Chapter 7 Flashcards
This term refers to a policy of insurance that provides coverage for the title-related risks associated with real estate transactions:
Select one:
a. Lender’s Mortgage Creditor Insurance
b. Liability Insurance
c. Title Insurance
d. Property Insurance
Title Insurance
Rationale: Title Insurance is a policy of insurance that provides coverage for the title-related risks associated with real estate transactions.
Relevant section(s) of the textbook: 7.4 Title Insurance
The correct answer is: Title Insurance
This term refers to a policy of insurance that provides coverage for the homeowner against covered risks:
Select one:
a. Title Insurance
b. Lender’s Mortgage Creditor Insurance
c. Liability Insurance
d. Property Insurance
Property Insurance
is a policy of insurance that provides coverage for the homeowner against covered risks.
Relevant section(s) of the textbook: 7.3 Property Insurance
The correct answer is: Property Insurance
The act of adding mortgage arrears or other costs associated with a mortgage to the principal amount is known as:
Select one:
a. Reamortization
b. Easement
c. Disbursements
d. Capitalization
Correct Answer: Capitalization
Rationale: Capitalization is the act of adding mortgage arrears or other costs associated with a mortgage to the principal amount. For example, capitalizing a lender’s fee means that this fee would be added to the mortgage principal and amortized.
Relevant section(s) of the textbook: 7.1 Mortgage Default Insurance
The correct answer is: Capitalization
A Title Insurance policy typically protects against all the following risks, EXCEPT:
Select one:
a. Hydro, tax, water and gas arrears
b. Defence of Title
c. Fraud and forgery
d. Defects revealed in a 5-year old survey
Correct Answer: Defects revealed in a 5-year old survey
Rationale: Defects revealed in a 5-year old survey is Incorrect: All surveys should be up to date.
Relevant section(s) of the textbook: 7.4 Title Insurance
The correct answer is: Defects revealed in a 5-year old survey
This term refers to insurance obtained by the borrower from the lender, usually in the branch of the lender when they apply for the mortgage:
Select one:
a. Title Insurance
b. Lender’s Mortgage Creditor Insurance
c. Liability Insurance
d. Property Insurance
Correct Answer: Lender’s Mortgage Creditor Insurance
Rationale: Lender’s Mortgage Creditor Insurance is obtained by the borrower from the lender, usually in the branch of the lender when they apply for the mortgage. This type of policy is very convenient for the borrower to obtain and the insurance premium is usually included in the mortgage payment, making it virtually invisible to the borrower.
Relevant section(s) of the textbook: 7.2 Mortgage Creditor and Life Insurance
The correct answer is: Lender’s Mortgage Creditor Insurance
This term refers to insurance that provides protection from having to pay damages to people:
Select one:
a. Property Insurance
b. Liability Insurance
c. Errors and Omissions Insurance
d. Mortgage Default Insurance
Correct Answer: Liability Insurance
Rationale: Liability Insurance provides protection from having to pay damages to people, if the owner has been found responsible for unintentionally injuring them or damaging their property.
Relevant section(s) of the textbook: 7.3 Property Insurance
The correct answer is: Liability Insurance
Out of the following options, what will title insurance cover?
Select one:
a. Municipal work orders and permits
b. Title issues that arise after the policy date
c. Fire retrofit compliance
d. Environmental hazards
Correct Answer: Municipal work orders and permits
Rationale: Municipal work orders and permits are protected under a Title insurance policy.
Relevant section(s) of the textbook: 7.4 Title Insurance
The correct answer is: Municipal work orders and permits
The minimum amount of coverage required per year for an E and O policy is:
Select one:
a. It is up to the brokerage
b. It is not required
c. $1,000,000
d. $500,000
Correct Answer: $1,000,000
Rationale: As FSRA states, “All mortgage brokerages and administrators are required by law to carry errors and omissions (E&O) insurance in a form approved by FSRA, with extended coverage for fraudulent acts. This E&O insurance must cover a minimum of $500,000 in respect of any one occurrence and $1 million in respect of all occurrences in a given year. The legal requirements about E&O insurance are in Ontario Regulations 188/08 and 189/08 under the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA).
Relevant section(s) of the textbook: 7.5 Errors and Omissions Insurance
The correct answer is: $1,000,000
This term refers to insurance designed to compensate the lender if the lender suffers a loss on an insured mortgage:
Select one:
a. Mortgage Default Insurance
b. Property Insurance
c. Liability Insurance
d. Errors and Omissions Insurance
Mortgage Default Insurance
Which of the following is not a licensed Title insurance provider in Ontario?
Select one:
a. Little Title Guaranty Company
b. Chicago Title Insurance Company
c. Stewart Title Guaranty Company
d. FCT Insurance Company Ltd (First Canadian Title)
Correct Answer: Little Title Guaranty Company
Rationale: The Little Title Guaranty Company does not exist and is obviously not a licensed Title insurance provider in Ontario.
Relevant section(s) of the textbook: 7.4 Title Insurance
The correct answer is: Little Title Guaranty Company
