REMIC Mortgage Agent Course Chapter 7 Review Question Solutions

Allows the Lender to make loans in excess of 80% Loan to Value and recover insured losses by making a claim to the insurer. Allows the Borrower to receive a high ratio mortgage with favourable terms and a favourable interest rate.

Allows the Borrower to obtain a higher LTV mortgage at competitive rates from chartered banks

4. How can a Borrower currently in default be assisted by the Lender and the mortgage default insurer?

Both CMHC and Genworth Financial provide mortgage default management programs that are designed to assist Borrowers who get into financial difficulty and have trouble making their scheduled mortgage payments.

Typically, these programs are provided through the Lender in conjunction with the insurer and are designed to provide a solution.

A Lender may make arrangements with the Borrower to recover payment arrears over the shortest period, as long as it is within the Borrower’s financial ability. For example, with a CMHC policy a Lender may do this with amounts up to $10,000 without CMHC’s prior approval.

A Lender may increase the amortization of a mortgage when the default is due to the payments no longer being affordable for the Borrower.

This procedure allows the Lender to add the amount of arrears to the loan amount. For example with a CMHC policy, a Lender may increase the loan amount up to $20,000 one time during the Borrower’s ownership without CMHC’s prior approval.

Lenders may have additional options that can be approved by the insurer before implementation.

Provides coverage against fraud and forgery from the time the policy is in force.

Provides coverage against title defects and items that occurred before closing that may make the property unmarketable

6. What type of insurance would you suggest to a purchaser of a condominium?

Contents insurance since the master policy only covers the unit, not the contents.

7. When was title insurance first introduced in the United States and Canada?

The first title insurance company, the Law Property Assurance and Trust Society, was formed in Pennsylvania in 1853. Title Insurance was developed in the United States and until the early 1990s was not available in Canada. Virtually all real estate transactions in the United States currently carry title insurance, while its popularity is continuing to grow in Canada.

8. Discuss the main differences between mortgage creditor life insurance and term life insurance.

	Mortgage Creditor Insurance	Term Life Insurance
Underwriting	Post-underwritten	Pre-underwritten
Convenience	Quick and easy to qualify	May require medical investigation, lengthening the process
Portability	None	Independent of a Lender
Premiums	Level	Level
Amount of Initial Coverage	Determined by the amount of the mortgage	Determined by the insured
Protection on default/illness	If the Borrower defaults or cannot make his or her mortgage payment, the insurance will cease as the insurance is tied to the mortgage.	As long as the insured can make pay the insurance premium, the insurance will continue, regardless of whether the mortgage payment cannot be made.
Amount of Continuing Coverage	Decreases	Constant

9. Which companies are currently licensed to provide title insurance in Ontario?

10. Without errors and omissions insurance, what might the consequences be to a Mortgage Broker who commits an error and is sued by a client?

Errors and Omissions insurance is an insurance policy that covers the professional from claims made against him or her due to negligence in the form of errors committed in a transaction. Insurance policies prior to 2008 did not have a fraud provision. Therefore, if the Mortgage Broker were to commit fraud and the Borrower suffer a loss he or she could not receive compensation from the Broker’s errors and omissions policy.