Real Estate Council of Alberta Fundamentals Practice Exam

What does a debt consolidation scheme typically offer?

1. Financial literacy programs

2. To pay off mortgage if the owner signs over the title

3. Investment in real estate funds

4. Guaranteed returns on property sales

The correct answer is: To pay off mortgage if the owner signs over the title

A debt consolidation scheme typically involves combining multiple debts into a single loan, often with a lower interest rate, to make it easier for individuals to manage their financial obligations. The reason the selection about paying off a mortgage in exchange for signing over the title is presented as correct relates to predatory practices often associated with such schemes, where lenders may promise to clear existing debt like a mortgage but require the borrower to cede ownership of their property. By signing over the title, the homeowner effectively loses control over their asset, which can complicate financial recovery in the future. The other options do not accurately reflect what a debt consolidation scheme primarily offers. Financial literacy programs are aimed at educating individuals about managing finances but do not directly relate to consolidating debt. Investment in real estate funds pertains to opportunities in the property market rather than debt management. Guaranteed returns on property sales suggest a level of security in investment that is not a characteristic of debt consolidation schemes, which usually focus on reducing liabilities rather than offering investment benefits.