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THE UNIVERSITY OF BRITISH COLUMBIA

Real Estate Division

Mortgage Brokerage in British Columbia Manual

Table of Contents

UBC Real Estate Division. 2017. Mortgage Brokerage in British Columbia - Course Manual. Vancouver, BC: UBC Real Estate Division.

Preface: Introduction to Real Estate and Mortgage Brokerage

Land Ownership
Land Value
Real Property Law
Key Participants in the Mortgage Brokerage Market
Residential and Industrial, Commercial and Investment (IC&I) Real Estate Markets
Characteristics of Real Property
Organization of the Real Estate and Mortgage Brokerage Industry in British Columbia

Chapter 1: Fundamentals of Law

The Sources of Our Laws
Categories Within Our Legal System
Real Property Law
The Judicial System in Practice: The British Columbia Court System

Chapter 2: The Mortgage Brokers Act and Professional Ethics

The Registration Body - The Registrar of Mortgage Brokers for the Province of British Columbia
The Registration System
The Registrar’s Powers of Investigation
Powers of Disciplinary Action
Mortgage Broker Market Conduct
Ethics
What are Professional Ethics?
Why Study Professional Ethics?
Professionalism
Duty to Uphold the Law
Duty to Client in Providing Mortgage Services
Enforcement of Professional Ethics
Appendix 2.1: Sample Disciplinary Decision of the Registrar of Mortgage Brokers
Appendix 2.2: Form 9 – Lender Disclosure Statement
Appendix 2.3: Form 10 – Borrower Conflict of Interest Disclosure Statement
Appendix 2.4: Form 11 – Lender Conflict of Interest Disclosure Statement
Appendix 2.5: Code of Ethics and Standards of Professional Conduct Mortgage Brokers Association of
British Columbia (MBABC)

Chapter 3: What the Purchaser Buys: Estates and Interests in Land

The Evolution of Real Property Law and the Doctrine of Estates
Fee Simple Estate
Life Estate and Estate Pur Autre Vie
Leasehold Estates
Interests in Land Less Than Estates
The Extent of “Ownership” in Land
Co-Ownership of Land

Chapter 4: Title Registration and Strata Properties in British Columbia

Who Owns the Land?
How is Land Divided?
Title Registration in British Columbia
The Torrens System of Land Registration
Land Title Offices, Searching Title and the Registration Process
Title Insurance
Contaminated Sites Registry
First Nations Land Registration
Strata Properties (Condominiums) and Cooperatives in British Columbia
Appendix 4.1: Sample Certificate of Title
Appendix 4.2: Sample Excerpts From Strata Plans – Sample Strata Plan: Ground Floor

Chapter 5: The Professional Liability of Mortgage Brokers

Negligence
Misrepresentations and Deceit
Errors in Drafting Agreements
Breach of Fiduciary Duty
Statutory and Industry Liability
What is the Bottom Line?
Introduction to Tort Law
Trespass
Private Nuisance
Liability of an Occupier
Mortgage Fraud
The Competition Act
Law of Agency
Agent’s Appointment and Authority
The Common Law Duties of the Agent to the Principal
The Duties of the Principal to the Agent
Relationship Between the Agent and the Third Party
Appendix 5.1: Borrower Conflict of Interest Disclosure Statement Form 10 – Section 17.3

Chapter 6: The Law of Contract

Preface
Void, Illegal, Voidable and Unenforceable Contracts
Offer
Acceptance
Consideration
Legal Intention
Capacity
Legal Object
Genuine Consent
Termination of a Contract
Remedies

Chapter 7: Introduction to Mortgage Law

Introduction to Mortgage Law
Legal and Equitable Mortgages
Implied Terms of a Mortgage
Express Terms of a Mortgage
Special Types of Mortgages
Federal Legislation over Mortgages
Provincial Legislation Over Mortgages
Assignment of the Mortgage
Assumption of the Mortgage
Novation and Impairment of the Security
Priorities
Future Advances
Lenders’ Remedies
Judicial Sale
Action on the Personal Covenant
Quitclaim Deed
Possession and Sale
Agreements for Sale
Appendix 7.1: Land Title Act Form B
Appendix 7.2: Wrap-Around Mortgages

Chapter 8: Financial Statements

Forms of Organization
Importance of Financial Reporting
Generally Accepted Accounting Principles (GAAP)
Financial Statements
Income Tax Return
Analyzing Financial Statements

Chapter 9: Introduction to Mortgage Finance

Role of Financing in Real Estate Transactions
The Capital Market
The Characteristics of Mortgage Loans as Investments
Development of Contemporary Mortgage Lending
Classification of Mortgage Loans
Mortgage Repayment Plans
Mortgage Interest Rates and the Federal Interest Act
Using the HP 10bII+ Calculator in this Course
The Basis of Interest Calculations
Future Value and Present Value of Lump Sums
Annuities: Payments
Calculating Interest Only Payments

Chapter 10: Interest Rates and Mortgages

Equivalent Interest Rates
Application of Equivalent Rates to Periodic Payments
Analysis of Constant Payment Mortgages

Chapter 11: Mortgage Analysis in Real Estate Practice

Impact of Financing on Real Estate Transactions
Portable Mortgages
Impact of Brokerage and Other Fees

Chapter 12: Mortgage Underwriting and Borrower Qualification

Residential (Owner-Occupied) Mortgage Underwriting
Commercial Mortgage Loan Underwriting

Chapter 13: Management of Individual Loans

Financial Covenants of the Borrower
Loan Administration and Management
Arrears and Default

Chapter 14: Mortgage Loan Repayment and Refinancing Options

Variable Rate Mortgages (VRMs)
Graduated Payment Mortgages (GPMs)
Sinking Fund Assisted Mortgages (SFAMs)
Reverse Mortgages or Reverse Annuity Mortgages (RAMs)
Refinancing the Property
Wrap-around Mortgages

Chapter 15: Introduction to Real Estate Appraisal

Purpose of Appraisal
Licensing Requirements for Appraisers
Subject of an Appraisal
Nature of Value
Variations in Sale Prices
Definitions of Market Value
Legal Considerations for Appraisers
Overview of the Appraisal Process
Step 1: Defining the Appraisal Problem
Step 2: Scope of Work Determination
Step 3: Data Collection
Step 4: Data Analysis
Step 5: Selection of the Appropriate Appraisal Approach
Step 6: Reconciliation of Value Indications and Final Opinion of Value
Step 7: Communicate Findings

Chapter 16: Direct Comparison (Comparative) and Cost Approaches of Appraisal

Purpose of the Appraisal
Direct Comparison (Comparative) or Market Approach
Analysis of Market Transactions
Adjustments for Value
Case Study
Other Applications of the Comparative Approach
Scope of the Comparative Approach
Limitations of the Comparative Approach
The Cost Approach
Determining Market Value by the Cost Approach
Scope of the Cost Approach
Limitations of the Cost Approach
Appendix 16.1: Calculations Used to Find Market Value of a Vendor Takeback
Appendix 16.2: Core Logic – Swift Estimator: Residential – Standard Report

Chapter 17: The Income or Investment Approach of Appraisal

Establishing Net Operating Income
Required Rate of Return
Capitalization Process
Case Study 1
Case Study 2

Chapter 18: Introduction to Marketing and Technology

The Marketing Concept
Marketing Theory
Integrated Marketing
Advertising
Other Types of Marketing
Measuring the Effectiveness of Advertising and Marketing
Technological Tools for Mortgage Brokers

Chapter 19: Effective Negotiations and Alternative Dispute Resolution

The Nature of Effective Negotiations
Negotiation Approaches
When Negotiations Fail

Chapter 20: From Contract to Completion

The Contract of Purchase and Sale
Closing Procedures
General Introduction to Statements of Adjustments
Items on Statements
Preparing Statements of Adjustments

Chapter 21: Mortgage Brokering: Blending Theory and Practice

Initial Client Interview
Mortgage Option Recommendations
Taking the Mortgage Application
Obtaining the Credit Report
Reviewing Paperwork
Submitting the Application
Fulfillment
Instructions and Closing
Administration

Glossary

Index