Olivia, a mortgage broker, has a client, Grayson, who meets all of the requirements for approval by Olivia's private lender. Joe. Joe has had issues with borrowers missing payments in the past, and has decided to charge NSF fees of $300, a condition that is much higher than normal. However Joe also offers lower rates than Olivia's other investors. Since Grayson has very good credit and debt servicing ratios, would this be a good option for Grayson?
Olivia, a mortgage broker, has a client, Grayson, who meets all of the requirements for approval by Olivia's private lender. Joe. Joe has had issues with borrowers missing payments in the past, and has decided to charge NSF fees of $300, a condition that is much higher than normal. However Joe also offers lower rates than Olivia's other investors. Since Grayson has very good credit and debt servicing ratios, would this be a good option for Grayson?
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
Related questions
Question
Pls help ASAP for both
![Olivia, a mortgage broker, has a client, Grayson, who meets all of the requirements
for approval by Olivia's private lender. Joe. Joe has had issues with borrowers
missing payments in the past, and has decided to charge NSF fees of $300, a
condition that is much higher than normal. However Joe also offers lower rates
than Olivia's other investors. Since Grayson has very good credit and debt servicing
ratios, would this be a good option for Grayson?
Select one:
a. Yes, the lower rate offered by Joe will offset the higher NSF fee
b. Yes, the lower rate combined with low risk of missed payments makes this
a good option for Grayson
c. No, the NSF fee is much too high and is therefore not reasonable for
Grayson
d. No, Grayson is at risk of missing payments and therefore this is not
advisable](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F52052328-5a34-4195-86aa-03a6e2c9ba62%2F254f515b-c3e5-48ba-9931-6dc395f7f1fb%2Feqc1rib_processed.png&w=3840&q=75)
Transcribed Image Text:Olivia, a mortgage broker, has a client, Grayson, who meets all of the requirements
for approval by Olivia's private lender. Joe. Joe has had issues with borrowers
missing payments in the past, and has decided to charge NSF fees of $300, a
condition that is much higher than normal. However Joe also offers lower rates
than Olivia's other investors. Since Grayson has very good credit and debt servicing
ratios, would this be a good option for Grayson?
Select one:
a. Yes, the lower rate offered by Joe will offset the higher NSF fee
b. Yes, the lower rate combined with low risk of missed payments makes this
a good option for Grayson
c. No, the NSF fee is much too high and is therefore not reasonable for
Grayson
d. No, Grayson is at risk of missing payments and therefore this is not
advisable
![Elona, a mortgage broker, has a client, Emma, who wishes to pay off some debts
and back taxes to the CRA, which is threatening her with immediate collections.
Emma, who has a first mortgage with CIBC that will come up for renewal in nine
months, has great credit, lots of income and forty percent equity in her home. She
wants to increase her first mortgage with CIBC to consolidate her debts and pay off
the CRA, but CIBC told her that as long as she had outstanding back taxes, they
would not increase her mortgage. Elona has a solution. Elona's private lender.
Laszlo, is looking for a mortgage in which to invest. Laszlo is fine getting repaid up
to 25% of his investment during the term but is insistent that any mortgage he does
is for a one year term with a prepayment penalty of 3 months. Out of the following
options which one meets the needs of both Emma and Laszlo?
Select one:
a. Pay off CRA and consolidate her debts using Laszlo's mortgage, then pay off
Laszlo's mortgage by refinancing the CIBC mortgage at renewal
b. Pay off CRA using Laszlo's mortgage with a postponement clause, then
refinance with CIBC to consolidate her debts, borrowing enough to pay off
Laszlo at the end of his term
c. Laszlo's mortgage won't help Emma; Emma should wait until the CIBC
mortgage comes up for renewal in nine months
d. Pay off CRA using Laszlo's mortgage with a postponement clause, then
refinance with CIBC to consolidate her debts](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F52052328-5a34-4195-86aa-03a6e2c9ba62%2F254f515b-c3e5-48ba-9931-6dc395f7f1fb%2Fez0emws_processed.png&w=3840&q=75)
Transcribed Image Text:Elona, a mortgage broker, has a client, Emma, who wishes to pay off some debts
and back taxes to the CRA, which is threatening her with immediate collections.
Emma, who has a first mortgage with CIBC that will come up for renewal in nine
months, has great credit, lots of income and forty percent equity in her home. She
wants to increase her first mortgage with CIBC to consolidate her debts and pay off
the CRA, but CIBC told her that as long as she had outstanding back taxes, they
would not increase her mortgage. Elona has a solution. Elona's private lender.
Laszlo, is looking for a mortgage in which to invest. Laszlo is fine getting repaid up
to 25% of his investment during the term but is insistent that any mortgage he does
is for a one year term with a prepayment penalty of 3 months. Out of the following
options which one meets the needs of both Emma and Laszlo?
Select one:
a. Pay off CRA and consolidate her debts using Laszlo's mortgage, then pay off
Laszlo's mortgage by refinancing the CIBC mortgage at renewal
b. Pay off CRA using Laszlo's mortgage with a postponement clause, then
refinance with CIBC to consolidate her debts, borrowing enough to pay off
Laszlo at the end of his term
c. Laszlo's mortgage won't help Emma; Emma should wait until the CIBC
mortgage comes up for renewal in nine months
d. Pay off CRA using Laszlo's mortgage with a postponement clause, then
refinance with CIBC to consolidate her debts
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