Credit Application Assessment

The final assessment is carried out by a credit provider officer or higher authority to determine whether the loan application should be granted. The officer checks if the applicant meets minimum requirements under NCCP Act, has sufficient income to repay the loan and no previous default records. A mortgage broker may be asked to obtain information on asset values and fluctuations. Additional support like a third-party guarantee may be required in housing loans. Credit providers perform reviews before final assessments and check for necessary evidence.

Certificate IV in Finance and Mortgage Broking
Assessment Task
FNS40815
Your details:
Name:
Address:
Phone:
Company name
Email:
Your assessment task
You are required to keep a copy of your assessment task for a period of 12 months.
Submit your assessment to our Education Team via [e-mail]
Plagiarism Statement
All assessments must be your own work and not a result of plagiarism or collaboration
with other students or workmates.
Assessment
The pass mark is 70% for each element. If you do not achieve this, you will receive
feedback via your email address and be asked to resubmit your assessment for a second
marking. Assignments will not be returned to you as they need to be retained for by us for
verification and audit purposes.
Task Assessments Target
Mark
Word
Count
Status
1 Identify and Interpret Compliance Requirements 27 600 Done
2 Deliver and Monitor a Service to Customers 39 860
3 Contribute to OHS Hazard Identification & Risk Assessment 41 900
4 Manage Personal Work Priorities and Professional Development 24 528
5 Develop and Nurture Relationships with Clients, Other
Professionals and Third Party Referrers
17 374
6 Promoting the Effective Use of Credit 15 330
7 Prepare a Loan Application on Behalf of Mortgage Broking
Clients
64 1408
8 Steps Taken by the Credit Provider 23 506
Total 250 5500
Assessor’s Initials: ____________________
Assessment Date: ____________________
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Introduction
Objective The objective of this Assessment Task is to demonstrate that you have the
skills and knowledge required to conduct a client relationship and comply with
statutory, industry and organization compliance requirements.
Elements to
be assessed
To achieve this objective, you will need to demonstrate your ability to:
The assessment tasks in this assessment will allow you to demonstrate your
knowledge and skills in relation to these elements.
Assessment
process
Start by:
1. Reading the Assessment Task.
2. Type your answers to the assessment tasks into this template document
(hand-written answers are not accepted)
3. Submit your completed document by uploading it on the ‘Ready for
Assessment’ area of www.CPDplus.com
Don’t forget to keep a copy and retain it for 12 months.
Need help? If you have any questions or would like to request a digital copy of this
assessment task, please email the Mentor Support Team at
[e-mail]
Statement of
Completion
Upon successful completion of this assessment you will be awarded the
Statement of Completion for FNS40811 Certificate 4 in Finance and Mortgage
Broking.
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Task 1: Identify and Interpret Compliance Requirements
1. Identify
compliance
requirements
Mortgage brokers face important compliance requirements, the foremost among
them being the reasonable lending provisions of the NCCP Act. The penalties for
non-compliance include loss of license (for businesses) and removal from the
industry (for individuals). If fraud is involved there may also be the criminal
penalties of fines and / or imprisonment.
Compliance requirements are not static. It is therefore important to stay up to
date with them.
Mortgage brokers also need to keep up-to-date with the actions of the regulatory
authorities such as APRA and the Reserve Bank. Their actions may not amount
to direct regulation, but through their effects on interest rates and bank lending
these authorities can have a very direct impact on the business mortgage
brokers are able to do.
(a) A key requirement of the responsible lending obligations is the ‘unsuitability test.’ What must a
mortgage do to comply with the unsuitability test?
No Mark
1. /1
2. /1
3. /1
(b) List the sorts of items a client’s requirements and objectives could include (as indicated by
ASIC).
Mark
/2
(c) Leading credit providers and other financial organisations have code of ethics, sometime
called codes of conduct. Select one of them and summarise it by itemising its main principles.
Mark
/4
Sub-total /9
Continued
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(d) In point form, list the key information that the NCCP Act requires to be contained in a Credit
Guide.
Mark
/3
(e) It is important to keep up to date with compliance requirements so that the required changes
can be made to organization procedures and product offerings. Suggest three sources that
you can use.
Mark
/3
(f) Explain the requirement for Australian Credit Licensees to keep a training register.

Mark
/2
(g) Explain APRA’s current attitude towards bank lending for investment properties.
Mark
/2
Sub-total / 10
Continued
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Task 1: Identify and Interpret Compliance Requirements Continued
1.2
Interpret,
analyse
and
prioritise
identified
complian
ce
requirem
ents
Some of the compliance requirements are difficult to meet. Unfortunately, also
there have been some ‘rogue’ mortgage brokers who have failed to comply – to the
disadvantage of their clients.
The finance planning industry has been plagued by non-compliance in the largest
planning groups, with the image of the industry being substantially tarnished as a
result. It may not suffer greatly because of the absence of an alternative source of
financial advice.
This is not so with mortgage brokers. They are just establishing their reputation and
consumers always have alternative of going to the lenders directly.
(a) Select three tasks you perform on a regular basis that are subject to compliance
requirements.
No Mark
1. /1
2. /1
3. /1
(b) Identify the compliance requirements that are relevant to the three tasks selected, indicating
the name of the relevant legislation, regulation or code of conduct.
No
1. /1
2. /1
3. /1
(c) How does your organisation monitor your compliance?
Mark
/2
Sub-total /8
Continued
Total /27
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Task 2: Deliver and Monitor a Service to Customers
2.
Identify
customer
needs
The relationship with a client is generally described as beginning with the
establishment of empathy. In other words, it is first necessary for a mortgage
broker to establish that he / she is truly interested in the client and the client’s
needs. It is only after that that the mortgage broker has established the right to
interview a client.
(a) Use the internet or any other source to find a definition of empathy.
Mark
Empathy is an emotion between sympathy and affection. It is a feeling which someone
expresses to someone else.
/1
(b) List three open-ended questions that assist in developing empathy with a client? How do such
questions indicate empathy?
No. Mark
Are you comfortable with our services?
What are the problems that you are experiencing?
Can anything else be done to help you further with your current problem?
/2
The fact that in each question an effort has been made to comfort the client indicate
empathy.
/1
(c) List and explain the steps involved in an ‘active listening approach’.
Mark
 Concentrate completely on what speaker is saying. /1
 Do not ask any question while the speaker is speaking. /1
 Have a clear mind while listening to the speaker. /1
(d) How is client service commonly monitored in your organisation? What are the two possible
outcomes?
No. Mark
1. In order to monitor the client services in an organization the following standards
procedure shall be followed:
I. A clear strategy shall be there to improve the quality of services that are
being provided to clients.
II. Survey should conducted on the clients to find out the quality of services
they expect from the organization.
III. A system of feedback shall be instituted within the organization to
accumulate the feedback of clients on quality of services that are being
provided by the organization.
IV. Continuous endeavor to improve the quality of services.
/1
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2. I. Improvement in quality of services that are offered by an organization.
II. Increase amount of customer / client satisfaction.
/2
Sub-total /10
Continued
Task 2: Deliver and Monitor a Service to Customers Continued
2.1 Deliver
a service to
customers
In a survey on the reasons for referrals conducted by David Maister, only 10%
were due to the quality of technical work. The remaining 90% of referrals were due
to the quality of service.
This indicates that the key to maintaining client relationships and gaining referrals
is the provision of outstanding service. This has been described by Maister as
‘over-servicing’.
(a) Describe three ways in which a mortgage broking organisation can attempt to ‘overservice’
clients?
No. Mark
1. Huge increase in marketing and advertisement to attract client. /1
2. Making a pitch for sale always. /1
3. Making a pitch for purchase always. /1
(b) How would you keep a client informed about the progress of an application as it passed through a
creditor provider’s hands? What approximate timing might be involved?
No. Mark
1. Effective communication with the client by using calling services about the progress of an
application as it passed through a creditor provider’s hands. Providing timely response to the
clients and customers is essential to the success of a broking business thus, it is important to have a
great customer service to clients and customers up-to-date with progress in different matters.
/2
2. A period of 12 months is approximate time for ensuring that proper communication is made with
the client to let him know about the status of such application.
/2
(c) Describe how you might attempt to resolve conflicts with clients.
Mark
Discussion with the client is one of the most effective ways to resolve conflicts and disagreement
with client. Understanding the issue on which the conflict has arisen between the organization
and the client, then a discussion on the issue with the client could be very helpful in resolving such
/2
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issue. Information is another important component that helps in resolving conflicts as often wrong
information leads to conflicts between the client and an organization.
(d) How do you can prepare clients for the hiccups that can happen while their credit application is being
processed
Mark
A complete way through shall be provided to the client and he shall be made aware of the various situations
that he might have to face over the period of time during which the status of the application shows pending.
An in-depth discussion shall be held with the client to make him aware of various issues that might arise in
the future in the application stage. This will help the client to deal with various issues that generally arise in
application stage.
/2
Sub-total /11
Continued
(e) The chapter on Operating a Mortgage Broking Business contains an example suggesting that a
mortgage broker acting in the best interests of clients should act as a Protector rather than an Expert.
What are the implications for this in regard to (i) advice given to clients and (ii) recommending the
most suitable loan products?.
No. Mark
1. The client should be advised with more caution than flamboyance. Only the deals that will surely
benefit a client should be suggested to the client. Thus, even if there is a minute chance of any
issue that a client might be facing the expert shall withdraw the client engagement from such
deals.
/2
2. The most suitable loan products are the ones that bear minimum rate of interests and have other
beneficiary attributes for a client. The repayment scheme of suitable loan products shall be
beneficiary to a client from every aspects.
/2
(f) How could you prepare yourself to deal with client concerns?
Mark
A thorough knowledge of the market is vital to deal with the concerns of clients. Along with the knowledge
of the market the client should have good communication skill to be able to communicate different matters
clearly with the clients. Thus, one should work on their communication skills to prepare his / herself to deal
with clients’ concerns.
/2
(g) Give examples of the following legal breaches: breach of the duty of care, false and
misleading conduct, unconscionable conduct & conflict of interest without disclosure.
No. Mark
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1. Engaging clients in deals which will not be very beneficiary to them despite existence of better
deals.
/1
2. Convincing clients to enter into loss making deal knowing such deals will end up making losses for
the clients for personal benefit.
/1
3. Allowing the clients to enter into wrong and bad deals despite having prior knowledge of the same. /1
4. Making money by convincing client to enter into a particular deal at the exception of the other
deals and not disclosing the benefit to the client.
/1
(h) Once a desirable market segment has been identified, a mortgage broking business can put
its mind o developing suitable marketing strategies. List examples of different strategies that
might be used.
Mark
 Aggressive marketing and promotional campaign shall be help to promote the desirable market
segment to attract customers.
 Convincing the clients to engage themselves to understand the components of the market.
 Engaging the clients to make them feel part of the whole proceeding.
 Listing the probable benefits of different products in the market and how the clients can be financially
benefitted from these products.
/2
Sub-total /12
Continued
(i) What steps can be taken to keep up to date with product changes and ensure that this
knowledge is properly disseminated?
Mark
Shall be kept up-to-dated by keeping necessary information about different products and changes that have
been made in the characteristics of these products. In case of disposal of any old product and
introduction of a new product the reasons shall be searched and verified for gather further knowledge
that will be helpful for the future.
/2
(j) What are the procedures for dealing with client complaints in your organisation?
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Mark
Checking the issues that the clients have listed in his / her complaint.
Proper investigation shall be made to see whether the accusations are true or not.
Based on the findings of the investigation necessary decisions shall be made on the complaints of the
clients.
/2
(k) What normal protocols should for protecting the confidentiality of client files?
Mark
Keeping the files in a safe and secure place with proper lock and key system in place.
Ensuring that only those who are authorised to see the files of the clients are using such files.
No unauthorised person shall be allowed to open the safe and lockers where the clients files have
been stored for confidentiality and security purposes.
/2
Sub-total /6
Total /39
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Task 3: Contribute to OHS Hazard Identification & Risk Assessment
3. Contribute
to workplace
hazard
identificatio
n
Occupational health and safety hazards are often considered only in terms of
physical injury, perhaps the result of working with heavy machinery, working in an
excessively noisy environment, or slipping or falling. Just as relevant, however, is
work-related stress. This describes the physical, mental and emotional
reactions of workers who perceive that their work demands exceed their
abilities and/or their resources (such as time, help/support) to do the work.
For the questions that follow, please read ‘Overview of Work-related Stress’
from the NSW Government. It may be found at:
http://www.safework.nsw.gov.au/__data/assets/pdf_file/0008/99233/overview-
work-related-stress-6071.pdf
Other ‘Tip Sheets’ from the same website may also be useful.
(a) How would you define workplace stress?
Mark
Work place stress is the emotional fatigue and feeling of a void which comes with the
excessive pressure of performance at the work place. The feeling of lack of motivation due
to working in a particular environment day in day out is also attributable to emotional
stress.
/4
(b) Suggest at least two ways in which work-related stress may affect client relationships.
Mark
I. Inability to serve the clients due to work related stress in employees and
workers.
II. Lack of effective communication due to stress factors in the work place.
/2
(c) Suggest at least four approaches you can take to reduce workplace stress? (Hint: you may
find suggested ways if you key ‘handling workplace stress’ into a search engine).
Mark
I. Efforts to create a friendly environment at the place of work.
II. Allowing the employees and workers to communicate freely with each other to
ensure there is enough discussions between them to make them feel happy
and contained at the work place.
III. Creating group culture within the organization so that there is bonding between
the employees and workers.
IV. Taking the employees and workers into confidence and engaging them in every
important decisions making process to make them feel an important part of an
organization.
V. Planning official picnics and get a ways to create a friendly environment within
the employees and workers.
/4
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Sub-total /10
Continued
Task 3: Contribute to OHS Hazard Identification & Risk
Assessment Continued
3.1 Gather
information
about
workplace
hazards
In assisting in the control of work-related hazards, you will need to be access
suitable information.
Please read ‘Glossary of Job Demands and Job Resources’ from the QUT/ANU
People at Work project. It may be found here:
http://web.archive.org/web/20150227212940/http://
www.peopleatworkproject.com.au/LiteratureRetrieve.aspx?ID=174670
(a) Explain the distinction between ‘job demands’ and ‘job resources’ risk factors.
Mark
Job demands are the expectations of the management from the workers and employees of
an organization whereas job resources are the components and resources needed by the
workers and employees to live up to the expectations of the management of such an
organization. Job demands are only possible to be fulfilled if there are enough job
resources available within the organization. Even with best of workers and employees an
organization will not be able to achieve much if there is not enough job resources available
at the workplace.
4/4
(b) Identify two ‘job demands’ risk factors that are relevant to your workplace and describe what
detrimental effect they might have.
No. Mark
1. Over the top expectations of the management from the employees and workers. This
might increase the stress level in the workers at the work place which could be very
detrimental to the overall performance of such organization.
/ 2
2. Putting too much pressure on the workers and employees and not allowing them any
breathing space in order attain certain objectives. This could harm the environment
at the workplace and subsequently the financial performance of such organization.
/ 2
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Sub-total /8
Continued
Task 3: Contribute to OHS Hazard Identification & Risk
Assessment Continued
3.2
Contribute to
OHS risk
assessment
Once risks have been identified, they should be controlled. A way of doing this is to
use “job resources” available in the organization.
Once again, please refer to the ‘Glossary of Job Demands and Job Resources’ that
was referred to earlier.
Apart from OHS issues, there are other significant risks that have to be dealt with
at all levels in an organisation.
(a) List the job demand factors you have identified previously and for each one select one or
more job resources that might be used to mitigate these risks.
No. Mark
1. Over the top expectations; to deal with this the management should expand its
workforce by recruiting professional and skillful personnel and providing them with
necessary resources to achieve the desired objectives.
/ 1
2. Putting too much pressure; allowing the workers and employees all proper facilities
and providing them with proper rest and refreshments would help an organization to
improve its working environment.
/ 1
(b) Select one of the job resources listed and suggest how you could apply it in your work
situation.
Mark
Use of technology in the modern business organizations could be very helpful in achieving
desirable performance from the workers and employees with optimum use of resources.
/ 1
(c) Select a significant risk issue, other than OHS issues, that has an impact on the way you
perform your duties and explain how it is managed.
Mark
Lack of training and improper knowledge: Lack of training and improper knowledge of a
subject often have detrimental effect on one’s ability to discharge his / her duties properly
at the place of work. Considering the ever changing technology and ways of working it is
necessary to provide effective training to the workers to equip them in performing their
duties properly.
/3
Sub-total /5
Continued
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Task 3: Contribute to OHS Hazard Identification & Risk
Assessment Continued
3.3
Environment
al risks
The risks that should be considered in management decision-making include
environmental risks.
This is giving rise to a new way for businesses to report to stakeholders that goes
beyond traditional financial reporting. It is called “triple bottom line” reporting.
(a) List the three criteria of triple bottom line reporting. What is the likely effect of this form of
reporting on management decision-making at all levels.
No. Mark
1.  Consideration of social, environmental and financial aspects is the most important aspect of such
reporting.
 Mere output from the processes is not the learning outcome of such reporting rather
demystification of the processes is the key objective of such reporting.
 Evaluation of the existing working set up is the primary objective of such reporting.
/ 2
2. Better management of an organization would be possible with such reporting.
Improvement in the processes will help the organization to improve its overall
performance after such reporting.
/ 2
(b) Select the annual report of a leading financial organization such as a major bank and, after
identifying the organization, summarise what it says about its environmental impact
(suggested maximum length of 50 words).
Mark
Technology One Limited an Australian Information and technology company engaged in
developing accounting and other software for businesses and other organizations have
clearly mentioned in its CSR report that it is important to take all necessary precautions to
ensure that there is no negative impact on the environment.
/ 2
(c) Briefly indicate the environmental protection assistance that your business organization is
able to receive from your State or Territory environment protection agency.
Mark
Often lack of knowledge is responsible for irresponsible behavior on the part of an
organization which affects the surrounding environment negatively. Important inputs and
information from State and Territory protection agency in such situation helps business
organizations to be more responsible in their behaviors to sustain the environmental
development.
/ 2
Sub-total /8
Continued
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Task 3: Contribute to OHS Hazard Identification & Risk
Assessment Continued
3.4 Effective
team
management
Risk assessment also requires effective team management and participation and
the right sorts of questions being asked.
(a) Describe the benefits of team meetings.
Mark
Discussions help an organization to communicate its ideas to the stakeholders of an
organization. Team meetings helps an organization to discuss various issues and to come
up with effective solutions to deal with these issues. Team meetings also help an
organization to communicate its ideas and objectives to the employees, workers and other
stakeholders. This helps an organizations in its endeavour to achieve its desired
objectives.
/ 2


(b) Consider your own role in team meetings and describe the approach you and other members
should take to information sharing.
Mark
A responsible manager will ensure that there is proper communication between the
management and the stakeholders of the organization to communicate all the details
about the organization on time to achieve the overall objectives of such organization.
/ 2
(c) Give examples of the types of risks that should be considered in all team meetings.
Mark
 Risk relating to uncertainties.
 Risk of not reaching the budgeted revenue amount.
 Risk of failure to fulfil the financial commitments.
 Risk of employee backlash and protests.
/ 2
(d) Explain why leadership is important in risk management.
No. Mark
1. Leaders show the way to a mob. Thus, a good leader could take the workforce to newer heights
whereas an inefficient leader could take them to the path of destruction.
/1
2. In order to manage an organization and its resources properly. Optimum use of resources is only
possible if there is a proper leadership at the helm of an organization thus, a proper leader will help
/1
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an organization in using its resources effectively and efficiently.
3. To deal with chaos and other problems in an organization. A leader is the one who will be calm and
composed even under tremendous chaos and shall show the correct path even under turbulent
situation.
/1
4. Showing an organization correct way to head to in the future. /1
Sub-total /10
Continued
Total /41
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Task 4: Manage Personal Work Priorities and Professional
Development
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4. Set
and meet
own work
priorities
One of the challenges we face in a workplace situation is time management.
Management theory on the subject began with the Pareto Principle, suggested that
only about 20% of the things we do produce 80% of the results we achieve. The
challenge than becomes to set time aside for the 20% that matters.
The theory was taken further with Stephen Covey’s Time management matrix.
(a) Describe Covey’s Quadrant 2.
Mark
To manage time effectively Stephen Covey have talked about four different quadrants.
Quadrant I is about urgent and important matters whereas quadrant II is about matters
which are not urgent but important. Thus, quadrant II is to include matters and activities
that are important and to be done however, there is no definite urgency for the activities
and matters in this quadrant.
/2
(b) List three of your work activities that should belong in Covey’s Quadrant 2.
Mark
I. Promotional and marketing activities.
II. Up-gradation of training manual for the employees.
III. Sending status reports to the clients on applications pending.
/3
(c) Suggest ways that you might utilize to ensure that proper time is spent on Quadrant 2
activities so that stress is avoided.
Mark
I. Proper knowledge of the business is important in order to assess the important
components of business that are to be included in quadrant I as these are
urgent as well as very important for the business. After that quadrant II shall be
compiled by including matters and activities that are important however, there
is no urgency in any of them.
/2
(d) Digital diaries are now available as both computer and mobile phone apps. Describe the
place of digital diaries in managing personal work priorities.
Mark
Digital diaries are very helpful to the management in allowing them to prioritise different
activities and works in an organization. Managing of personal works is also made easier
with the use of digital diary and since it is very easy to use and maintain the management
finds it as an efficient tool in managing and prioritising different activities.
/2
(e) Describe the importance of setting goals in terms of personal well-being.
Mark
Importance of setting goals is a way to keep a track of one’s progress. For most it
generally works but there is no guarantee that it will be beneficial for all. However, setting
goals help individuals to track their movements and progress in life. Suppose an individual
has set a goal of buying a home at the age of 30 when he was 20. This will help him after
10 years from the time when set himself the goal of buying a home to check whether he
has made enough progress and has he been able to achieve his goals that he set 10
years. Hence, this can also be referred as a way to assess one’s progress thus, it is quite
/2
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importance.
Sub-total /11
Continued
(f) What does Stephen Corvey recommend for “re-creation” (a Quadrant 2 activitiy),
Mark
Planning and preparation are the two most important factors for re-creation according to
the theory promulgated by Stephen Covey. The author has mentioned four different
quadrants, these are I, II, III and IV according to the urgency and importance of activities
and works. Re-creation mentioned in quadrant II is possible with proper planning and
preparation.
/2
(g) What are the common characteristics of work goals?
Mark
 Work goals should be specific.
 Work goals shall be measurable.
 The goals set should be realistic thus, achievable. There is no point in setting unrealistic and imaginative
goals.
 Works gaols should be time specific.
/2
Sub-total /4
Continued
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Task 4: Manage Personal Work Priorities and Professional
Development Continued
4.1. Develop
and
maintain
professional
competence
One of the outcomes of spending more time on Covey’s Quadrant 2 is that we
have more time for professional development. Desirable professional development
includes a range of activities begin with reading the morning press to undertaking a
degree course at university. Increasingly these days, it may also involve doing a
course through the internet.
Setting professional development goals is part of the goal setting we should
undertake in are working life. If we have personal goals we are more likely to make
things happen. Also, research suggests that goal setting relieves stress and
increases physical wellbeing.
Goal setting of this type is a Covey Quadrant 2 activity. As such it is something we
have to deliberately set time aside for. This may be easier over time because that
way it becomes more of a habit.
Ideas for professional development do not come out of a vacuum. You should be
prepared to seek advice from colleagues and other mortgage brokers.
(a) List three activities you might consider undertaking to increase your competency (in addition
to formal professional development training) to comply with ethical, legal and procedural
requirements.
No. Mark
1. Undergoing training on regular basis. /1
2. Staying up-to-date with latest information. /1
3. Acquiring knowledge to handle modern day technology. 1
(b) Describe how you can obtain ideas for professional development from (i) feedback and (ii)
competency standards.
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No. Mark
1. Feedback will help us to understand what the customers like and dislike and
accordingly, these should be used in the future to improve the performances.
/1
2. Competency standards provide guidelines to maintain the quality of performance as
required by the clients.
/1
(c) Where do you see yourself in three years time? List three skills or competencies you will need
to arrive there. Against each skill or competency nominated, suggest how you will attain it.
Mark
1. A successful entrepreneur. /1
2. Dedication.
Passion.
Education.
Knowledge.
Hard-work.
/1
(d) Suggest ways in which mortgage brokers may network to assist other mortgage brokers.
Mark
Use of information and technology to stay in touch and provide continuous feedback to fellow mortgage
brokers to keep them up-to-date with latest developments in the market is a way to assist fellow
mortgage brokers.
/2
Sub-total / 9
Total /24
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Task 5: Develop and Nurture Relationships with Clients, Other
Professionals and Third Party Referrers
5 Develop
professional
business
relationships
David Maistre has defined professionalism as an ‘‘… an unqualified dedication to
excellence in serving clients and their needs.’ This has important implications for
how client relationships are established and maintained.
Mortgage brokers are also able to develop and benefit from relationships with
other brokers because their main competition is not with each other. Rather, it is
the banks and other financial institutions.
Networking within the industry is therefore important.
Meeting other mortgage brokers requires much the same techniques as meeting
clients, other professionals and third party referrers. The relationship depends on
the development of rapport and the ability to contribute to the relationship in key
knowledge areas.
(a) What needs to be demonstrated at the outset in a client relationship? When is appropriate to
demonstrate competence?
No. Mark
1. Commitment towards the client is an important consideration which needs to be
demonstrated at the outset.
1/
2. Demonstration of competence is important at the time of finalization of a contract. 1/
(b) Imagine that you are explaining the function of mortgage broking to a client. What words
would you use?
Mark
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I. Easier to get access of loans with mortgage banking.
II. Reduced rate of interests for loans under mortgaged banking.
III. Timely payment of installments.
/2
(c) Explain the importance of a code of ethics in the relationship between a professional and
clients.
Mark
It is of huge importance to follow the code of ethics in the relationship between
professionals and clients. It will increase the confidence of clients on the professionals and
hence, it will be easier for the professional to convince the clients on buying or selling
different products.
/2
Sub-total /6
Continued
(d) Drawing on your own experience or the experience of a more experienced colleague or
manager, describe a situation where a need was identified to use language and concepts
appropriate to cultural differences. How was the need met?
No.
1. Obviously there are certain influence of regional and local languages in the place
business. It would be easier for professionals and business organizations to
operate and function with proper command over regional and local language as
it will help in dealing the local clients and other stakeholders. For example, in a
country like China it would very important to have proper knowledge of local
languages as they are generally considered weak in English.
1/
2. Taking lessons to learn such regional and local languages as are required by the
professionals to deal with clients will help in this regard.
1/
Sub-total /2
Continued
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Task 5: Develop and Nurture Relationships with Clients, Other
Professionals and Third Party Referrers Continued
5.1 Build and
maintain
business
networks and
relationships
For a relationship with a client to continue, they need an assurance of continuing
mutual benefit. The continuing mutual benefit is also important in relationships
with other professionals, including relationships with ‘outsiders’ such as
accountants, real estate agents and other professionals.
(a) List two others type of professional your organization uses to develop client relationships and
indicate in each case how it is able to provide them with a benefit in the relationship.
No.
1. I. Asking the clients to provide their feedback on regular basis on the services
provided by the clients, if necessary such exercise should be private to ensure
that the clients are able to express their opinions freely without any obligation.
II. Allowing modification in the services to satisfy the requirements and needs of
the clients.
/1
2. I. The clients’ feedback will be very useful to improve the client relationship as
the professionals will understand what the clients require.
II. Modification will be useful in creating products that are in accordance to the
clients’ liking.
/1
(b) Surveys indicated that two-way dialogue, or ‘conversation’ is of overriding importance in
developing client relationships, relationships with colleagues and also other professional
relationships. List four characteristics of this process.
No. Mark
1. Direct communication. /1
2. No place for any confusion. /1
3. First-hand experience in dealing with issues faced by clients without any layer. /1
4. Comprehensive. /1
(c) Other professionals that a mortgage broker might forms contacts with are referred to in
marketing literature as ‘Centres of Influence’ (COI). Why does David Maistre place them in
his ‘second tier’ in order of effectiveness. What activities in David Maistre’s first tier does your
organization engage in.
No. Mark
1. The importance mortgage products are most important as these are the subject matter on which
client and professional relationship based thus, contracts formed with other professionals by
mortgage brokers has been placed in second tier.
/1
2. The client professional relationship, the mortgage products, importance of code of ethics in
providing services to the clients.
/1
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Sub-total /8
Continued
(d) List four occupations and professionals that may become Centres of Influence.for your
organisation.
Mark
I. Accountants.
II. Law Firms.
III. Taxation authorities in the country.
IV. Banking personnel such as investment bankers, agents etc.
/1
Other
Sub-total / 1
Total /17
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Task 6: Promoting the Effective Use of Credit
Read the following scenario then answer the questions that follow.
Roslyn qualified as a schoolteacher some years ago, but failed to take up a teaching position
after graduating because she became a single mother. Fortunately, she has been able to live with
her widowed mother, but now that her daughter has reached school she is taking up a position as
a schoolteacher some suburbs away.
Because of the distance of her new school from her parent’s home she will need to buy a car.
After careful consideration, she has chosen a small hatchback that has an on-road cost of
$15,800.
She will be working full time with a starting salary of $50,000.
She knows little about finance and has come to you for advice. She would prefer to finance the
full cost of the car because she has little in savings.
Task 6.1.
(i) Suggest two financing options that Roslyn might consider.
(ii) Explain the main features of each.
(iii)Choose one of these options and explain your choice. Are there any disadvantages that need
to be considered?
No. Mark
1. First option: To finance 50% of the car value and down payment the balance 50%
at the time taking delivery of the car.
Second option: Make a down payment of 20% of the value of car at the time of
delivery and finance the remaining 80% of car’s value.
/1
2. In case the first option Roslyn will have to pay 6% per annum interest on the
outstanding amount. The outstanding principal amount shall be paid in 5 equal
annual installment with interest in addition.
/2
3. In case of second option the rate of interest will be 7.5% per annum on the
outstanding amount. The outstanding principal amount shall be paid in 6 equal
annual installment with interest in addition.
/2
Sub-total /5
Continued
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Task 6: Promoting the Effective Use of Credit Continued
Task 6.2.
Write a letter to Roslyn letting her know about your preferred, explain how she will make
payments and giving your reasons for choosing it as the option more clearly meeting her needs.
You should take care to proofread your letter.
Mark
Respected Roslyn,
Considering your financial condition and annual income it would be beneficial to you if
you chose first option as the total amount of payment would be much less under this
option and it suits your condition perfectly.
The comparative analysis in the following would help you understand the financial effect
of two options:
First option
Car price 15,800.00
Down payment 7,900.00 Total payment
Annual installment : 1 2 3 4 5
Principal 1,580.00 1,580.00 1,580.00 1,580.00 1,580.00
Interests 474.00 379.20 284.40 189.60 94.80
Annual payment 2,054.00 1,959.20 1,864.40 1,769.60
1,674.80 9,322.00
Total payment 17,222.00
Second option
Car price 15,800.00
Down payment 3,160.00 Total payment
Annual installment : 1 2 3 4 5 6
Principal 2,106.67 2,106.67 2,106.67 2,106.67 2,106.67
2,106.67
Interests 948.00 790.00 632.00 474.00 316.00
158.00
Annual payment 3,054.67 2,896.67 2,738.67 2,580.67
2,422.67 2,264.67 15,958.00
Total payment 19,118.00
Thus, by choosing the first financing option Roslyn would be able to save $1896.00.
Thus, Roslyn should opt for first option to finance her car.
/4
Task 6.3.
Roslyn is concerned that the lender will apply for a credit report. Explain:
(i) The procedure and cost involved in obtaining a copy of her credit file.
(ii) The right of a lender to access credit report information.
No. Mark
1.  Contracting a credit reporting body. /2
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 Provide necessary information to identify yourself to the credit reporting
body.
 Contact National Credit Reporting Bodies to get credit report.
 Generally the credit reporting agencies are required to provide a free credit
report copy to lenders at-least once a year.
 However, there are certain amount of fees often charged by professionals
to help clients out to get their credit report but it should be bare minimum if
any.
2. /2
Task 6.4.
Further information
Roslyn mentions that her mother’s washing machine has broken, and she urgently needs a
replacement washing machine. The cost is less than a thousand dollars and she plans to use her
credit card for the purchase. She tells you that she will make the minimum required repayment per
month until she pays the machine off.
Draft a letter to Roslyn providing advice about her plan.
Mark
Respected Roslyn,
It would be a beneficial to you if you exchange your existing washing machine with a new
one as this will reduce the amount required to acquire the new machine. Making maximum
down payment at the time of taking delivery would help you to reduce your monthly
installment to the minimum possible.
/2
Sub-total /10
Total /15
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Task 7: Prepare a loan application on behalf of mortgage broking
clients
Case Study — Evaluating and processing a loan application
Read the following case study then answer the questions that follow.
Ross and Melissa Cooper are a young couple who have been married for five years, during which
they have been renting an apartment while saving to buy an apartment of their own. They do not
have any children at this stage.
After some months searching, they have found a small two-bedroom apartment that suits their
needs. The purchase cost of the property is $480,000, and they have provided a deposit of
$60,000. You are recommending a standard variable loan.
Ross has been working at Gaines Consulting Pty Ltd. for 12 years and has a salary of $80,000.
Melissa has been working at Jackson Equipment Hire Pty Ltd for 8 years and has a salary of
$70,000. Neither has had previous employment, apart from casual work when they were younger.
The full details of Ross and Melinda that you have collected are as follows:
Applicant 1 Applicant 2
Loan purpose Purchase home (owner occupied)
Amount and type of loan sought $480,00, standard variable rate
Deposit $60,000
Address Unit 2, 27 High St.,
Mackville, NSW. 2080
Unit 2, 27 High St.,
Mackville, NSW. 2080
Status Renting Renting
Years there 5 years 5 years
Contact details Phone (W)
Phone (H)
02 9200 1111 (w)
02 9400 9900 (h)
02 9310 2000(w)
02 9400 9900 (h)
Mobile [phone] 960 000
Email [e-mail] [e-mail]
Number of dependants Nil Nil
Employment Gaines Consulting Pty. Ltd Jackson Equipment Hire Pty Ltd
How long? 12 years 8 years
Gross income ( p.a.) $80,000 p.a. $70,000 p.a.
Credit history Personal loan to purchase a car — since
repaid.
Personal credit card with Central Bank with
a limit of $3,000. Current balance: $300
Personal credit card with Northern with a
limit of $2,000. Current balance: $300
Store card with Wilson’s Department Store.
Current balance: S250
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Note: All credit cards are repaid in full when
due.
Note: All credit cards are repaid in full when
due.
ASSETS AND LIABILITIES
Assets Liabilities
Details Market value Details Monthly
payments
Amount owing
Cash at bank $15,000 Credit card limit:
$2,000
$3,000 $300
Deposit paid on
property
$60,000 Credit card limit:
$3,000
$2,000 $300
Motor vehicles:
1.
2.
$15,000
$7,000
Other:
Personal effects $30,000
Business value Nil
Total assets $127,000 Total liabilities $600
Surplus/deficiency: $126,400
OTHER DETAILS:
They are seeking a loan term of 25 years. Other requirements are:
 proposed settlement date — 6 weeks time
 ability to make additional payments from time to time without penalty
 monthly repayments
 redraw facility.
The applicants will have no other financial commitments other than their monthly mortgage
commitments, rates and utility costs and strata fees.
The current variable home loan rate is 6% pa.
Note: For the purposes of this assignment, any first home purchase assistance should be
ignored.
OTHER INFORMATION
APRA is concerned that interest rates may rise and because of this it is requiring all lenders to
“stress test” all housing loans at a borrowing rate of 7% p.a.
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Task 7.1.
Apart from requiring the presentation of a Credit Guide, the NCCP Act says nothing about what a
mortgage broker should say about him/herself at the beginning of a client interview. In the space
below, make a few brief points about what you would say about yourself and your firm at this
stage. Remember that at the outside the client is primarily looking for assurance that the broker is
concerned about them and their interests.
Mark
The most important consideration on the premise of which our organization has been set
up is to give the interests of the clients first and foremost priority. Since our business is
established the one and only motto that have remained unchanged till now is to provide
highest quality of brokerage services to the clients ensure their interests get paramount
importance. All necessary measures will be used to ensure that the clients get the best
possible financing deal at lowest possible associated costs.
/2
Task 7.2.
List in point form the important information a Credit Guide conveys to the credit applicant.
Mark
 The rate of interests on financing amount is variable and can change any time depending on the
changes and circumstances of financial market.
 The lenders have to fulfil the terms and conditions attached with the loan documents.
 There should not be any default in repayment of loan.
 In case of any default in repayment of loan the financial institution will have the right to take necessary
actions against the defaulting parties under the provisions provided in respective legislations applicable
to such financial transaction.
 The applicant should read the terms and conditions clearly and understand them properly before taking
loans from financial institutions.
/3
Task 7.3.
Under the Anti-money Laundering and Counter-terrorism Financing Act 2006 (AML/CTF Act),
mortgage brokers are required to establish the identity of their clients. To do this they must cite
original copies of at least three primary documents and one secondary document. List three
primary documents and one secondary document below.
Mark
Under the Anti-money Laundering and Counter-terrorism Financing Act 2006 (AML/CTF Act), to establish
the identity of the clients the mortgage brokers must provide the following documents of the clients:
Primary documents:
I. Australian full birth certificate.
II. Australian passport.
/3
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III. Certificate of Australian citizenship.
Secondary documents:
I. Medicare card of the client / clients.
II. Bank statements from an Australian bank containing relevant details related to banking
transactions of the client.
Sub-total /8
Continued
Task 7.4.
Mortgage brokers should present adequate information to clients to enable them to make a
choice between loans. This involves conducting research to determine suitable loans and
presenting clients with a choice among, say, three loans that are considered to be suitable for the
client’s requirements. The characteristics of the three selected loans are then presented to clients
in a way that allows a comparison to be made. The presentation may be made a piece of paper,
or other means such as a Powerpoint overhead.
You are now required to use the internet or other sources to choose three loans that you believe
will meet the requirements of Ross and Melissa. The relevant details should be placed in the
spaces provided.
Mark
Credit Provider ANZ Bank
Bank of
Queensland
Limited
Commonwealt
h Bank
/6
Product Name Home Loan Home Loan
Home Loan
Interest Rate Type (%) 6% per annum 6.5% Per
annum
7% per annum
Comparison Rate (%) 4% 4% 4%
Minimum Loan Amount ($) $240000 $260000 $300000
Maximum Loan Amount ($) $500000 $540000 $580000
Minimum Loan Term 5 Years 5 Years 5 Years
Maximum Loan Term 25 Years 25 Years 25 Year s
Maximum LVR (%) 50% 60% 70%
Maximum Insured LVR (%) 25% 30% 35%
Mortgage Offset Account
(Yes/No) No Yes
Yes
Loan Redraw Facility (Y/N) Yes Yes No
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Split Loan Facility (Y/N) Yes No No
Fixed Interest Option (Y/N) No No No
Task 7.5 (a)
Explain significant features of the loan products that you have chosen in words that the client
would understand. Your answer should be restricted to features relevant to the clients.
Mark
The loan products of from three different banks have different characteristics. The amount
of interests is lowest in case of ANZ bank at 6% per annum whereas it is highest with 7%
for Commonwealth Bank. However, the highest amount loan that the clients can obtained
is also from Commonwealth banks which is $580000.00 though considering the
requirement of loan is only $480000.00 it is immaterial to provide loan in excess of the
required amount. Another important factor is the LVR percentage and with 70% LVR
Commonwealth Bank is providing highest value in this case. Except ANZ Loan both other
banks are providing mortgage offset accounts. None of the banks are providing the benefit
of fixed interest option with their loan products.
/2
Sub-total /8
Continued
Task 7.5 (b)
Credit providers always have other fees and charges beyond their stated interest rates. Select
one of the loans you have set out in Task 7.4 as the one preferred by Ross and Melinda, and
explain any additional fees and charges in a manner that your clients can understand.
Mark
Based on the above three loan products for financing the desired hose of Ross and
Melinda it would be important to advise them to use the most preferable loan product from
the financial point of view of the clients, in this case Ross and Melinda. Considering that
all the loan products are fulfilling the requirements of the clients in terms of required
amount since the maximum amount of loan in all the cases are in excess of the required
amount of loan only the product which is going to benefit the clients from financial point of
view should be selected. Considering that the interest rate is lowest with 6% per annum
on the loan product offered by ANZ the clients would be inclined towards using the loan
product of ANZ bank to finance their house. However, other terms and conditions are also
to be assessed and verified before suggesting the best possible scenario for the clients as
far as financing the house is concerned. However, none of the other terms and conditions
provided in the loan product of ANZ bank are detrimental to the financial interests of the
clients hence, the advice to Ross and Melinda would be to take loan from ANZ bank to
finance the house. Apart from the interest the client will have to pay loan processing fees
to the bank.
/2
Task 7.6
It is important to verify the information that you obtain from clients, particularly information that
relates to income. List the documents that you should ask for and then examine to verify the
incomes of Ross and Melissa.
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Mark
I. The income tax returns filed by both Ross and Melinda should be asked and
verified to examine the actual incomes of the clients.
II. The salary slips of the clients, if provided by the companies where they work.
III. Details of other incomes such as rent, interest on deposits etc.
IV. Up-to-dated bank statements of the clients.
/3
Task 7.7
In dealing with clients, it is important to explain technical concepts in ‘plain English’ so that they
understand them. In the first two spaces below, explain the terms ‘LVR’ and ‘insured’ LVR’ in
terms that that your clients will understand. Then, in the third space, explain how Lender’s
Mortgage Insurance is normally paid, once again expressing yourself in a way that the clients are
likely to understand.
No. Mark
1. Loan to Valuation Ratio is referred to as LVR in short. It is the valuation of a
mortgaged assets in proportion to the loan amount.
/1
2. Insured LVR is the absolutely certain amount that one will get from mortgaging a
particular.
/1
3. Lender’s mortgage insurance depends on the amount of loan and valuation of the
mortgaged assets and paid before taking loan from financial institution.
/1
Task 7.8
Mortgage brokers assist their clients to complete their preferred lender’s credit application form,
as well as applications for the First Home Buyer’s Grant and (where applicable) stamp duty
exemption. Examples of these forms are set out over the following pages and you are required to
complete them on behalf of Ross and Melissa. Remember that each form must be signed by the
client, so facsimile signatures must be attached,
Mark
The forms for the following pages can be found at: http://www.pwloans.com.au/ANZ
%20full%20application.pdf
http://www.osr.nsw.gov.au/sites/default/files/file_manager/ofh001.pdf (application form
only) http://www.osr.nsw.gov.au/sites/default/files/file_manager/oda066.pdf ((application
form only)
/15
Sub-total /23
Continued
Task 7: Prepare a Loan Application on Behalf of Mortgage Broking
Clients Continued
Task 7.9.
It is important to keep clients informed about the steps involved in the credit approval process.
Indicate how your organization keeps your client informed as the loan application proceeds. What
are the likely normal time intervals for each step that you explain to your clients.
No. Mark
1. Communicating the application status by using through phones on regular basis to
make sure that the applicants are aware of each and every development. As soon
as any new development happens to an application it should be communicated
with the applicant. A time interval of 7 days is considered appropriate.
/2
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Task 7.10
Assess the loan application of Ross and Melissa Cooper against the five C’s.
a) Character
How would you assess the applicants’ character?
Mark
In order to assess the character of the applicant all relevant details available about the
client are examined and verified. In case of any prior loan taken by such applicant the loan
repayment scheduled and history is checked.
/2
b) Capacity
(i) What will the applicants’ monthly payment be, given the current variable lending rate of
6% p.a.? (Hint: visit a website such as: http://www.yourmortgage.com.au/calculators/).
(ii) Using the ‘income percentage method’, assess the applicants’ capacity to repay the loan
(25 words)
No. Mark
1. The monthly payment of the applicant will be $3130.00 (aaprox.) assuming that the
whole amount of $480000 will be financed by taking loan @6% per annum interest.
/1
2. Monthly payment of $3130.00 is approximately about 25% of the combined income
of the applicants, i.e. Ross and Melissa. Considering that even after combining the
incomes of both the applicants the monthly payments still stands as high as 25% of
such combined incomes it would be a challenging prospect for the applicants to
repay the loan without any default. However, it is also to be said that if proper
planning is made then it is very much probable to repay the whole loan without any
default.
/1
Sub-total / 6
Continued
Task 7: Prepare a Loan Application on Behalf of Mortgage Broking
Clients Continued
c) Capital
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(i) How would you verify the equity the applicants intend to contribute to the purchase?
(ii) What should you be careful about regarding this contribution? (50 words)
No. Mark
1. Equity is the capital that is used in a business. However, it can also be referred to
as the own contribution of a prospective buyer in an asset, in case the asset is
partly acquired by own capital and partly by borrowed capital.
/1
2. The proposed contribution to be made by an applicant / applicants should be free
from any encumbrance, there should not be any issue with the contribution to be
made by the owner / owners. Generally it is in cash however, in case the equity is
in the form of any asset then proper valuation of such asset shall be made.
/1
d) Collateral
(i) Assuming the valuation placed on the property is $480,000, calculate the loan to valuation
ratio (LVR).
(ii)Given the LVR that you have calculated, what steps might the bank take to protect its
position? (25 words)
No. Mark
1. In that case the LVR is 100% /1
2. Shall keep itself up-to-dated about the value of the property and in case of any
particular incident having negative impact on the valuation of such asset necessary
steps shall be taken to reverse the trend.
/1
e) Conditions
Using the information that has been presented, identify any ‘conditions’ that might impact on
this loan application. How should they be handled?
Mark
In case of any misinformation provided in the application then there can arise number
complications with such loan application
/2
Task 7.11
What is your organization’s policy about notifying applicants of the outcome of their application?
Mark
Standard telephone calls are made at first. Then registered letter in the addresses are
circulated to formally let the applicants aware of their application statuses.
/2
Sub-total /8
Continued
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Task 7.12
The credit application that is forwarded to the credit provider is accompanied by supporting
documentation used to verify the information concerning the financial position of the client. List
four types of document that are likely to be forwarded. In the case of Ross and Melissa Cooper.
No. Mark
1. Income tax returns /1
2. Bank Statements /1
3 Salary slips /1
4. Rent receipts /1
5. Investment income related documents such as dividend warrant etc. /1
6. Other documents /1
Task 7.13
What should be the rules regarding access to client files?
Mark
The clients’ files should be stored in safe and secure place and only those who are
dealing with the case shall be allowed access to these flies. No one other than those
working in the case should be given any access to these files. Proper lock shall be
installed in cabinets and safes to ensure unauthorized persons do not get access to these
documents.
/2
Task 7.14
There are times that you might suggest to clients that they should have a fixed interest loan for a
period. Explain why you would do this.
Mark
Often there is too much fluctuation in financial market, a steady earner would not
like that whether the fluctuation in favor or against it is not a good position to be in.
Hence, in most of the cases where the applicants are of the view that it is better to
have fixed rate of interest for loans then necessary efforts shall be put in to ensure
fixed interests rate loans are provided to them.
/1
Task 7.15
List the information you should include on a client file.
Mark
The personal details of the client.
The financial details of the client.
The communication related details of the client.
/2
Sub-total /11
Continued
Total /79
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Task 8: Steps Taken by the Credit Provider
8 Build and
maintain
business
networks and
relationships
As indicated, the process of interviewing a client, carrying out a preliminary
assessment, and forwarding a credit application to a credit provider should take
no longer than two days. The credit provider’s task, however, is more involved
and takes longer because there are more matters to consider than the final
assessment, which is normally carried out soon after the credit application has
been received from the mortgage broker.
These matters include having the security valued and negotiating any additional
support, checking all details, preparing an offer letter, preparing security
documentation, having the loan documentation signed, attending settlement,
registering the mortgage and having the mortgage documents stamped.
The offer letter is in fact the loan contract the mortgage broker becomes involved
once again – to check that the requirements of the loan purpose are met and to
ensure that the client understands all terms and conditions.
Task 8.1.
The final assessment of the credit application is carried out by an officer of the credit provider, or
at a higher level if that officer’s authority is exceeded. What is that officer’s responsibility in terms
of the NCCP Act.
Mark
To check whether the applicant has fulfilled the minimum requirements under NCCP Act and
thus, should the application be granted.
To check whether the client has the ability to repay the loan from his / her existing income.
To check whether the client has any previous defaulting records in repayment of loans.
The credit report file of the client should be checked for any default.
/2
Task 8.2.
Give examples of the information that the mortgage broker may be asked to obtain at the time of
the final assessment.
Mark
The actual value of the asset at present.
The current value of the asset in the market at present.
The expected fluctuations in value of the assets and the resultant impact on the value of the
assets.
/2
Task 8.3.
Sometimes additional support, such as a third party guarantee is required in housing loans.
Indicate when such support may be required and the matters about which the credit provider
should seek to be satisfied. How is the required evidence about those matters normally obtained?
No. Mark
1. In case the income of the applicant is not sufficient to meet the loan requirements. /1
2. The financial health of the guarantee provider and his / her ability to repay the loan
in case the applicant fails to discharge his / her obligation.
/1
3. By verifying the income tax returns, bank statements of the guarantee provider. /1
Sub-total /7
Continued
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Task 8.4.
Distinguish between the credit provider’s final assessment and the credit review carried out by
the credit provider?
Mark
Credit provider’s final assessment is the ultimate judgment on the ability of an applicant in
repaying the loan and thus, generally this determines whether the loan application will be
sanctioned or not.
Review is the process which allows the credit providers to collect necessary evidence on the
basis of which the final assessment is made.
/3
Task 8.5.
List five of the checks the credit provider would normally perform before preparing an offer letter.
No. Mark
1. Checking the income details of the applicant. /1
2. Verifying the income tax return of the applicant. /1
3. Verifying the bank statement of the applicant. /1
4 Verifying the other income related documents submitted by the applicant. /1
/1
Task 8.6.
Why do mortgage brokers become involved once again when the offer letter is forwarded to the
client? What legal responsibility under the NCCP Act leads to this involvement?
No. Mark
1. Because this is the final stage before sanctioning of the loan and the amount of
commission to the mortgage broker will be decided at this stage.
/2
2. Mortgage broker needs to keep record of the final decision as to sanction of loan. /2
Task 8.7.
List four other matters relating to the offer letter that the mortgage broker should check.
No.
1. The amount of loan to be sanctioned.
2. The rate of interest to be carried on the loan amount.
3. The repayment period and schedule.
4. Other terms and conditions attached with the loan. /1
Sub-total /13
Continued
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Task 8.8.
Imagine that you are the client’s solicitor writing to the client. In words that the client is likely to
understand explain: what happens at settlement; how funds are normally disbursed following
settlement; and how the title document is registered.
No. Mark
1. At settlement a lump sum amount has to be paid by the client to the credit provider
to settle the accounts between the two.
/1
2. Funds are generally deducted from accounts of the client or online transfer is being
made.
/1
3. The title document is registered as soon as the settlement takes place. /1
Sub-total /3
Total /23
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