LIBF CeMAP (Certificate in Mortgage Advice and Practice) — All Questions

Where a borrower falls into arrears, MCOB 13 requires the lender to:

• a.Add unlimited charges to the account
• b.Repossess the property immediately once a single monthly payment has been missed by the borrower
• c.Treat the customer fairly and consider repossession only as a last resort✓
• d.Refuse to communicate with the borrower

MCOB 13 requires lenders to deal fairly with customers in payment difficulty, make reasonable efforts to agree a way to resolve the arrears, and treat repossession as a last resort after other options have been considered.

As a condition of a mortgage, a lender will normally require the borrower to have:

• a.Travel insurance
• b.Life insurance covering the lender's directors and senior managers for the duration of the loan
• c.Buildings insurance covering at least the reinstatement value of the property✓
• d.Pet insurance

Lenders require buildings insurance so that the property, which is their security, can be rebuilt if it is damaged or destroyed; cover must be at least the reinstatement value. Contents insurance, by contrast, protects the borrower's belongings and is optional.

A mortgage adviser who suspects that a client's application contains falsified income documents to obtain a larger loan should:

• a.Ignore it if the client insists
• b.Decline to proceed and, where appropriate, make a suspicious activity report, in line with anti-money-laundering obligations✓
• c.Increase the size of the requested loan to help the client meet the higher purchase price they have privately agreed with the seller of the property
• d.Simply tell the client to find a different lender

Submitting falsified documents is mortgage fraud. Under the Money Laundering Regulations 2017 and the Proceeds of Crime Act 2002, the adviser must not facilitate it and, where suspicion of criminal proceeds arises, must consider making a suspicious activity report (SAR) to the National Crime Agency, without tipping off the client.

Which protection product is most commonly recommended to repay the outstanding balance of a repayment mortgage if the borrower dies during the term?

• a.An annuity
• b.Decreasing term assurance✓
• c.Private medical insurance
• d.Motor insurance

Decreasing term assurance provides a sum that reduces broadly in line with the falling balance of a repayment mortgage, so it can clear the outstanding debt on death for a relatively low premium. Level term assurance is more commonly paired with interest-only mortgages, where the balance stays constant.