Module 3.7 Review market for lender and product Flashcards

Question

what are the two different title insurance policies

Answer 1

loan policies, which protect lenders against title-related losses owner policies, which protect borrowers/owners against title-related losses

Answer 2

is required when a real estate transaction is scheduled to close before the land titles office has registered the applicant’s name on the title. In this case, the loan policy protects against the possibility that a name other than the applicant’s might be entered onto the title during the time gap between when the deal closes and when the title document is officially updated.

Answer 3

A loan policy protects the lender but is paid for by the applicant. Some lenders require title insurance for every mortgage transaction. Others order it only in specific circumstances such as for gap coverage or to protect against issues arising from RPRs.

Answer 4

providing coverage related to a lender’s ability to enforce a mortgage agreement protecting against mortgage fraud indemnifying the lender against losses if the priority of the insured mortgage is not as expected. For example, if a lender provided a first mortgage, and it was later discovered that it was registered in the second or third position, the lender would have unknowingly taken a substantially greater risk with the mortgage but would not have charged an interest rate reflective of that risk.

Answer 5

In the event that a lender requires an applicant to purchase title insurance or a current RPR, a real estate lawyer typically makes those arrangements. As a mortgage associate, you would not be directly involved in the process.

Answer 6

protects the applicant/owner and is paid for by the applicant/owner. As a mortgage associate, you have no role in selling owner policies. Typically, it is the lawyer for the deal who provides information about premiums and arranges for the policy if an applicant chooses to purchase title insurance. It is also possible for an applicant to purchase an owner policy directly from a title insurance company or insurance agent or broker. The premium for a title insurance owner policy is a one-time fee and is not attached to the mortgage amount as other types of insurance premiums sometimes are.

Answer 7

It helps to ensure that the transaction closes on time. (If there are delays in registering the buyers’ names on the title, gap coverage protects against intervening registrations between the date of closing and the date of registration.) It protects the rightful owner against identity theft and others fraudulently registering mortgages against the title or against someone claiming an interest in the land (for example, an easement for a driveway or a builder’s lien). It provides coverage for legal fees associated with resolving title issues; coverage for renovations completed without a permit that result in a loss; coverage for known defects such as encroachments, delays in registration, and land-use violations; and coverage if a property does not meet municipal land-use requirements. Title insurance claims are usually “no-fault,” which means that the insurance company cannot claim negligence on the part of the insured and deny coverage. Even errors and omissions on the part of the lawyer ordering the title insurance are usually covered. An owner policy remains in effect as long as the borrower has an interest in the property. It also protects the owner’s heirs in the event of his or her death and the owner’s spouse in the event that the property is transferred as a result of marital breakdown.

Answer 8

Where is it available? Lenders can arrange directly with a title insurance company or through the lawyer handling the transaction Borrowers/owners can purchase through a real estate lawyer, a title insurance company, or an insurance agent or broker Who does the policy protect? Protects the lender against title-related losses Protects the borrower/owner against title-related losses How much is the premium? One-time premium, paid by the borrower; cost varies depending on the value of the property One-time premium, paid by the borrower/owner; cost varies depending on the value of the property What does the policy cover? Covers the full amount of the mortgage on the property Covers a maximum amount as set by the policy, ideally the full value of the property; specifics may vary from product to product How long does the coverage remain in effect? Coverage lasts until the mortgage loan is repaid in full Coverage lasts as long as the borrower/owner owns the property and often transfers to heirs after death of the owner or to spouse after marriage breakdown

Answer 9

Home insurance Covers the physical structure of the house and garage (for example, roof, siding, and fences) against various kinds of damage (for example, from hail, fire, lightening, trees falling over in the wind onto the house, and vandalism) Property insurance Covers the personal property or contents of the house and garage (such as furniture, appliances, personal belongings, and lawn mowers) Liability insurance (sometimes called casualty insurance) Covers the owner’s legal responsibility or liability for injuries to other people in or on the property (for example, if a visitor fell down the stairs or tripped over an electrical cord plugged into the block heater of the owner’s car)

Answer 10

no because the insurance for the condo corp covers all the buildings and shared structures

Answer 11

property insurance to cover all indoor structures

Answer 12

Builder coverage usually provides buyers with a one-year warranty on minor items such as scratched paint, broken drywall, and chipped tiles. Most insurers require a new home builder warranty if the house has not been occupied for at least one year

Answer 13

(such as Alberta New Home Warranty or National Home Warranty) are private, non-profit companies established by the home building industry, not insurance companies or government organizations.

Answer 14

provide coverage for up to five years, protecting homeowners after any one-year builder’s warranty has expired. Typical coverage includes items such as deposits, completion of construction, and quality of workmanship, materials, and structural integrity. Temporary living expenses are covered in the event that the owner has to move out for a brief time to accommodate unforeseen work.

Answer 15

outline the purposes, features, and qualification criteria for each of their various programs and products for different borrowing situations. Sometimes each product is represented on a single sheet. Other times, all the lender’s products and underwriting guidelines are formatted into a chart-like matrix.

Answer 16

name and purpose of the product or program maximum mortgage amount and eligible uses for the money broad statements about required credit score, qualifying ratios (GDS and TDS), maximum LTV available interest rates, term lengths, amortization periods, payment frequencies down payment requirements, income documentation requirements, equity requirements prepayment and payout options/penalties, rate hold/rate drop policies fees, lending criteria and restrictions, time frame to approval NOTE: Not every product sheet includes all of the above information.

Answer 17

Pick them up at tradeshows and conferences. Contact a lender business development manager (BDM) directly for information, and ask to be added to his or her e-mail distribution list for product information and updates Search on lender websites.

Module 3.7 Review market for lender and product Flashcards

(41 cards)