Humber/Ontario Real Estate Course 1 Exam Practice

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Which of the following statements about mortgages is NOT correct?

  1. The mortgagor is the individual that provides mortgage funds to the buyer.

  2. The mortgagee is the legal term referring to the person who lends the money to the mortgagor.

  3. When arranging a mortgage, the mortgagor offers property as security for mortgage funds advanced by a lender.

  4. When a lawyer is registering a new mortgage in Land Titles, it is legally referred to as a charge.

  5. The mortgagee has the right to sell the property if the borrower defaults on the loan.

  6. The mortgage must always be insured by a government-approved agency.

The correct answer is: The mortgagor is the individual that provides mortgage funds to the buyer.

The statement regarding the mortgagor is not correct because the mortgagor is actually the borrower, the individual who takes out a mortgage to purchase a property. In this context, the borrower receives funds from the lender, not provides funds. The lender, or mortgagee, is the one who provides the mortgage funds to the buyer (the mortgagor). The other statements accurately reflect aspects of mortgages. The mortgagee indeed refers to the lender who advances funds to the mortgagor. The mortgagor's property can serve as security for the loan advanced by the mortgagee. When a new mortgage is registered in Land Titles, it is referred to as a charge, and the mortgagee does have the right to sell the property in the event of default by the borrower. While mortgages can be insured by government-approved agencies, particularly for high-ratio mortgages, it is not a requirement for all mortgages, making the statement about mandatory insurance questionable but not incorrect in every context.

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