Cost of Borrowing 1st
page
If there is no grace period with
respect to when interest begins then please leave this box blank
“Where the actual interest rate may
change… “- this is in respect to Variable mortgages and you would put in the
details of the product. See below for
appropriate descriptions
Terms and Conditions: These are all defaulted to” Refer to the commitment for
complete details”. Please add anything that is unusual on the approval. For
example: tax hold backs, cash backs, holdback of funds, insured conventional mortgage, etc.
Nature, Amount and Timing of
Optional Services: This includes life
insurance, ELV, Home Warranty Plans, etc.
Conflict of Interest 2nd
page
- Conflicts of Interest -describe
any conflicting relationship if it applies to your deal. For example, you’re
related to the lender
- Mortgage Commission – tick the box
- Bonus
(really means Volume Bonus) – tick the box
- Other
Compensation (means points, mcap bucks, etc) – tick the box
- Referral – No referral Fee paid or Referral – Referral Fee paid tick the boxes if either applies
to your deal. If they don’t apply then leave them blank. If you have ticked
that a referral fee will be paid then you must include the name of the person
or company that is receiving the referral fee
- The
Broker is representing Both the Lender and the Borrower … (changed
from Lender)
- The brokerage has placed over 50%...
leave this blank as it does not apply unless the client requests the
information
- The
brokerage has acted for 35 lenders during the previous fiscal year
- RMA
has not acted as a lender in
the previous fiscal year
- After
all the information is entered then it will download onto the Disclosure
Form. Please PRINT COMBINATION as this melds the 2 forms into one
document.
Variable Rate
Mortgages
here are 2 examples of the
descriptions that need to be included in on the disclosure where the mortgage
is a Variable Rate Mortgage
Scenario 1 – TD, Desjardins,
Meridian Credit Union, Your Neighbourhood Credit Union do not automatically adjust the mortgage payment as the
Prime rate changes. The description should read something like this:
VRM, Prime -.60, compounding
monthly, lender will not change the mortgage payment as Prime changes, therefore,
negative amortization may occur.
You will need to adjust the
percentage rate and compounding to match the commitment
Scenario 2 – for all other A lenders:
VRM, Prime -.60, compounding
semi annually, lender will change the mortgage payment as Prime changes.
You will need to adjust the
percentage rate and compounding to match the commitment
Step, Matrix, AIO, LOC, HELOC, and the like
Complete the file as if it was a
fixed mortgage using the total mortgage amount. The only difference is that in
the disclosure you will enter the line of credit portion (as if you were doing
a vrm)
The description for the vrm portion on the disclosure will read
something like this:
STEP mortgage for 150K - 50K in a secured line, calculated monthly
based on the prime rate, not amortized, interest only payments
100K in a VRM, Prime -.70% lender
will change mortgage payments as Prime Rate changes
Matrix mortgage, 25K in a LOC,
calculated monthly based on the prime rate, not amortized, interest only
payments
AIO Mortgage, 10k in a LOC,
calculated monthly based on the prime rate, not amortized, interest only
payments
LOC and/or HELOC, 75K in a LOC
and/or HELOC, calculated monthly based on the prime rate, not amortized,
interest only payments
Equity Line Visas & Bundle Mortgages
Home Trust ELV’s – the
line of credit portion and terms should be written in the terms and conditions
section of the disclosure.
For example: 7k in an equity line
visa at 8.99%. Payments based on 1% of the monthly balance or $10.00, whichever
is greater.
Bundle Mortgage - Home
Trust has recently re introduced the Bundle
Mortgage. Since they are issuing 2 separate approvals (one for the 1st
and one for the 2nd) I will require 2 separate complete files
General Rules for the disclosure form
Anyone looking at a disclosure
should be able to understand what type of mortgage and what the different terms
are if the disclosure is completed properly. Common sense should prevail in
some situations regarding mortgages that are not quite straight forward. The
following are guidelines only and may not cover the scope of all that’s
required on a disclosure.
CMHC
- If
CMHC and sales tax charged, then remember to add the amounts to the fees
section of the disclosure
- CMHC
and sales tax are NOT to be included in APR (unless it’s an insured
conventional mortgage)
- If
the lender/client is paying the cmhc and tax or if it’s an insured conventional
mortgage then please make a note of this in the terms and conditions
section of the disclosure
FEES SECTION – what to include
- Lender
fees are to be entered in the fee section of the disclosure and included
in APR
- Estimated
legal fees and disbursements are to be listed in the fees section of the
disclosure and included in APR
- Any
cost associated with the mortgage needs to be listed in the fees section
and included in APR. For example: appraisals, home inspections, estimated
legal fees, lender fees, broker fees, title searches, etc.
TERMS AND CONDITIONS SECTION – what to include
- Tax
holdbacks are to be listed in the Terms and Conditions section of the
disclosure
- Cash
back amounts are to be listed in the Terms and Conditions section of the
disclosure
- Any
funds held back at closing by the lender must be recorded in the Terms and
Conditions section of the disclosure
- Any
penalties for breaking a mortgage can be listed in the Terms and Conditions
section of the disclosure, never in the fees section
- CMHC and tax charged by the lender
AND paid by the lender or
client
- Make
a note of any insured conventional deals
- ELV’s must have an appropriate
description. i.e. ELV, interest
only monthly payments based on 1.5% of outstanding monthly balance, no
amortization
- Lines
of Credit must have an appropriate description. i.e. LOC, interest only monthly payments, no amortization
Other things you need to know
Form 1
All Private Investor Disclosures (FORM 1) must be received at head office
for Broker of Record’s signature before going to the Investor 2 days prior to
the Investor committing to fund such mortgage. Please also include the Lender Risk Tolerance form and
photo ID of the investor when sending the Form 1 to head office for signing
Failure to do
this will result in no commissions payable Commissions/Broker Fees to you as an
agent or broker, no exceptions will be made.
Please email
them to maryannlegato@rmabroker.ca
or fax them to 1-888-482-3536
Turn around
time for a Form 1 is 48 hours
Insurance
Make sure
the clients initial at the top of the form to waive or accept. Please also make
sure they sign and date at the bottom of the form.
Client Suitability Form
Must be signed and dated by all
clients on the application. If the mortgage
is Variable then please also have the client circle their risk tolerance
Photo Identification
Mortgage
brokerages must take steps to verify the identity of the borrower and lender
that you do business with. Acceptable photo ID is the following:
1. Driver’s
license
2. Passport
3. Citizenship
Card
Please
note: In addition to the picture, the ID must show the client’s signature. This
may mean that in some cases you will need to take multiple photocopies of the
ID. FSCO indicates that a Health card (OHIP card) is NOT acceptable. Amelia McLeod and Elaine Carter have passed
along a good suggestion. At the time of your client meeting have a digital
camera available. Take pictures of the client’s ID and signatures for the
greatest clarity.
Please make sure to write the clients name and ID# beside the
photocopies before sending the file in
If Photo id is not available then the clients must provide
you with a signed affidavit from the lawyer confirming identity.
Please use the form below if you have any questions or need clarification.