BC MB — BCFSA / UBC Sauder - Mortgage Brokerage in British Columbia Quick Reference

Exam Identity and Use

This Quick Reference supports independent preparation for the BC Financial Services Authority exam pathway for BCFSA / UBC Sauder - Mortgage Brokerage in British Columbia, exam code BC MB.

Use it as a compact final-review sheet for:

• BC mortgage brokerage regulation and registration
• borrower, lender, and investor duties
• disclosure, conflicts, trust funds, and records
• mortgage products, underwriting, suitability, and fraud controls
• BC land title, mortgage security, priority, and enforcement
• core mortgage math and exam-style decision points

Always align final answers with the current course materials, legislation, BCFSA guidance, and forms tested in your offering of the course.

High-Yield Exam Map

BC Regulatory Framework

Registration and Licensing Decision Table

Mortgage Broker vs Submortgage Broker

Core Duties by Relationship

Mortgage Transaction Workflow

Disclosure and Conflict Reference

Trust Money and Records

Trust Account Controls

• Separate client money from brokerage operating money.
• Use written authority for receipts, transfers, and disbursements.
• Maintain individual client ledgers.
• Reconcile trust bank account, trust ledger, and client ledgers.
• Investigate shortages immediately.
• Do not pay personal or brokerage expenses from trust.
• Do not backdate receipts, forms, signatures, or file notes.
• Keep enough records to show who paid, why, when, where funds went, and who authorized it.

Mortgage Math Formula Sheet

Canadian Mortgage Rate Conversion

For a nominal annual rate \(j\) compounded semi-annually, converted to a payment-period rate with \(p\) payments per year:

\[ i_p = \left(1 + \frac{j}{2}\right)^{2/p} - 1 \]

Use the payment-period rate in payment and amortization formulas. Do not simply divide a Canadian nominal semi-annual mortgage rate by 12 unless the question specifically allows a simplified approach.

Payment

\[ PMT = PV \times \frac{i}{1 - (1+i)^{-n}} \]

Where:

• \(PV\) = principal borrowed
• \(i\) = periodic interest rate
• \(n\) = total number of payments over amortization
• \(PMT\) = regular blended payment

Outstanding Balance After \(k\) Payments

\[ BAL_k = PV(1+i)^k - PMT \times \frac{(1+i)^k - 1}{i} \]

Alternative view: balance is the present value of remaining payments at the contract periodic rate.

Loan-to-Value

\[ LTV = \frac{\text{Loan amount}}{\text{Lending value}} \times 100\% \]

Lending value is commonly the lower of purchase price or appraised value, unless the lender’s rules specify otherwise.

Gross Debt Service and Total Debt Service

\[ GDS = \frac{\text{Housing costs}}{\text{Gross income}} \times 100\% \]\[ TDS = \frac{\text{Housing costs + other required debt payments}}{\text{Gross income}} \times 100\% \]

Housing costs commonly include principal, interest, property taxes, heating costs, and applicable strata/condo allowances under lender rules.

Interest-Only Payment

\[ \text{Interest-only payment} = \text{Principal} \times \text{Periodic rate} \]

Useful for HELOCs, construction draws, some private mortgages, and bridge loans.

Debt Coverage Ratio

\[ DCR = \frac{\text{Net operating income}}{\text{Annual debt service}} \]

Used often for income-producing property and commercial-style underwriting.

Capitalization Rate

\[ \text{Value} = \frac{\text{Net operating income}}{\text{Capitalization rate}} \]

Higher cap rate usually implies lower value for the same NOI, reflecting higher required return or risk.

Calculation Traps

Mortgage Product Selection Matrix

Underwriting Quick Reference

Five Cs of Credit

Borrower Information Checklist

Income Type Notes

Suitability Decision Points

BC Land, Title, and Security Concepts

Priority and Title Traps

Default and Enforcement

Default Workflow

1. Borrower breaches mortgage terms.
2. Lender or servicer confirms arrears/default and reviews documents.
3. Demand/default notice is issued as required.
4. Borrower may cure, refinance, sell, negotiate, or contest.
5. Lender may start foreclosure proceeding in BC Supreme Court.
6. Court may grant order nisi and redemption period.
7. If not redeemed, court may allow sale or order absolute.
8. Proceeds are applied to costs, interest, principal, and priority claims.
9. Surplus or deficiency is addressed according to law and court order.

Private Mortgage and Investor Suitability

Private Lending Red Flags

• Investor is told the mortgage is “safe,” “guaranteed,” or “like a GIC.”
• Borrower has no credible exit strategy.
• Appraisal is old, related-party, restricted, or inconsistent with sale price.
• Broker, borrower, appraiser, builder, or vendor are related and not disclosed.
• Prior charges, arrears, tax debts, or litigation are minimized.
• Investor does not understand rank, foreclosure delay, or liquidity risk.
• Borrower fees consume too much of the advance.
• Mortgage proceeds are used to pay undisclosed debts or incentives.
• Syndicated or pooled structure is treated as ordinary mortgage brokering without securities analysis.

Advertising and Communication Controls

Ethics, Fraud, and Misrepresentation

Scenario Answer Patterns

Borrower Explanation Checklist

Before a borrower commits, they should understand:

• Principal amount and purpose
• Interest rate, compounding, term, amortization, and payment frequency
• Fixed, variable, or adjustable payment risk
• Open/closed status and prepayment privileges
• Penalty method and discharge costs
• Broker fees, lender fees, insurer premiums, legal costs, appraisal costs, and taxes where applicable
• Conditions before funding
• Consequences of default
• Renewal and maturity risk
• Whether the broker is paid by lender, borrower, or both
• Any conflicts, referral fees, or related-party interests
• Whether the product is temporary and what the exit strategy is

Lender / Investor Disclosure Checklist

For a lender or private investor, focus on:

• Borrower identity and creditworthiness
• Loan amount, interest rate, term, payment structure, and fees
• Property description, value support, and valuation assumptions
• LTV and calculation basis
• Mortgage priority and existing encumbrances
• Property taxes, strata arrears, liens, judgments, or litigation
• Borrower purpose and exit strategy
• Default history or arrears if known
• Broker compensation and conflicts
• Related-party relationships
• Risks of default, enforcement delay, cost, illiquidity, and value decline
• Whether independent legal advice is recommended or required

Last-Week Review Checklist

• Explain when registration is required and why exemptions are narrow.
• Distinguish mortgage broker, submortgage broker, lender, borrower, investor, lawyer, appraiser, and insurer.
• Know the required disclosure logic for compensation, conflicts, and material facts.
• Practice LTV, GDS, TDS, payment, balance, DCR, and cap-rate calculations.
• Convert Canadian nominal semi-annual rates correctly.
• Identify unsuitable mortgage recommendations from borrower facts.
• Spot private mortgage investor risk factors.
• Recognize trust money and improper disbursement scenarios.
• Review BC title concepts: priority, registered charges, strata, leasehold, liens, taxes, and foreclosure.
• Use “disclose, verify, document, update, or decline” as the default response to red flags.
• Do not choose answers that rely on oral-only disclosure, hidden fees, backdating, document alteration, or ignoring material changes.

Practical Next Step

Work timed BC MB scenario sets that mix law, ethics, suitability, title priority, private lending, and mortgage math. After each question, write the rule that controlled the answer and the red flag that made the wrong options tempting.