 20 years, a term of 5 years, and an option to make accelerated biweekly payments, rounded up to the next higher dollar. If this option is exercised, what is the amount of the accelerated biweekly payment?

$ 2215

$ 1108

$ 1908

$ 3815

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Review Math 4 - Acc Bi Wk, find PMT

Step 1: Find monthly PMT using the loan terms

J2 =3

PMT = 12 (acc bi-wk questions always start with monthly PMT)
NPEPN: 3#NOM, 2#PYR, #EFF, 12#PYR, #NOM = 2.9814...
Enter: 20# N ; 400000 PV ; 0 +/- FV

Press PMT = -2214.671...

Step 2: Accelerate the monthly PMT by dividing it by 2
PMT = -2214.671... / 2 = -1107.335...

Step 3: Round the accelerated PMT up as instructed or to the next higher penny
PMT = -1107.335... = 1108

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Question 19

REM6.2015

In the comparative method of appraisal, it is MOST important that the subject building and the comparable building be :

similar with respect to factors that have a major influence on the buyers and sellers.

free from any mortgage on title.

of the same general architectural style.

constructed with either average or above average workmanship.

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Review Comparative & Cost Methods (Appraisals)

• theory of substitution says to use similar properties
• not a requirement at all
• not usually important to/a significant influence on buyers/sellers

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Question 20

REM7.1059

With respect to the application of the Environmental Management Act (“EMA”) to mortgage, which of the following is TRUE?

Lenders can face liability under the EMA if that become registered owners of the property as a result of a foreclosure. Q

The EMA automatically makes a lender partially responsible for environmental contamination of a property if the lender’s mortgage was registered on title at the time of the contamination.

Lenders can file a notice with the EMA before providing mortgage proceeds directing the Director of Waste Management to conduct an environmental assessment of the @ subject property.

The EMA has no application to mortgages.

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Review Mortgage Law

• the EMA does apply to mortgage lending situations because a mortgage lender may be liable for a contaminated site including if they become the registered owner of the property
  (which can occur as a result of foreclosure) or if they somehow cause the contamination
• the Environmental Management Act says that a lender is not liable if they participate only in financial matters (including if they had a mortgage registered on title before the
  contamination occurred), impose requirements that will not cause or increase contamination, or appoint a person to investigate the site

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Question 21

21

A $195,000 mortgage loan has an interest rate of 7.5% per annum, compounded monthly. At the end of its 5-year amortization and term, the borrower will owe $178,877.95 on the loan. What is the amount of each monthly payment?

$ 1423.09

$ 1598.34

$ 1441.04

$ 1567.87

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Note

no explanation

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Question 22

REM6.3010

An estimate of gross potential rents is achieved by:

comparing all rents for similar spaces.

comparing rents for recently leased similar spaces.

projecting future rental increases.

totaling current rents in the subject building.

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Review Income Method (Appraisals)

• not all rents because some may not be current pricing (leased a long time ago)
• recently leased, similar spaces reflects the current rates for that particular type of property
• you do not project/predict any values
• not all current rents in the building because properties may not be similar use and the rent amounts may not reflect current rates

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Question 23

MM8.056

According to the Business Practices and Consumer Protection Act, which of the following is not required on a Disclosure Statement for Fixed Credit?

The effective date of statement

The total cost of credit to the borrower

The effective annual rate

A description of prepayment rights

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Review Math 8

Fixed credit (a loan of money); fixed means the rate of borrowing stays the same and does not change -the disclosure statement must include the following: Effective
date of the statement; Interest accrual date and the details of any grace period; Term and amortization period of the mortgage and nature, timing, and amount of all advances and
payments; Initial outstanding balance of the mortgage with an accounting of every payment, advance, or charge that makes up that balance; Total of all advances made or to be made;
Description of prepayment rights; Total cost of credit to the borrower; Annual interest rate and compounding frequency; Annual Percentage Rate (APR); Method of determining the
annual interest rate at any time (if it changes) and the lowest annual interest rate at which payments would not cover accruing interest, unless the amount of the scheduled payments is
adjusted automatically with interest rate changes; Nature and amount of any charges other than interest; Nature of any default charges; Description of the security interest

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Question 24

RE3.2023

Which of the following is NOT an explicit obligation found directly in the Mortgage Broker's Act?

Maintaining the confidentiality of your client’s information

Advising your clients to seek independent professional advice on matters outside of your expertise

Doing unto others as you would have them do unto you

Acting in the client’s best interests

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Review Professionalism & Code of Ethics

• the Golden Rule: “Do unto others as you would have them do unto you” is a guiding principle for behaviour, as well as a component of other
  ethical codes, such as the Canadian Real Estate Association’s REALTOR® Code (the Golden Rule is not an explicit obligation found in the Rules made under the Real Estate Services
  Act)

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Question 25

25

A purchaser of a property has arranged for a $180,000 mortgage loan at 6% per annum, compounded semi-annually. Payments are to be made monthly commencing November 1st. Full funds are advanced on September 15th. Calculate the size of the interest adjustment payment the purchaser will have to pay on October 1st. Assume that it is NOT a leap year.

$ 320.58

$ 467.07

$ 207.59

$ 194.60

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Review Math 8

• Interest Adjustment PMT question

J2=6

PMT = 365 (because the interest adjustment is calculated daily)
How many days from Sept 15 to Oct 1? 30 - 15 + 1 = 16 days
16N

180000PV

0 +/- PMT

Press FV = -180,467.067... + 180,000 (PV) = 467.067...

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Question 26

REM7.2019

Which of the following statements is TRUE?

The adjustment date and the possession date must be the same day.

A deposit paid by a buyer will appear on the buyer's statement of adjustments as a debt.

It is standard practice to hold the buyer responsible for the taxes on the adjustment date itself.

The total of the credit column on the seller's statement of adjustments will always be e identical to the total of the debit column on the seller's statement of adjustments.

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Review From Contract to Completion

• adjustment, possession, and completion dates can all be the same or they can be different
• deposits are always credited to the buyer
• for calculation of monies for the statement of adjustments, the buyer pays/receives amounts from the adjustment date onward; this is NOT referring to loss or damage to the property
• debits and credits will not be equal between the parties because some items are only recorded on one person’s statement

FV = 484,978.254... (this becomes the new PV at the beginning of the 2nd year) Step 3: Find new PMT based on NEW PV (OSB) J2 = 3.5 (2.5+1) ; Pmt = 12 ; N 19# (20 - 1) ; PV 484,978.25 ; FV 0+/- Press PMT = 2,908.929...+/- But you need to overwrite the PMT with the ORIGINAL PMT because it doesn't say that variable PMTs are allowed for this loan; Overwrite PMT = 3,285.63+/- PMT Step 4: Find the OSB after the second year (entered as 1#N because we already had a year go by) 1#N ---> FV = 462,039.432...+/- -->

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Question 27

27

Your client has applied for a $500,000 closed variable rate mortgage. The interest rate to be changed on this loan will be at the prime rate plus 1%. The current prime rate is 4% per annum, compounded semi-annually. The borrower will make monthly payments rounded up to the next higher cent on a 20 year amortization period and a 5 year term. Interest rate adjustments will be made annually on the anniversary date of the mortgage. If the prime rate decreases to 2.5% at the end of year 1, what will the outstanding balance owing on this loan be at the end of year 2?

$ 484978.25

$ 462039.43

$ 438290.73

$ 477591.54

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Review MATH 8 - Variable rate mortgage, find OSB

Step 1: Find PMT based on original loan terms

J2 = 5 (441) ; Pmt = 12 ; N 20# ; PV 500,000 ; FV 0+/-

Press PMT, round up, plug back in = 3,285.63+/- (rounded up)

Step 2: Find OSB after first year

1#N ---> FV = 484,978.254... (this becomes the new PV at the beginning of the 2nd year)

Step 3: Find new PMT based on NEW PV (OSB)

J2 = 3.5 (2.5+1) ; Pmt = 12 ; N 19# (20 - 1) ; PV 484,978.25 ; FV 0+/-

Press PMT = 2,908.929...+/-

But you need to overwrite the PMT with the ORIGINAL PMT because it doesn't say that variable PMTs are allowed for this loan; Overwrite PMT = 3,285.63+/- PMT
Step 4: Find the OSB after the second year (entered as 1#N because we already had a year go by)
1#N ---> FV = 462,039.432...+/-

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Question 28

REM1.4033

One or more of the following statements about the BC land registration system is TRUE:

A. Documents intending to transfer a fee simple title must be registered to be effective and enforceable against subsequent bona fide purchasers of the fee simple. B. A charge registered against a fee simple title may be removed from the title if it is a forged document. C. The Assurance Fund will compensate every financial loss sustained as a result of BC’s land registration system regardless of the reason for the loss. D. Unless the Land Title Act specifies the use of a prescribed form, any instrument is registrable as long as it is sufficient to pass or create an estate or interest in land.

Only A is true

Only C and D are true

Only A, C and D are true

Only A, B and D are true

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Review Title Registration in BC

• title to the land does not pass to you until you register paperwork in the land title office
• charges are not guaranteed as soon as they are charged to title; if not correct/true they can be removed
• Assurance Fund does not compensate every financial loss incurred because the cause of the loss does matter
• the form of documents is not prescribed for lawyers; as long as they use a document that is legally enforceable then they can use their own documents

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Question 29

29

Kate has taken out a reverse mortgage, based on the security of her $450,000 home. The loan is written at 7.75% per annum, compounded annually over a 5-year term. The outstanding balance is not to exceed 30% of the market value of the home at the time the loan was written. What is the monthly amount Kate will receive under the reverse mortgage?

$ 1861.97

$ 1855.21

$ 1842.26

$ 1810.11

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Review MATH 8

• RAM, find PMT

J1 = 7.75

PMT = 12 , do NPEPN = 7.4876...

How much will the RAM mortgage amount be? 450,000 x 30% = 135,000

5#N

0 +/- PV

135000 FV

Press PMT = -1861.9717...

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Question 30

30

Which of the following statements about the Financial Institutions Commission (FICOM) is FALSE?

FICOM is an agency of the provincial government that administers a number of statutes and regulations, including the Mortgage Brokers Act.

FICOM is an agency of the provincial government that administers a number of statutes and regulations, including the Mortgage Brokers Act.

FICOM is solely responsible for enforcing all of the consumer protections granted by the Business Practices and Consumer Protection Act

Through the Registrar of Mortgage Brokers, FICOM governs the registration of mortgage brokers and sub mortgage brokers.

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Note

Review 1.3 The Mortgage Brokers Act (Chapter 2)

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Question 31

31

You are arranging a partially amortized mortgage loan with a face value of $300,000 for your client. The loan contract is to be written at 5% per annum, compounded semi-annually, with monthly payments, an amortization period of 20 years and term of 5 years. A brokerage fee of $5,000 will be deducted from the face value of the loan. Under the Business Practices and Consumer Protection Act, what is the Total Value Paid by the borrower?

$ 128194.20

$ 368417.67

$ 382582.38

$ 276205.77

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Review Math 8

• Interest cost, but asking for total value paid

Interest Cost type question (but a sneakily worded one), and you will calculate starting with the FACE VALUE of the loan (including the fees) and instead of doing the interest cost after one or two months, you will find the interest cost after the term length of 3 years and then add that to the PV to get the Total Value Paid

Find PMT, round up, plug back in = 1971.38+/-PMT

Then enter: 1 input 60 # Amort = = 68417.671... for the Interest cost

Add 400,000 PV = 68417.67 + 300,000 = 368417.67

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Question 32

31RE7.4025

Which British Columbia act regulates the way private sector organizations collect, use, keep secure, and disclose personal information?

Private Information and Disclosure Act

Private Sector Protection Act

Personal Information Protection Act

Privacy Collection Act

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Review Technology

• the Personal Information Protection Act (PIPA), which came into force in January 2004, regulates the way private sector organizations collect, use, keep secure, and disclose personal information
• the other answers are made-up/nonsense answers

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Question 33

REM1.1019

To enforce a judgement, which of the following actions can a successful plaintiff pursue?

Send written pleadings to the defendant

Send an appeal to the BC Court of Appeal

Execution

File a Notice of a Civil Claim

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Review Fundamentals of Law

Review Enforcing a Judgement
- to enforce a judgement a court will first do an Examination of the judgement debtor and then will allow a lien, wage garnishment, or will seize property through a Writ of Execution and have it sold to pay the debt

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Question 34

34

An investor invests $7,200 in a savings account which bears interest at a rate of 20% per annum, compounded daily. What amount will be on hand at the end of 2 years?

$ 10368

$ 10705.79

$ 10541.42

$ 10739.96

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Review Math 3

• find FV

J365 = 20
Pmt = 0
-NPEPN not needed but could do it anyway (if you do the NPEPN, do not enter lYR and PYR)
2x 365N
20 IYR
7200 PV
0 +/- PMT
365# PYR
Press FV = 10739.961...

#

Question 35

REM6.1027

Your friend mentioned to you that the value of his house was $1,050,000 While you understand what he means, you know that the true subject of an appraisal is:

known as the value to the owner because it is subjective in nature.

a combined value that considers personal property, public property, and private simulations.

the market value of the physical property.

the value of the legal rights of the ownership vested in a particular piece of real estate.

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Review Appraisals Introduction

• market value (objective) does not reflect owner’s value (Subjective)
• none of these are included in true/market value (and ‘simulations’ is a typo)
• there is more value in real property than just the land; real property = land + improvements + all other interests
• correct description of the subject of an appraisal

#

Question 36

REM7.3017

Which of the following correctly outlines the “objective/task” method of creating a promotional budget?

Define the competition, outline competitors’ expenditures, and set tasks to maintain competitive-parity with competitors

Conduct tasks in order to reach a sales objective that is specific, realistic, measurable, and within a predetermined timeline

Create an objective, analyze costs and benefits, and determine the tasks to reach the objective

Define the advertising objective as “SMART”, outline the necessary tasks, and estimate the costs of performing the tasks

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Review Marketing

• this approach describes the “follow-the-competition” method
• this approach describes the “SMART” criteria for developing effective business and marketing goals; Specific, Measurable, Achievable, Relevant, Timely
• this is not the “SMART” marketing criteria
• the “objective/task” method involves defining a “SMART” marketing objective, outlining the tasks required to attain the objective, and estimating the cost of performing these tasks

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Question 37

37

In the market, existing mortgages are bought and sold as financial investments, whereas in the market, loans are initiated to facilitate the sale of interests in land.

Primary; secondary

Secondary; capital

Capital; primary

Secondary; primary

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Review Math 7

• the primary mortgage market determines the cost and availability of mortgage funds; in the primary mortgage market, loans are initiated in the primary market to facilitate the sale of interests in land. Examples: funds secured by a mortgage from such sources as a bank, a credit union, a trust company, an insurance company, a mortgage broker, or the vendor of the property, the transaction is considered to be a primary market transaction
• secondary mortgage market: where existing mortgages are bought and sold as financial investments; the second investor/purchaser of a mortgage is buying the right to receive the stream of payments that the borrower had agreed to make to the original lender

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Question 38

REM6.2047

An appraiser is using the market data approach for his appraisal of a single family house. By proper adjustment the appraiser can use sales prices of all the following properties for comparison purposes, EXCEPT:

houses located on a different street.

lots with different square footage.

houses recently sold between related parties.

houses sold over four months ago.

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Review Comparative & Cost Methods (Appraisals)

• theory of substitution says to use similar properties; properties on different streets are reasonable to use; it is difficult to find two properties that are very much alike
• theory of substitution says to use similar properties; it is difficult to find two properties that are very much alike so square footage of house and lot will likely not be the same
• property sold between related parties is not an arm’s length transaction; the relationship between the parties will affect the sale price agreed upon between the parties
• theory of substitution says to use recently sold properties and recent means when market conditions have remained stable; 4 months prior could still reflect a stable market

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Question 39

REMS3.1041

Depreciation expense is:

another name for capital cost allowance.

a deductible expense in computing income for purposes of income taxation.

usually calculated on land by the straight-line method.

none of the above.

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Review Financial Statements

• depreciation expense is from straight line depreciation method and cost allowance is from capital cost allowance method
• depreciation expense is not a deductible expense (CCA is a deductible expense)
• land never depreciates

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Question 40

41

In negotiation, your resistance point is:

the point in time when you make a counter-offer.

your bottom line.

when you decide not to negotiate any further.

your best-case scenario.

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Review Negotiations

• resistance point = your bottom line = the point that you will not cross and at which you will walk away from the table and toward your best alternative (you will go look for something else)

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Question 41

REM4.3015

Dusty has an agency contract with Wentworth that allows Wentworth to buy early collectible computers on Dusty’s behalf. Specifically, the contract only authorizes. Wentworth to buy collector computers that were made before 1980. One day , Wentworth finds the rare computer made in the 1980s called the Apple LISA that he remembers Dusty mentioning he would like to own, so Wesley buys the computer on Dusty’s behalf. The vendor agrees to the sale and a contract is signed. Dusty is so pleased with the purchase that he immediately elects to complete the contract upon hearing the news from Wentworth. In this situation, Wentworth’s authority to buy the car was created by:

Ratification

Implication

An express contract

Estoppel

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Review Law of Agency

• ratification created the authority to buy the Apple LISA; ratification = retroactive authority — authority was given after the computer was already purchased
• this is not an example of implied authority; implied authority is exercised to get the job done (to carry out the express authority) -there was no express contract to buy the Apple LISA because it was not in the date range -apparent authority is usually gotten from the ‘agency by estoppel’ relationship

#

Question 42

REMS3.1044

Which of the following statements regarding corporations is TRUE?

A corporation’s individual shareholder’s liability is limited to their investment in the company.

A corporation is not a legal entity separate from its owners and managers.

Individuals who acquire shares in a corporation own the assets of the company.

A Corporation does not pay income taxes.

---

Review Financial Statements

• shareholders legal liability/responsibility is limited to their share in the company
• a corporation is considered a person (a legal entity) under the Law
• shareholders do not own the assets of the corporation
• corporations are subject to Income tax - they are considered a person (a legal entity) by Law

#

Question 43

REM2.3024

When comparing cooperatives and condominiums, which of the following is TRUE?

Both condominiums and cooperatives are created by filing a strata plan in the land title office.

Both condominiums and cooperatives must provide buyers with a disclosure statement.

Buyers of condos will generally find it easier to finance their purchase than will buyers of cooperatives.

Owners of condominiums and owners of cooperatives are both free to sell their units to whomever they choose.

---

REVIEW Strata Properties Condos and Co-ops

• Co-op’s are created under the Cooperative Association Act by depositing an incorporation agreement in the land title office; stratas are created by depositing the strata plan in the land title office
• disclosure statement is usually needed/should be given for both stratas and co-ops (but cooperatives could be exempted)
• strata (condominium) property purchases are easier to finance than co-op purchases are because with a strata property you get a fee simple interest and with a co-op you only get ownership of shares in the non-profit co-op corporation
• Strata/condo owners can sell to whomever they choose but co-op share owners usually need approval of a prospective buyer by to co-op’s board of directors before they can sell their shares

#

Question 44

RE7.403

In order to advertise to a wider audience, a licensee has decided to create his own website. Based on the information in the Real Estate Council of British Columbia’s Guidelines Internet/Social Media Advertising, which of the following is a general guideline that he should follow?

The name of the brokerage can be excluded in online advertising.

He can advertise another licensee’s listings directly on his own website without permission from the listing brokerage in order to increase business.

If the licensee is a member of a team, the team name must be included on the licensee’s website but not in social media advertising.

If linking to an outside database of available properties, it should be clear to consumers which listings are his and which are not.

---

Review Technology

• he name of the brokerage must appear in a prominent and easily readable form on all internet and social media advertising vehicles
• you can advertise other brokerage’s listings on your website as long as you get permission and you make it clear that they are not your brokerage’s listings
• team names must be included on social media advertising as well as on the licensee’s website
• consumers should clearly be able to differentiate a licensee’s own listings from other available properties

#

Question 45

REM2.1027

Walter White is being sued for creating a nuisance. He makes the following arguments:

A. The activity causing the nuisance benefits members of the public. B. The damage he has created is trifling and of little consequence. C. He has not been negligent in carrying out the activity causing the nuisance. D. The activity causing the nuisance is authorized by statute and cannot be conducted without creating a nuisance.

Which of the above is a valid defense to the lawsuit?

A, B, C and D

A and D

Band D

A and C

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Review Professional Liability

• two valid defenses for nuisance are that the damage caused is trifling (so little that it doesn’t matter) and that the activity causing the nuisance is a result of activity gov’t authorized (note that the phrase “benefits the public” is NOT the same thing as authorized by statute)

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Question 46

46

Consider the scenario where a lender offers a low upfront mortgage rate and then raises the mortgage rate to market levels within six months to two years. This would be best described as a:

refinancing mortgage.

teaser rate mortgage.

blend and extend mortgage.

reverse mortgage.

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Review Math 8- teaser rate

• a “teaser rate” is a low, introductory interest rate that is typically offered for the first few months as an incentive to choose a certain mortgage program; after the introductory/teaser period is over, the rate is bumped up (or slowly bumped up over a short period of time) to the current market rates; this concept is similar to offers you see for 0% APR credit cards

#

Question 47

REM6.1043

An appraiser has estimated the market value of a single-family dwelling to be $410,000. On the day of the appraisal, the house sold for $370,000. Given that there was sufficient evidence of recent sales, was the appraiser’s estimate of value reasonable?

No, the estimate exceeds the maximum allowable error for the appraisal of market value for a residence.

No, the appraiser’s estimate is a subjective “value to owner” and does not represent the market value.

Yes, because appraisers have no maximum allowable error when calculating market value for a residence.

Yes, it was within the maximum error allowed for appraisers in the calculation for market value of a residence.

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Review Appraisals Introduction

• acceptable margin of error is -10% to +10%; calculations: best to use the RANGE Method when question mentions only one property; take appraised value and subtract and add
  10% to get price range and see if sale price (SP) falls within the range

410,000 —- 10% = 369,000

410,000 + 10% = 451,000

SP is 370,000 and falls within the acceptable range of 369,000 to 451,000

NOTE: using the ratio method for this question may make you choose the incorrect answer;
410,000 / 369,000 = 1.111... x 100 = 111.1%, which is 11.1% error and should indicate that it is unacceptable but this ratio method is “rough math” and is not as accurate as the
range method that gives you the answer to the exact penny

#

Question 48

RE7.401

Which of the following items is NOT an example of a technological compatibility issue?

A licensee cannot access a forms software because it is not compatible with her computer’s operating system

A licensee sends a form to a property seller from a mobile phone, and the seller is able to fill it out from her desktop computer

A prospective client can view a licensee’s website from his laptop, but the website is difficult to navigate from his smartphone

A licensee has to enter the same property information into three different programs because the programs are not compatible with one another

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Review Technology

• accessibility issues from software incompatibility is a technology compatibility issue
• when the form is compatible across mobile devices and the desktop computer, there is no technological compatibility issue
• websites not being easily navigated on both laptop/computers and mobile devices is a technology compatibility issue
• not having cross compatibility and interconnecting software programs is considered a technology compatibility issue

#

Question 49

REMS3.1012

Which one of the following is inconsistent with generally accepted accounting principles?

Expenses are recognized at the time they are incurred.

Assets are revalued upwards to account for the effect of inflation.

Fiscal year ends cannot be changed at will.

Revenues are recognized at the time they are earned.

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Review Financial Statements

• describes matching principle
• assets are not valued up according to inflation; assets decline in value due to depreciation
• fiscal year ends are dictated/decided on by the govt (CRA)
• describes revenue recognition principle

#

Question 50

50

You purchased a warehouse for $600,000 cash and redeveloped it over a 15 months period. If you sold the warehouse for $725,000, what effective annual yield did you earn on this investment (assuming that these are the only cash flows)?

17.548922 %

15.235263 %

1.269052 %

16.345450 %

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Review Math 3

• find IYR % (yield)
  J1 = ? (asking for effective yield)
  PMT = 12 , because time is in months ; cannot do NPEPN

15N

600000 PV

0 +/- PMT

725000 +/- FV

12 #P/YR

Press I/YR = 15.2352... = J12

-conversion needed? YES, asking for J1 (effective yield)
-press #EFF = 16.3454...

#

Question 51

REM7.1037

Ann feels that her mortgage interest rate is harsh and unconscionable, she can apply to :

Employment Standards Act

Business Practices and Consumer Protection Act (BPCPA)

Interest Act

Mortgage Broker Legislation

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Review Mortgage Law

• the ESA governs employers and employees in BC with regard to compensation, conditions of employment, fair treatment of employees and employers, and help in resolving disputes
• the BPCPA allows the borrower to attack the rate of interest being charged
• Interest Act says max of 5% per annum can be charged if interest is generally mentioned in the contract; Interest Act does not allow the borrower to attack the interest rate being charged
• the MBA and the Mortgage Brokers Act Regulations (the “Regulations”) are the provincial statute laws that regulate the conduct of all persons who deal in mortgages in British Columbia

#

Question 52

53

A borrower has arranged a loan of $285,000 at an interest rate of 5% per annum, compounded semi-annually with payments set as $2,157 per month. What is the period necessary to amortize the loan?

Exactly 191.280574401 years

Exactly 240 months

Approximately 13 years

Approximately 16 years

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Review Math 2

• find N
  J2=5
  Pmt = 12 , do NPEPN = 4.9486...

285000 PV

2157 +/- PMT

0 +/- FV

Press N = 191.2808... months

-convert? YES, asking for years so divide months by 12
191.2808... / 12 = 15.9400... years

#

Question 53

REM7.2021

Avneet is purchasing Robert’s house. Given the following information, calculate the cash proceeds of sale to Robert on completion: Price: $295,000 Deposit paid to brokerage: $30,000 Financing: 1st mortgage of $105,000 to be assumed. 2nd mortgage of $47,000 has been arranged by Avneet Taxes: The taxes in the amount of $1,200 are not yet due. Commission: 5% of sale price. Conveyancing Fees: $900 Adjustment, Completion, and Possession Dates: April 30th Note: It is not a leap year.

174858.77

144858.77

176058.77

174855.48

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Review From Contract to Completion

Credits:

295,000 — sale price

Debits:

105,000 - assumed mortgage

14,750 —- commission

391.23 — property taxes

Property tax calculation (seller’s portion):

Jan 31, Feb 28, Mar 31, Apr 29 = 119 days (BUYER PAYS FOR APR 30)
119/365 = 0.32602... x 1200 = 391.23, seller’s portion
(debited to the Seller, credited to the Buyer)

#

Question 54

REM6.2042

Real Estate values are influenced by externalities. Which of the following below could be used to determine this principle?

The market suffers a significant drop in world wheat prices and because of this, the supply of vacant office space increases in the city.

It is being announced that a small residential area has been rezoned for a new University and as a result the value of the houses in the residential area nearby will increase.

Because of unemployment, real estate prices decline.

All of the above.

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Review Appraisals Introduction

• this is not an externality in the local market
• this describes an externality in the local market
• this is not an externality in the local market

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Question 55

55

A $190,000 mortgage loan, written at a nominal rate of 5% per annum, compounded semi-annually, has a 3 year contractual term. Payments are made monthly and are based on a 20 year amortization period. Payments are rounded up to the next higher dollar. What is the size of the required payments?

1297

1249

1157

2093

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Review Math Classes 1, 2, 3

• Find PMT

J2=5

Pmt = 12 , do NPEPN = 4.9486...

20#N

190000 PV

0 +/- FV

Press PMT = -1248.537...

#

Question 56

REM1.1014

The BC Supreme court can accept appeals from:

BC Court of Appeal

Small Claims Court

Small Claims Tribunal

The Court of Queen’s Bench

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Review Fundamentals of Law

Remember the SUPREME SANDWICH - in this BC court system the supremes will never touch one another - all cases go through the courts in this order:
1. Small Claims Court (if it meets $35,000 max monetary limit and territory limit)
2. Supreme Court of BC — there are many in BC, no territory limitation
3. BC Court of Appeal
4. Supreme Court of Canada

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Question 57

REM6.2055

You have a partially completed appraisal report that you need to fill in. The 2,200 square foot subject property has 4 bedrooms and 4 bathrooms. The house next door is similar in all respects except for square footage, the number of bedrooms, and the number of bathrooms. The 2,300 square foot comparable sold for $245,000 and has 3 bedrooms and 3 bathrooms. If the market value of a bedroom is $4,000, the market value of a bathroom is $5,700, and above a 1,900 sq. ft. benchmark, each 100 sq. ft. is worth $6,000, the adjusted sale price for this comparable is:

$ 248700

$ 260700

$ 229300

$ 241300

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Review Comparative & Cost Methods (Appraisals)

IASS formula:

When comparable is Inferior Add+ value

When comparable is Superior Subtract- value

SUBJECT: 4 bedrooms, 4 bathrooms, and 2,200 square feet

COMPARABLE: 3 bedrooms, 3 bathrooms, and 2,300 square feet
Bedrooms: One less bedroom, Inferior -> Add value (+4,000)
Bathrooms: One less bathroom, Inferior -> Add value (+5,700)

Square feet: 100 square feet larger, Superior -> Subtract value (-6,000)
Adjust 245,000 sale price by +4,000 and +5,700 and -6,000

= 245,000 + 4,000 + 5,700 - 6,000 = 248,700

#

Question 58

58

Regan, a new appraiser, has found a comparable which was recently sold for $273,000, comprised of $90,000 cash and $183,000 vendor supplied mortgage at 7% per annum compounded semi- annually, with monthly payments (rounded to the next higher dollar) sufficient to amortize the loan over 25 years. If the market rate of similar financing is 5% per annum compounded semi-annually, what would Regan regard as the sale price of the house (round the answer to the nearest $100)?

$ 310400

$ 242000

$ 220400

$ 152000

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Review Math 5 - PIMPO

J2=7

PMT = 12 , do NPEPN = 6.9000...
25#N

183000 PV

0 +/- FV

P: Press PMT = -1281.760... = 1282+/-PMT
I: A =T, do nothing

M: J2 = 5, do NPEPN = 4.9486...
P: Press PV = 220424.520...

O: +90000 = 310424.520...

#

Question 59

59

Your friend has just purchased a home and has arranged for a mortgage loan of $68,000 to be advanced on the completion date, June 11. The loan will commence on July 1, and the payments will begin one month later, on August 1. The interest rate on the mortgage will be 8.25% per annum, compounded annually. What is the amount of the interest adjustment payment due on July 1? Assume it is not a leap year.

$ 281.19

$ 310.85

$ 296.02

$ 294.73

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Review Math 8 - Interest Adjustment PMT question

J1 = 8.25

PMT = 365 (because the interest adjustment is calculated daily)
How many days from June 11 to July 1? 30 - 11+ 1 = 20 days
20N

68000PV

0 +/- PMT

Press FV = -68,296.016... + 68,000 (PV) = 296.016...

#

Question 60

60

A vendor is willing to sell his house for $96,000. He demands 24 monthly payments, and payment of the outstanding balance in the amount of $75,000 with the 24th payment. He wishes to earn an effective annual rate of 15% on his money. What is the monthly payment required?

$ 1955.72

$ 7336.27

$ 1008.85

$ 1887.47

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Review Math Classes 1, 2, 3

• Find PMT

J1=15

Pmt = 12 , do NPEPN = 14.0579...

24 N (do NOT enter as 24#N or 24 x 12 N - if you do, the calculator will think these are both representing 24 YEARS)
96000 PV

75000 +/- FV

Press PMT = -1887.463...

#

Question 61

61

A borrower has arranged a loan of $100,000 at an interest rate of 6% per annum , compounded semi-annually with payments set at $839.89 per month. What is the period necessary to amortize the loan?

Exactly 191.280874 months

Exactly 179.997514 months

Exactly 15 months

Exactly 16 years

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Review Math 2

• find N
  J2=6
  Pmt = 12 , do NPEPN = 5.2963...

100000 PV

839.89 +/- PMT

0 +/- FV

Press N = 179.9975... months
- convert? NO, asking for months

#

Question 62

REM2.3041

Which of the following best describes the “strata corporation”?

A corporation that the developer incorporates and which holds title to the common property and to the individual strata lots until they are sold

A corporation formed by a group of individuals who possess an undivided joint tenancy ownership interest in the land and/or buildings

An executive body, similar to a board of directors, created to oversee the strata council, which must exercise the powers and perform the duties of the strata council

A corporation formed by the deposit of a strata plan whose members are the owners of the strata lots in the strata plan

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REVIEW Strata Properties Condos and Co-ops

• the strata corp does not own/hold title to the property; the developer owns the property until they sell strata units/lots to buyers
• strata OWNERS own the common property (not the strata council, or corporation) as Tenants-in-Common (not as Joint Tenants)
• the strata COUNCIL is the body of representatives elected from among the owners of the strata lots and which exercises the powers and performs the duties of the strata corp
• two definitions of strata corporation:
• Formed by the deposit of a Strata Plan whose members are the owners of the strata lots in the strata plan OR
• collectively, the group of owners as one entity, once the strata plan has been deposited at the Land Title office

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Question 63

63

Which of the following is FALSE?

Both arbitration and mediation can produce a non-binding resolution

The rules of evidence are relaxed for arbitration and mediation

The neutral 3rd party in both arbitration and mediation may impose a binding solution on the two parties.

Both arbitration and mediation are less formal than the Court.

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Review Negotiations

• mediation is only non-binding (it is never binding)
• arbitration can be binding or non-binding
• both arbitration and mediation are not formal, like the court
• the rules for evidence for both arbitration and mediation are not strict like the court

#

Question 64

REM1.1022

Which one the following is TRUE regarding the doctrine of stare decisis?

Disputes that have already been in the courts are predictable with absolute certainty.

If a court in BC has already decided a particular issue, and another court is faced with the same issue, the earlier decision should direct the subsequent decision.

Decisions from Ontario courts will have no relevance to BC courts.

The BC Court of Appeal is authoritative for judges in BC Courts.

---

Review Fundamentals of Law

• court cases are never predictable and especially not with absolute certainty
• a judge CAN go to a different province/country to look for a similar case to help them make a decision on theirs (as long as it has a similar legal system)
• this is a good description of stare decisis - “let the former decision stand”
• the BC Court of Appeal only handles appeal cases from other courts so a judge will not use a BC Court of Appeal case as a precedent case

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Question 65

65

Which of the following techniques is NOT a recommended practices for a mortgage broker in order to decrease the likelihood of mortgage fraud?

Confirm that employers name on the applicant's employment letter matches the information contained on the applicant's credit report.

Obtain a copy of the contract of purchase and sale to verify items such as the property address and purchase price

Demand identification personally from the applicant

Meet with the applicant’s employer to confirm the applicant's employment status and current income.

---

Review Math 8

• to decrease mortgage fraud: be familiar with the prevalent types of mortgage fraud and investigate factors such as: discrepancies between the application address(es), the
  address(es) on file at the credit bureau, and the address(es) listed on the applicant’s credit report; identification or documentation that is illegible or that displays imperfect positioning
  of text or images; assets and debts that are not consistent with the client’s age and income; income that is too high for the type of employment; the same phone number for the
  borrower and the employer; void cheques that are not personalized; and large unexplained lump-sum deposits in bank or investment statements

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Question 66

66

Three years ago Harry Jamieson took out an interest only loan at the Bank of Shaquille. He originally borrowed $78,000 at the rate of 14.75% per annum, compounded semi-annually. Harry makes quarterly payments and has a five year term. What is the amount of Harry’s 13th payment?

$ $825.09

$ $876.25

$ $1505

$ $1300.36

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Review Math 2

• find PMT (I.O. loan)

J2 = 14.75

Pmt = 4 , do NPEPN = 14.4876...
5#N

78000 PV

78000 +/- FV

Press PMT = -2825.088...

#

Question 67

REM2.1019

Which of the following are necessary for Sonya, a trading services licensee, to be found responsible for a negligent misrepresentation?

A. The person making the complaint must have reasonably relied on Sonya’s statement. B. The plaintiff and Sonya must have entered into a contract with the person making the complaint, either for advice or services. C. The statement made by Sonya must have been made negligently. D. Sonya must have made an untrue statement of fact or opinion.

All of the above are necessary.

A, C and D only.

B, C and D only.

C and D only.

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Review Professional Liability

• another party needs to rely on your misrepresentation
• you don’t need to have a contract in place
• the misrepresentation needs to be made negligently (carelessly)
• you need to make a misrepresentation of fact or opinion

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Question 68

68

Your client has a mortgage for $425,000 which is written at 4.5% per annum, compounded semi-annually. The mortgage calls for monthly payments rounded to the next higher dollar, a 5-year term, and a 25-year amortization period. The mortgage contract permits the borrower to prepay the full amount of the loan subject to the interest rate differential penalty. Your client wishes to prepay this loan at the end of the first year (with the 12th payment). At the time of prepayment, the current comparable interest rate is 3% per annum, compounded semi-annually. What is the amount of the interest rate differential prepayment penalty?

$ 6213.41

$ 49533.58

$ 26209.06

$ 24853.64

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Review Math 8

• find interest differential rate prepayment penalty
• how much time is left on the 5 yr term? 4 yrs of term left = 48 months
  Find PMT, round up, plug back in = 2353+/-
  Find OSB after 1 year = 1#N, press FV = 415519.968...= OSB
  Find IRD = between J2 = 4.5 and J2 = 3 is a difference of J2 = 1.5
  Convert J2 = 1.5 to monthly = J12 = 0.99792... / 12 = 0.083160 then press %
  = 0.001246...x OSB x 48 = 0.0008316...x 415519.968... x 48 = 24853.643...

#

Question 69

MM8.046

Your client has asked you for assistance with improving her credit score. Which of the following is a strategy that will typically improve the credit score?

Increasing credit utilization above 90% of each revolving account's credit limit

Correcting all credit report errors

Increasing the number of credit applications and inquiries from an assortment of lenders

Obtaining a large number of unsecured credit cards or loans

---

Review Math 8

• the credit score indicates the rate of default of the borrower (how likely they are to not make payments
• to improve credit scores, borrowers should: get a secured credit card with a $2,000+ minimum; make payments on time and at least the minimum payment every month; make full payments as soon as possible; not exceed the credit limit on credit cards and try to keep balances below the limit; reduce the number of credit applications/inquiries from potential lenders; avoid the closure of old inactive accounts because that can raise credit utilization and hurt the credit score; reducing credit utilization below 65-70% of each revolving account’s credit limit; pay unpaid bills; and correct credit report errors

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Question 70

REM7.3007

The promotional mix is a blend of:

Personal selling, advertising, place, price, and promotion.

Product, price, personal appearance, public relations, and sales promotion.

Personal selling, advertising, public relations, sales promotions, and publicity.

Product, price, place, and personal appearance.

---

Review Marketing

• Promotional mix = personal selling, advertising, public relations, sales promotion, publicity (in any order is fine)
• 4 P’s of marketing = marketing mix = product, place, price, promotion (in any order is fine)

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Question 71

REM1.2026

Which of the following will NOT result in Cody owning an interest in land?

Amy gives Cody the right to use the swimming pool on her property whenever he wishes.

Martina promises Cody that she will not add an extra storey to her home, thereby obstructing the view from Cody’s neighbouring property.

Steve grants access to a nearby beach to Cody’s property, by way of a concrete path on Steve’s property.

Reynold gives Cody the right to enter his property and harvest the lumber from a grove of cedar trees.

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Review Estates and Interests in Land

• this is an “Easement in gross”: a benefit that is not tied to any particular parcel (it cannot be a true easement because an easement needs to have dominant and servient tenements)
• this is a Restrictive covenant
• this is an Easement
• this is a Profits a Prendre

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Question 72

72

A purchaser of a property has arranged for an $80,000 mortgage loan at 6% per annum, compounded semi-annually. Payments are to be made monthly commencing November 1st. Full funds are advanced on September 15th. Calculate the size of the interest adjustment payment the purchaser will have to pay on October 1st. It's not a leap year.

$ 220.58

$ 173.37

$ 207.59

$ 194.60

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Review Math 8

• Interest Adjustment PMT question

J2=6

PMT = 365 (because the interest adjustment is calculated daily)
How many days from Sept 15 to Oct 1? 30 - 15 + 1 = 16 days
16N

80000PV

0 +/- PMT

Press FV = -80,207.585... + 80,000 (PV) = 207.585...

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Question 73

73

Your client has applied for a $100,000 closed variable rate mortgage. The interest rate to be charged on this loan will be at the prime rate plus 1% The current prime rate is 3% per annum, compounded semi-annually. The borrower will make monthly payments rounded up to the next higher cent on a 25-year amortization period and a 5-year term. Interest rate adjustments will be made annually on the anniversary date of the mortgage. If the prime rate decreases to 2% at the end of year 1, what will the outstanding balance owing on this loan be at the end of year 2?

$ 90609.29

$ 97611.09

$ 92655.97

$ 94162.56

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Review MATH 8

• Variable rate mortgage, find OSB

Step 1: Find PMT based on original loan terms

J2 = 4 (8+1) ; Pmt = 12 ; N 25# ; PV 100,000 ; FV 0+/-

Press PMT, round up, plug back in = 526.03+/- (rounded up)

Step 2: Find OSB after first year

1#N -> FV = 97,611.59 (this becomes the new PV at the beginning of the 2nd year)

Step 3: Find new PMT based on NEW PV (OSB)

J2 = 3 (2+1) ; Pmt = 12 ; N 24# (25 - 1) ; PV 97,611.59 ; FV 0+/-

Press PMT = 474.93..

But you need to overwrite the PMT with the ORIGINAL PMT because it doesn't say that variable PMTs are allowed for this loan; Overwrite PMT = 526.03+/- PMT
Step 4: Find the OSB after the second year (entered as 1#N because we already had a year go by)
1#N -> FV = 94,162.56

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Question 74

74

Which of the following statements about graduated payment mortgages (GPMs) is FALSE?

In a GPM, the total indebtedness of the borrower often continues to grow until the gradually increasing periodic payments become large enough to pay all interest charged in a payment period and make some contribution to debt repayment.

GPM payments are constant over the initial term of the mortgage.

Early payments on a GPM are typically lower than payments on a standard blended rate repayment loan.

GPMs represent a significant degree of capital risk unless extremely conservative loan-to-value ratios are used.

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Note

GPM payments increase throughout the loan term.

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Question 75

REM1.2002

Which of the following statements is FALSE?

Unlike a licence, an easement is an interest in land.

An easement always grants exclusive possession of the easement land.

A restrictive covenant must benefit a dominant tenement and burden a servient tenement.

A lease creates an interest in land.

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Review Estates and Interests in Land

• easements do not grant exclusive possession; an easement is a right, acquired by a landowner, to use a neighbouring property in a specific way (without possessing it)

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Question 76

76

In which of the following situations would a graduated payment mortgage be MOST appropriate?

Frederick is renegotiating his existing mortgage and believes that interest rates will significantly increase in the next few years. He is risk averse and wants to be assured that his payment stream will be constant over the term.

Harmon and Jennifer have been saving for a long time and now want to invest their savings in a mortgage loan. However, they are very concerned about locking their investment in at current interest rates because rates may rise in the future.

Joni has just retired from 35 years of teaching in Surrey and wishes to supplement her pension income. She owns and occupies a reasonably expensive waterfront property in North Vancouver.

Mike and Theresa have just graduated from school and want to purchase a house and start a family. However, their current low income does not allow them to meet the payments required for a large enough loan to purchase their dream home. They expect their income to increase quickly in the near future.

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Note

In a graduated payment mortgage, the payments are initially set at a value below that required to fully amortize the loan. Payments slowly increase over time to the point where the loan is fully amortized. This loan would be ideal for Mike and Teresa as they can make increasingly larger payments as their incomes gradually rise.

• Frederick would be most suited to a fixed rate mortgage, which has a fixed rate over the term with constant payments.
• Harmon and Jennifer would be most suited to a variable rate mortgage, where the interest rate charged on the loan is altered periodically to that of the market rate. This would ensure that Harmon and Jennifer are not locked in to one specific rate over the term of the mortgage loan.
• Joni would be most suited to a reverse annuity mortgage, where the borrower receives a series of payments and repays this amount at the end of the loan term, or upon the death of the borrower, either by: refinancing the property; from the sale of the property; or from the proceeds of the borrower’s estate. This would allow Joni to supplement her income.

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Question 77

77

The Versatile Corporation is looking to receive a second mortgage on its business offices. The Venus Bank requires a loan-to-value ratio of 75% and a safety margin of 20%. There are 20 years remaining on the first mortgage and the contract interest rate is j2 = 6%. The property is currently valued at $10,000,000. The outstanding balance of the first mortgage is $4,042,651.55 and monthly payments are $28,791.30. The company’s net operating income is $650,000. Calculate the maximum monthly payment available for the second mortgage using the income constraint.

$ 43333.33

$ 72124.63

$ 14542.03

$ 27983.23

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Note

NOI $650,000
x Debt Service Ratio x (1-0.20)
= Annual Debt Service $520,000

Monthly Debt Service: $520,000 + 12 = $43,333.33
Maximum Monthly Payments: $43,333.33 - $28,791.30 = $14,542.03
The maximum monthly payment available for the second mortgage is $14,542.03.

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Question 78

REM7.1009

The blend and extend refinancing option:

Involves renegotiating a first mortgage with the lender and making repayment penalties.

Always provides the largest amount of new funds for borrowers.

Typically allows borrowers to take advantage offer low interest rate on their current mortgage funds as well as additional funds, while avoiding costly prepayment penalties.

Is illegal and not available in Canada.

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Review Mortgage Law

• blend and extend avoids renegotiating a new first mortgage and prepayment penalties
• first legal mortgage provides all/majority of funds to borrowers
• blend and extend is an alternative to renegotiating a new first legal mortgage (which would mean paying fees to exit the contract early) or getting a second mortgage (which would have a higher interest rate)
• blend and extend mortgages are NOT illegal and are allowed in Canada

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Question 79

79

An investor has the opportunity to invest in one of four alternative mortgages, each with the same degree of risk. The only distinction between these investments is the rate of interest charged to the borrower. These rates are:

Loan A: 3.25% per annum, compounded daily Loan B: 3.50% per annum, compounded quarterly Locn C: 3.45% per annum, compounded semi-annually Loan D: 3.25% per annum, compounded annually

Assuming that the investor can purchase each mortgage for the same amount of money, which investment will the investor prefer?

Loan A

Loan B

Loan C

Loan D

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Review Math 3

• find IYR % (yield)
• an investor wants the highest rate!
• NPEPN the 4 rates given into the same J frequency to compare them
• because there is a J1 in the list, we can just do an NPE (and not a full NPEPN)

A. J365 = 3.25

3.25#NOM, 365#PYR, #EFF = 3.3032... = J1

B. J4=3.5

3.5#NOM, 4#PYR, #EFF = 3.5462... = J1; highest rate, so this is the answer
C. J2 = 3.45

3.45#NOM, 2#PYR, #EFF = 3.4797...= J1

D. J1 = 3.25
-no conversion needed

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Question 80

80

An investor is willing to sell his house for $296,000. He demands 24 monthly payments and payment of the outstanding balance in the amount of $275,000 with the 24th payment. He wishes to earn an effective annual rate of 10% on his money. What is the monthly payment required?

$ 3157.76

$ 3166.37

$ 3212.42

$ 3260.71

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Review Math Classes 1, 2, 3

• Find PMT

J1=10

Pmt = 12 , do NPEPN = 9.5689...

24 N (do NOT enter as 24#N or 24 x 12 N - if you do, the calculator will think these are both representing 24 YEARS)
296000 PV

275000 +/- FV

Press PMT = -3157.759...

FV = 478677.083... (this becomes the new PV at the beginning of the 3rd year) Step 3: Find new PMT based on NEW PV (OSB) J2 = 4; Pmt = 12; N 23# (25 - 2) ; PV 385163.94 ; FV 0+/- Press PMT = 2646.924...+/- = 2647 -->

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Question 81

81

A $500,000 variable rate mortgage was written at 5% per annum, compounded semi-annually, to be amortized over 25 years with monthly payments rounded to the next higher dollar. The mortgage contract specified that the interest rate could be adjusted, on each anniversary of the mortgage, to the current market rate. Two years later, the market rate decreased to 4% per annum, compounded semi-annually. Calculate the required payments, rounded to the net higher dollar, after the second year, assuming the amortization period is not to be extended and the contract allows variable payments.

$ 2505

$ 2647

$ 2909

$ 2630

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Review MATH 8

• Variable rate mortgage, find PMT

Step 1: Find PMT based on original loan terms

J2 =5; Pmt = 12 ; N 25# ; PV 500,000 ; FV 0+/-

Press PMT, round up, plug back in = 2909+/- (rounded up)

Step 2: Find OSB after first year

2#N ---> FV = 478677.083... (this becomes the new PV at the beginning of the 3rd year)
Step 3: Find new PMT based on NEW PV (OSB)

J2 = 4; Pmt = 12; N 23# (25 - 2) ; PV 385163.94 ; FV 0+/-

Press PMT = 2646.924...+/- = 2647

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Question 82

RE3.2018

Which of the following is NOT an area of law where duties owed by licensees to their clients arise?

Contract law

Agency law

Public law

Tort law

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Review Professionalism & Code of Ethics

• public law is what the government is concerned about; public law is related to criminal, constitutional, and tax law

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Question 83

83

Alternative Dispute Resolution (ADR) is advantageous over going to Court for all of the following reasons, EXCEPT:

ADR will work even if only one party is truly committed.

ADR is effective at maintaining relationships

ADR provides both parties with a greater sense of control.

ADR allows for integrative solutions.

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Review Negotiations

• ADR requires both parties to want to participate (participative)

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Question 84

84

You are arranging a partially amortized mortgage loan with a face value of $400,000 for your client. The loan contract is to be written at 3.5% per annum, compounded semi-annually, with monthly payments rounded up to the next higher cent, an amortization period of 20 years and term of 3 years. A brokerage fee of $5,000 will be deducted from the face value of the loan. Under the BPCPA, what is the Total Value Paid by the borrower?

$ 439516.50

$ 407889.21

$ 407670.29

$ 455000.00

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Review Math 8

• Interest cost, but asking for total value paid

Interest Cost type question (but a sneaky one), and you will calculate starting with the FACE VALUE of the loan (including the fees) and instead of doing the interest cost after one or two months, you will find the interest cost after the term length of 3 years and then add that to the PV to get the Total Value Paid

Find PMT, round up, plug back in = 2314.66+/-PMT

Then enter: 1 input 36 # Amort = = 39,516.496... for the Interest cost

Add 400,000 PV = 39516.496... + 400000 = 439516.50

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Question 85

85

What will be the maximum loan granted on a commercial building with a lending value of $3,500,000 and yielding a net operating income of $360,000 per year, where the lender requires a debt coverage ratio of 1.25 and an 80% loan-to-value ratio? The loan will be amortized over 20 years with annual payments and the interest rate is 7.5% per annum, compounded annually. Round your answer to the nearest $1,000.

$ 2936000

$ 2800000

$ 3036000

$ 2590000

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Note

no explanation

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Question 86

REM3.3038

One Sunday, Ankit and Keevan entered into a verbal contract whereby Ankit agreed to buy Keevan's blue Ford truck. Unfortunately, Keevan owns two blue Ford trucks. While Ankit thought he was purchasing Keevan's 2002 midnight blue truck, Keevan intended to sell Ankit his 1988 sky blue truck. Neither realized the other's mistake until the contract’s completion day. Based on these facts, which of the following statements is true?

Their misunderstanding is a common mistake which will void their contract.

Contracts made on Sunday are illegal contracts and thus are considered to be void.

The contract is void because their misunderstanding is a mutual mistake.

The contract is unenforceable because it is not in writing.

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Review Law of Contract

• common mistake = subject matter of contract is destroyed BEFORE the agreement was made (both parties make the same mistake)
• contracts made on Sunday are legal and enforceable (not illegal and/or void)
• mutual mistake = both parties make a mistake but their mistakes are different
• verbal contract can be enforceable

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Question 87

REM6.3017

You are trying to calculate the market value of an income-producing property. In order to determine the market value, however, you must find the yield of several comparable properties and determine a market capitalization rate. The following information is for the recent sale of a similar income-producing property: Selling Price $864,000 Gross Potential Revenue $150,000 per annum Operating Expenses $30,000 per annum Market Vacancy Rate 4% What is the yield on the sale of the comparable property?

13.1944 %

17.3611 %

16.6667 %

13.8889 %

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Review Income Method (Appraisals)

Yield = NOI/Sale price
BUT missing NOI so you need to find the NOI first!

1. Find NOI:
   NOI = Gross Potential Revenue — Vacancy & Bad Debt — Expenses

   150,000 - 4% - 30,000 = 114,000

2. Yield = NOI / Sale price = 114,000 / 864,000 = 0.13194... x 100 = 13.194....%

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Question 88

REM1.4028

Which of the following situations is considered a method for using a manufactured home itself as security for purchase price?

• A) Manjit transferred ownership of his manufactured home to Kiefer, who then gave a security agreement on the home in favor of Manjit in exchange for part of the purchase price
• B) Jason borrowed money from his cousin in order to pay for his manufactured home. In exchange, Jason has a security agreement on the home in favor of his cousin.
• C) Igor purchased a manufactured home from Jackie under the condition that he will make weekly payments to her for the next 6 years, at which time Joanne will transfer legal ownership to him.

A & B only

A & C only

B & C only

All the above

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Review Title Registration in BC

• yes, because a security agreement (put in Manjit’s name because he has not been fully paid by Kiefer) provides a lender a security interest in a specified asset or property that is pledged as collateral (security)
• yes, a security agreement (put in Jason’s cousin’s name because she has not been fully paid by Jason) provides a lender a security interest in a specified asset or property that is pledged as collateral (security)
• yes, because the manufactured home will stay in Jackie’s name until she is fully paid by Igor

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Question 89

REM6.1019

Which of the following statements regarding property appraisals are TRUE?

A. The courts provide some guidelines as to an appraiser’s legal responsibilities under tort law and contract law. B. The courts have recognized that a reasonable margin of error exists when calculating damages as a result of a negligent appraisal. C. A large overvaluation of property by an appraiser does not, by itself, establish liability on the part of the appraiser. D. The value of real estate property can always be determined with certainty.

Statements B and D are true.

Statements A and C are true.

Statements B, C, and D are true.

Statements A, B, and C are true.

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Review Appraisals Introduction

• true, the common law (tort, contract, fiduciary duty) give guidelines for liability
• margin of error on regular/mundane properties is -10% to +10%
• appraisers/licensees are not always held liable for their over evaluation; the over evaluation by itself will not always mean you are held liable for it because the circumstances matter
• real property’s flow of information is limited and difficult to collect and means there is an expected margin of error for real property valuation

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Question 90

REM4.3013

Matty is Hank’s agent with the express authority to lease Hank’s ski chalet for the summer months. However, in his capacity as Hank’s agent, Matty accepts an offer to purchase the ski chalet instead. When Hank discovers what Matty has done, he is so impressed by the price, he calls the purchasers to tell them that he adopts Matty’s act. Which of the following is the result of these actions at law?

When Hank adopted Matty’s act, he created legal authority by means of revocation.

Hank did not need to ratify Matty’s actions as he had implied authority.

Hank did not need to adopt Matty’s act because Mark had apparent authority.

When Hank adopted Matty’s act he became bound by the contract as if Matty had been explicitly authorized to create the contract in the first place.

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Review Law of Agency

• revocation = revoke/take back/withdraw an offer
• this is not an example of implied authority; implied authority is exercised to get the job done (to carry out the express authority) which in this case was to LEASE the premises (not to sell it)
• apparent authority occurs with an agency by estoppel relationship where the principal misleads 3rd parties
• this is an example of ratification because Matty stepped outside his warranty of authority and needed his principal to give him permission to do what he had already done (sell the property)

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Question 91

REM2.3047

A strata lot in British Columbia in an exclusively residential complex is owned by two persons as joint tenants. At every meeting of the strata corporation the owners are:

entitled to a total of one vote.

entitled to the number of votes which is calculated in proportion to their unit entitlement.

entitled to one vote each.

entitled to a total of one vote for special resolutions but entitled to one vote on all other matters.

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REVIEW Strata Properties Condos and Co-ops

• one vote per unit/lot/door no matter how many owners there are for that one unit

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Question 92

92

Which of the following statements regarding the management of individual loans is true?

The book value of a mortgage is an estimate of the amount that might be received if the existing mortgage was to be sold in an arm’s-length transaction under current conditions.

Individual borrowers have the right, under the terms of the Interest Act, to prepay all of the outstanding debt at any time after three years from the initiation of the mortgage.

Arrears (tardiness in making payments) and default (no payments being made) are not common on mortgage loans.

A mortgage is an asset that cannot be sold to other investors.

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Review Mortgage Law and Math 7

• the book value of a mortgage equals the amount of principal outstanding at a particular point in time
• borrowers can prepay outstanding mortgage debt after 5 years from the mortgage’s initiation
• arrears and default are not common because, prior to the initiation of a loan, lenders typically undertake considerable analysis (investigate the borrower a LOT) to limit the risk
• mortgages are assets that can be sold to other investors

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Question 93

REM3.3047

Common law duress can be described as:

breaching a contract term during performance.

changing the terms of a contract.

actual or threatened violence or imprisonment.

undue influence.

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Review Law of Contract

• while in the contract (performing it), breaching its terms may make the contract voidable (but breaching terms is not duress)
• changing the terms of the contract cannot be done without consent of all parties to the contract and may breach the contract
• duress = forcing someone to enter into a contract as a result of a threat of actual physical force or by a threat of imprisonment; you do not need to actually be harmed
• undue influence = when a person in a stronger position induces a weaker party to enter a contract which they wouldn’t normally have agreed to be in

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Question 94

94

Which of the following statements about false or misleading advertising as prohibited by section 52 of the Competition Act is FALSE?

It is not an offence under the Competition Act for the visual advertisement to create a false impression as long as the written statements are true.

For a misrepresentation to be contrary to the Act it must be false or misleading in a material respect.

The Competition Act applies to both oral and written representations.

To avoid liability under section 52, the person accused of the offence must show that he or she honestly believed that the representation was not false or misleading and

exercised due diligence in making sure that was the case.

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Note

• the general impression test considers whether the oral or written statements in the representation are literally true as well as whether the overall advertisement (visual portion) may create a false impression; if the overall impression is misleading you ARE guilty of an offence of the Competition Act
• a misrepresentation will only be contrary to section 52 of the Competition Act if it is false or misleading in a material respect
• section 52 applies to both oral and written misrepresentations
• the accused may escape liability under section 52 if they honestly believed that the representations or advertisements were not false or misleading and that they exercised due diligence in making sure that was the case (they exercised all the care of a reasonable person that they were true/not misleading)

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Question 95

REM7.3002

In marketing, the initial trigger that starts the buying process is known as:

The buying decision.

Self-actualization.

The product purchase activity.

A felt need.

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Review Marketing

• ‘felt need’ is the trigger; for real estate, many different events can trigger a felt need: changes in family life, changes in job/work life, changes in finances, increases in rent/interest rates/property values, the ending of a lease, etc.
• the other answers are either made up or are from other concepts that are not part of your course

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Question 96

REM2.1039

Mikayla, on her way home from visiting a friend, noticed a house is for sale in a nice neighbourhood located on the quiet street and backs onto a wooden area. Mikayla decided to go ask the owners for the price. As she walked across the lawn, a tree branch fell down and hit her in the face. As a result, she broke her jaw and couldn’t go back to her job as an anchorwoman for four months. Which one of the following statements is FALSE?

Mikayla can sue the owners of the property for her lost earnings only if she can prove that they were previously aware of the danger presented by the old tree.

Even though Mikayla was not invited onto the property by the owners, the owners owe a duty of care to her

The BC Occupiers Liability Act governs this situation and contains within it the duty of care owed by an occupier to visitors on their property.

The BC Occupiers Liability Act has replaced the common law governing Occupier’s liability in BC.

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Review Professional Liability

• she doesn’t have to prove that the owners were previously aware of the danger (it only needs to be reasonably foreseeable)
• occupiers owe duty to children, invitees, licensees, and trespassers
• the OLA of BC governs occupier liability to visitors
• in BC, the OLA has replaced the common law rules of liability for visitors

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Question 97

97

A pre-approved mortgage for a residential property:

will always guarantee the borrower’s interest rate for 365 days.

calculates the minimum loan that the borrower qualifies for.

is based on the borrower’s current financial situation and a satisfactory credit review.

is based on a formula provided by the Fair Isaac Corporation.

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Note

no explanation

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Question 98

REM1.4017

The abolition of the doctrine of notice by the Land Title Act is subject to the exception of:

innocent misrepresentation.

Fraud.

breach of contract.

quantum meruit.

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Review Title Registration in BC

• the Land Title Act does not protect a purchaser who participates in a fraud

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Question 99

99

Who is responsible for ensuring that mortgage brokers meet the requirements of the Mortgage Brokers Act?

Real Estate Council of British Columbia

Registrar of Mortgage Brokers

Superintendent of Real Estate

Mortgage Brokers Institutions Commission

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Review Mortgage Broker’s Act (MBA)

M.11

Which one of the following would NOT be permitted act of the Registrar of Mortgage Brokers?

• The Registrar may attach conditions to the registration of an individual.
• The Registrar may investigate an individual or an organization to determine whether or not to grant registration
• The Registrar may deny registration on a legitimate basis without giving the applicant the right to reply.
• The Registrar may attach restrictions to the registration of an organization.

Review Mortgage Broker’s Act (MBA)

• the Registrar must not refuse to grant registration without giving the applicant an opportunity to be heard
• the Registrar may attach conditions or restrictions to the registration. For example, the Registrar may require that all of a submortgage broker’s transactions be approved by the Designated Individual.

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Question 100

100

A $400,000 variable rate mortgage was written at 5% per annum, compounded semi-annually, to be fully amortized over 25 years with monthly payments rounded to the next higher dollar. The mortgage contract specified that the interest rate could be adjusted, on each anniversary of the mortgage, to the current market rate. Two years later, the market rate decreased to 4% per annum, compounded semi-annually. Calculate the required payments, rounded to the next higher dollar, after the second year, assuming the amortization period is not to be extended and the contract allows variable payments.

$ 1671

$ 1832

$ 2118

$ 1660

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Review MATH 8

• Variable rate mortgage, find PMT
  Step 1: Find PMT based on original loan terms
  J2 =5; Pmt = 12 ; N 25# ; PV 400,000 ; FV 0+/-
  Press PMT, round up, plug back in = 2327+/- (rounded up)
  Step 2: Find OSB after first year
  2#N -> FV = 382946.701... (this becomes the new PV at the beginning of the 3rd year)
  Step 3: Find new PMT based on NEW PV (OSB)
  J2 = 4; Pmt = 12; N 23# (25 - 2) ; PV 385163.94 ; FV 0+/-
  Press PMT = 2117.567...+/- = 2118

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