Canada Mortgage
and Housing Corporation (CMHC)
A Crown Corporation which
was initially created to administer the National Housing Act and is
Canadas only public sector mortgage insurer. CMHC is charged with
administering government housing initiatives and works with
community organizations, the private sector, non-profit agencies and
all levels of government to help create innovative solutions to
todays housing challenges.
Canada Mortgage Bonds
Canada Mortgage Bonds (CMBs) are similar to Mortgage Backed Securities (MBS) in that Canada
Mortgage and Housing Corporation guarantees the timely payment of
interest and principal. However, an MBS has a disadvantage to
investors since borrowers of the underlying mortgages can make partial or full prepayments of their mortgage principal.
While consumers (borrowers) like this flexibility, investors do not like
this unpredictability. The Canada Mortgage Bond program eliminates this cash flow uncertainty to investors, as CMHC guarantees both semi-annual interest payments, and the repayment of principal on a
specified maturity date.
Canadian and
British Insurance Company Act
The federal statute that governs federally incorporated insurance companies.
Canadian Code of Advertising Standards
These are administered by
Advertising Standards Canada. The goal of the standards is to promote the professional practice of advertising, by setting =
criteria for what is or is not acceptable practice.
Capacity (5 Cs of Credit)
The ability of a borrower to repay a loan.
Capital (5 Cs of Credit)
The amount of money the borrower has invested into the property.
Capital Reserve
Requirements
Specified amount of capital that is necessary for lenders to hold to back up the loans they grant. The
amount is determined by government regulations.
Capped Rate Variable Mortgage
A variable rate mortgage on which the
lender has set a limit to interest rate increases or decreases.
Cash Back
A mortgage feature that provides the borrower with cash back, as a percentage of the mortgage principal.
It is generally used to
cover closing costs.
Caution
A notice registered on title by a person claiming to have a proprietary interest
(i.e. a right to call for or receive a transfer of charge) in land or in a charge (mortgage) of which he or she is not the registered owner. Cautions are registered to protect their interests. As a result, the registered owner of the land or charge cannot deal with the land or charge without consent of the cautioner.
Caveat Emptor
Let the buyer beware. Buyers must examine the goods or
property they are buying since they buy at their own risk.
Central Bank
A body established by a national government to regulate
currency and monetary policy on a national / international level. In
Canada, it is the Bank of Canada; in the United States, the Federal
Reserve Board; in the U.K., the Bank of England.
Certificate of
Occupancy (Permit)
A certificate provided by the
municipality that a property has been constructed under the
authority of the issued building permit, has met the requirements of
the building code, and is now suitable to be occupied.
Cessation of Charge
A discharge of a mortgage registered under the Land Titles Act.
Chain of Title
Chain of title refers to who has owned the land in the past. It is uncovered through the lawyers search. Seeextent of title.
Character (5 Cs of
Credit)
The overall opinion on a borrowers credibility to repay a loan; the borrowers length of employment is a key measurement.
Charge
The name given to a mortgage document when title is registered
under the Land Titles System. Also known as Certificate of
Charge.
Chattels
Movable possessions, personal property (generally items that may be removed without injury to the freehold
estate).
Chattel
Mortgage
A mortgage given on chattels. This type of
mortgage is usually given as collateral security to a mortgage on
real estate. As an example, there may be a chattel mortgage on
refrigerators and stoves in an apartment building.
Closed Mortgage
A mortgage agreement that cannot be repaid, refinanced or
renegotiated until maturity, unless otherwise stated in its
terms.
Closing Date
The date on which a sale becomes final, funds are transferred from the purchaser to the vendor, and the new owner takes possession of a property.
Closing Process
The procedure of finalizing the sale, once the lender receives an accepted commitment.
Co-Applicant
One of two or more people applying together for a loan.
Co-Insurance
A sharing of risk between insurer and insured which depends on the relationship of the amount
of the insurance carried versus the amount of insurance required at the time of the loss.
Collateral (5 Cs of Credit)
Guaranteed support for a loan, generally consisting of funds or real estate, that ensures added security to the lender. Collateral can also take the form of guarantees provided by third parties, i.e. guarantors.
Collateral
Mortgage
The mortgage registered to document collateral
security.
Collateral
Security
Security given in addition to the direct security and subordinate to it.
Commercial Properties
Properties that are utilized for commerce or trade (e.g. stores, office buildings).
Commitment
A letter / document issued by a lender reciting the basic terms of a loan which, when accepted by the borrower, forms a
binding contract. The commitment may have conditions attached to it which must be met before the contract can be finalized.
Common Law
A legal system of principles and rules of action based on customs and common usages. It forms a major part of the law in many countries, especially those with a history as British territories, such as Canada. Common law developed from rulings by judges based on tradition, custom and precedent, with the idea being that there was a legal framework common to all cultures throughout time.
Common Mistake
Both parties make the same mistake in a term of the contract.
Completion Loan
The single disbursement of the total loan following satisfactory completion of the property.
Comparable Properties
Properties that contain similar characteristics to the subject property in anappraisal.=20
Appraisals typically require three comparable properties. Comparables should have sold recently, be from the same or similar neighbourhood, be of the same style/age/condition, be of similar size and on similar lots. See Comparative Method of
Appraisal.
Comparative Method of Appraisal
A method of appraisal that bases the value of the property on that of comparable properties.
Compound Interest
Interest charged not only on the principal sum but also on interest amounts charged, but not paid, in preceding periods that accumulate as new principal.
Condition
A clause or statement in the contract, which must be met to fulfil an obligation in the agreement.
Condition Precedent
Clause in a contract that lays down factors and/or events that must occur for the agreement to be binding.
Condominium
Ownership of property whereby the owners hold negotiable title to their own unit. At the same time they share with fellow owners the title and cost of operation of the balance of the property (common elements) making up the condominium.
Consideration
Considerationmeans some right, benefit or profit accruing to the promisor or some forbearance, detriment, loss or responsibility suffered by the promissee. In other words, when dealing with contracts, the party trying to enforce the contract must have provided some benefit in return for the promise to complete the contract.
Contract
A contract is a legally binding agreement between two or more capable people for consideration or value, to do or not do some lawful and genuinely intended act.
Contract of purchase and sale
A contract involving the sale of a property that outlines the complete duties of the promisor and the promissee in the real estate transaction.
Conveyance
The transfer of an interest in property from one person to another.
Conventional Mortgage
A loan based on the credit of the borrower and on the collateral for the mortgage. A conventional mortgage does not exceed 75% of the market value of the property. This means that the borrower must have 25% or more available for the down payment.
Convertible Rate
Mortgages with a convertible rate feature allow borrowers to fix the rate of their variable rate mortgage at any time with no penalty.
Co-Operative
A form of multiple ownership of real estate in which a corporation or business trust holds title to a property. Individual unit holders have the exclusive right to occupy their unit by lease but their investment in the corporation is by way of shares.
Co-Ownership
The idea that a property (present or future) can be held at the same time by several persons. The most common types of co-ownership are joint tenancy and tenancy-in-common.
Corporation
A separate legal entity which exists apart from a person but has the rights and liabilities of an individual.
Cost of Goods Sold (Income Statement)
The costs of purchasing or producing and manufacturing items sold.
Counter Offer
A new offer made in response to an offer received. This has the effect of rejecting the original offer and placing the counter offer on the table for consideration.
Covenant
An agreement in writing (in Common Law must be under seal)contained in a deed and creating an obligation. It may be positive, stipulating the performance of some action. It may be negative or restrictive, forbidding the commission of some act.
Credit (5 Cs of Credit)
The repayment history of the borrower.
Credit Report
A detailed description of the applicants credit records. This includes information provided by lenders concerning credit card payments and loans repayment history. Provided by Equifax and Transunion free of charge.
Credit Score
A single number that represents the information found in a borrower's credit history. Equifax's credit score is known as the Beacon Score, while TransUnion's score is called the Empirica Score.
720-850-
You are at the top of the best rates and terms offered to you.
700-719-
Excellent score. You are very desirable borrower.
680-699-
Good Credit. You should be in good shape to buy.
660-679-
Ok credit. Don't look for other exceptions.
640-659-
Borderline. Ok if everything else is wrong.
620-639-
Weak. The rest of your life must be perfect.
600-619-
Difficult. Needs some work, or a special program.
Below 600
-Trouble! Try to fix up your credit immediatelly!
Credit Unions
Credit unions are lending institutions owned by their members. Membership is often based on a common bond of
association such as employment or ethnic background.
Creditor
One to whom a debt is owed.
Cross Default Clause
Mutual clauses in two or more mortgages, which state that a default under one mortgage constitutes a default under the other(s).
Current Assets
Goods that can easily be turned into cash, sold or consumed within a year's time.
Current Liabilities
Debts and obligations that are expected to be paid within a year, e.g. account payable, expenses, taxes.
Current Ratio
A measure that shows the ability of a firm to pay its current liabilities. It is calculated by dividing current assets by current liabilities.