Canada Mortgage Professionals Practice Exam 2025 – The Comprehensive All-in-One Guide to Exam Success!

The concept of the "five Cs of credit" refers to the key criteria that lenders use to evaluate a borrower's creditworthiness. These factors are crucial for assessing the risk involved in lending money. The five Cs include Capacity, Character, Capital, Conditions, and Collateral.

In this context, Capacity refers to the borrower's ability to repay the loan, measured by their income and debt obligations. Character reflects the borrower's credit history and reliability in repaying past debts. Capital pertains to the borrower's financial assets and net worth, indicating their investment in the loan and ability to pay. Conditions relate to the purpose of the loan and the economic environment.

Compliance, on the other hand, is not one of the five Cs. While compliance is important in the broader context of regulatory standards and ensuring laws are followed in lending practices, it does not specifically evaluate a borrower’s credit risk or ability to repay a loan. Thus, it does not belong within the framework of the five Cs of credit, making it the correct answer to the question about which factor is NOT part of this framework.