"What are examples of material risks that you would disclose about a mortgage product to a borrower, lender or investor?".
- Pre-payment penalties.
- If the mortgage product has a variable interest rate, the client needs to be aware of the potential for a higher interest rate.
- With a VRM or ARM mortgage, the interest paid and/or payment amounts will change based on the prime lending rate.
- Penalties, NSF fees, discharge fees, administrative fees, and what happens at the time of mortgage renewal.
- Increasing the length of a mortgage (amortization period) to lower monthly payments will result in a higher amount of interest being paid in the long-run.
- Property values can decline over time.
- If the borrower is a seasonal or contract worker.
- A single-use property poses a lesser risk than a multi-purpose or general purpose property.
- If the borrower experiences job loss or loss of income.
- Capacity of the borrower to make payments.
- Credit worthiness of the borrower.
- Character of the borrower.
- If the borrower has no verifiable income.
- If the borrower has a second or third mortgage on the property.
- Tax arrears can impact equity.
- What is the liability with respect to the borrower and lender?