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CeMAP® 3 Specimen Case Study

As you know the CeMAP® 3 and Bridge paper includes a number of case studies followed by 10 multiple choice questions.

So you can test yourself we have a complete case study for you to have a go at and check your answers.
If the results are not so good you might want to buy our Revision Guides or attend one of our public training courses.
Good luck.

Five years ago Garth and Tania took out a £70,000 joint repayment mortgage with the Ross on Wye Equitable Building Society. At that time Garth was earning £24,000, Tania was earning £6,000 and no mortgage indemnity guarantee policy was required. Since then the REBS self insure the risk.

Six months ago Tania’s father, Alan moved in after his mother’s tragic death.

They now plan to build an extension and are in the process of applying for a further advance of £32,000 from the Ross. Alan is donating £5,000 to the cause.

Last month Tania decided to give up work to look after Alan full time due to his muscle deterioration disease which has now made him totally dependent on Tania’s care. His only income is his merchant navy pension of £8,000 per annum.

When they first started the mortgage, the house was worth £118,000. However, due to a fall in house prices, over this period, it is now worth £110,000, but they’re hoping the extension will increase the value

1 In terms of the Consumer Credit Act 1974, the further advance applied for is deemed:

A regulated.
B exempt
C irrelevant since it is for home improvements.
D unregulated.

2 If the advance was £10,000 lower, under the Consumer Credit Act 1974 the classification would:

A change to regulated.
B change to exempt
C remain the same.
D change to unregulated

3 Tacking of the further advance:

A is not appropriate in this case.
B will reduce the priority of the initial mortgage.
C will reduce the priority of the further advance.
D requires the execution of a deed of variation.

4 The REBS have changed their policy now and charge for an indemnity guarantee policy where the further advance exceeds the loan-to-value ratio threshold of 75%, this further advance will:

A not require a mortgage indemnity guarantee policy.
B exceed the threshold by £19,500.
C exceed the threshold by £32,000.
D represent an overall loan-to-value ratio of 75%.

5 The decision taken by Tania last month:

A will ensure she received disabled carers allowance
B will ensure that income confirmation is not required since the further advance is for home improvements
C could affect whether or not the lender requires a property valuation.
D May require that Alan’s income is brought into the equation.

6 In order for the lender to grant the additional loan, Alan will be required to:

A sign a consent to mortgage form.
B seek independent legal advice.
C submit details of his income to the Department of Work and Pensions (DWP)
D provide details of his income.

7 When processing the new loan application, a statutory obligation is placed on Garth and Tania’s lender to:

A ensure a re-inspection of the extension is carried out.
B ensure building regulations are followed correctly.
C check the adequacy of the security.
D obtain written corroboration of income.

8 The REBS offers multiples of income of 3.5 plus 1 or 2½ joint. Taking into account Alan’s pension, what’s the least income Garth would need to earn?

A £19,077.
B £32,800.
C £74,000.
D £28,923

9 If the further advance fails to be granted, this could result in:

A an entry being placed in the CML Declinature Register.
B Alan acquiring an overriding interest in the property
C the original loan being reclassified as exempt under the Consumer Credit Act.
D a deed of postponement being issued to Garth and Tania.

10 Garth and Tania have looked into obtaining finance from the Pistol Bank plc. On a puisne basis. They explain that in the event of default they have their right to:

A. Instigate repossession proceedings only if the loan with REBS is also in default.
B. Repossess the property regardless of the REBS mortgage conduct.
C. Add their loan to the 1st lender’s loan under their consolidation rights
D. Insist on their own buildings insurance to be effected.

Answers

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