Topic 3 Mortgage Regulation Flashcards
(39 cards)
What is a disadvantage of having a second charge secured on a property for lender?
Second charge holder may not receive any funds after sale or repossession
Do lenders offer higher or lower rates of interest for a second charge?
Yes because the risk of them not receiving any funds after a sale or repossession is higher than a first charge lender
The FCA took over from who in 2013 as the regulator for marketing and sale of mortgages?
Financial Services Authority (FSA)
All the below are mortgage and home finance but what book are they covered in?
- Lifetime & second charge mortgages
- Bridging Loans
- Home Reversion Plans
- Home Purchase Plans (Islamic mortgages)
Mortgage & Home Finance Conduct of Business Sourcebook (MCOB)
What does the EU Mortgage Credit Directive do?
Sets minimum regulatory requirements in members states for credit agreements for residential property
Due to the complexity of amending the Mortgage Credit Directive (MCD) to MCOB many rules were adapted. What new rules were required?
- BTL mortgages
- Second charges
- CBTL mortgages
What is a “Back Book Loan”?
Regulation of a second charge mortgages before (21st March 2016 regulation came into place) provided they meet 2nd charge criteria
What did the EU (Withdrawal Agreement) Act 2022 (EUWAA) do?
Has allowed the UK to continue to use EU laws post-Brexit which are know as
(REU’s) Retained EU Laws
What does the Future Regulatory Framework review (FRF) do for the UK?
Ensures the UK financial services sector is subject to rules that suit the UK
The Future Regulatory Framework review lead to what act?
Financial Services & Markets Act 2023
What are the stages of UK legislation?
- Parliamentary Bill
- Act of Parliament
- Primary Legislation
- Secondary Legislation
The are what in relation to regulated mortgages?
- Lender provides credit to a individual or to trustees
- Borrow’s obligation to repay is secured by a mortgage on land in the UK
Regulated Mortgage Contract
What percentage of land in a dwelling meets the rules of a Regulated Mortgage Contract?
At least 40%
What are the features of a “Regulated Mortgage”?
- Completed before 21st March 2016
- MCOB rules apply
What are the features of a Mortgage Credit Directive (MCD) Regulated Mortgage”?
- Mortgages post 21st March 2016
- Subject to MCOB amendments to meet MCD rules
These types of borrowers are all what?
- Regulated Mortgages
- MCD Regulated Mortgage
- Lifetime Mortgages
- Home Reversion Plans
- Home Purchase Plans
- CBTL
Regulated Home Finance
What is a “Lifetime Mortgage”
Realise of equity for older homeowners out of their home
How does a “Lifetime Mortgage” work?
- Lender agrees to pay a percentage of the property
Mortgage repaid on:
- Death
- Borrow moves
- Goes into care
What normally happens with repayments of Interest on a lifetime mortgage?
Interest is rolled up and repaid when the arrangement ends
Lifetime Mortgages are exempt from MCD loans?
True or False
True
What type of “Lifetime Mortgage” allows lenders to arrange mortgages on an “Interest only” basis
Retirement Interest Only Mortgage
What is a “Home Purchase Plan”?
“Provider” buying a property and selling it to the ultimate owner during a specified period
Regular repayment or a lump sum amount
In a “Home Purchase Plan” does the beneficiary have to buy the land from the Provider?
Yes they are obliged to
“Home Purchase Plans” are linked to
which religion?
Islam
