Certificate IV in Finance and Mortgage Broking Assessment Task

This assessment task is for Certificate IV in Finance and Mortgage Broking. It covers identifying and interpreting compliance requirements, delivering and monitoring a service to customers, contributing to OHS hazard identification & risk assessment, managing personal work priorities and professional development, developing and nurturing relationships with clients, other professionals and third party referrers, promoting the effective use of credit, and preparing a loan application on behalf of mortgage broking clients.

Certificate IV in Finance andMortgage 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 Total
Mark
Pass
Mark
Actual
Mark
1 Identify and Interpret Compliance Requirements 27 19
2 Deliver and Monitor a Service to Customers 39 27
3 Contribute to OHS Hazard Identification & Risk Assessment 41 29
4 Manage Personal Work Priorities and Professional Development 24 17
5 Develop and Nurture Relationships with Clients, Other
Professionals and Third Party Referrers
17 12
6 Promoting the Effective Use of Credit 15 10
7 Prepare a Loan Application on Behalf of Mortgage Broking
Clients
64 45
8 Steps Taken by the Credit Provider 23 16
Total 250 175
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 forFNS40811 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 broker do to comply with the unsuitability test?
No Mark
1. To make reasonable enquiries about the borrower’s requirements and objectives /1
2. To make reasonable enquiries about the borrower’s financial situation /1
3. To take reasonable steps to verify that financial situation /1
(b) List the sorts of items a client’s requirements and objectives could include (as indicated by
ASIC).
Mark
As indicated by ASIC inquiries concerning requirements and objectives include:
1. The amount of credit needed or the maximum amount sought;
2. The timeframe for which it is required;
3. The purpose and benefit sought; and
whether the consumer seeks particular product features or flexibility, and understands the costs of
these features and any additional risks.
/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
Australian financial system is regulated is that industry associations are encouraged by ASIC to
draw up codes of conduct that can be used as a guide to legal and ethical behaviour. The
industry associations that draw up the codes of conduct have minimal disciplinary powers, but
the codes have legal force in that the courts and external disputes resolution schemes such as
the Financial Ombudsman Service (see below) treat them as being guides to correct behaviour
that are binding on members and non-members alike.
FALSE AND MISLEADING CONDUCT – Misleading and deceptive conduct and false and
misleading representations by corporations in trade or commerce are prohibited under the
/4
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Australian Consumer Law (ACL). A court may impose monetary penalties, grant injunctions to
prevent the prohibited conduct continuing or being repeated or to require that some action be
taken such as cancellation of contracts and an award of damages. The offence also overlaps
with fraud under criminal law, so fines and jail sentences may also be imposed.
Sub-total /9
Continued
(d) In point form, list the key information that the NCCP Act requires to be contained in a Credit
Guide.
Mark
The credit guide must be in writing and include:
1. The licensee’s name, contact details and Australian credit licence number;
2. Details on any fees and charges payable by the consumer
3. Details of any commissions likely to be received from the lender;
4. The names of the licensee’s six main lenders;
5. Details regarding complaint handling, including contact details of internal and external
dispute resolution processes;
6. Information about the licensee’s obligation to provide a written copy of an unsuitability
assessment upon request.
/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
To Keep up to date with compliance requirements
Professional Association of Australia
1. MFAA – The Mortgage Finance Brokers of Australia
2. FBAA – The Finance Brokers Association of Australia inform their members of
changes to requirements before they happen. The professional associations code
of practice can also be used as a sound guidance to compliance requirements.
/3
(f) Explain the requirement for Australian Credit Licensees to keep a training register.

Mark
ASIC requires a business’s compliance measures to be documented although it acknowledges that
the level of documentation will vary from detailed policy and procedures manuals in larger
organisations to checklists in smaller organisations.Once a compliance system has been
established, it is implemented and maintained. Training has an important function in this process,
/2
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but it is not enough on its own. Compliance and ethical behavior must become a dominant value of
the business
(g) Explain APRA’s current attitude towards bank lending for investment properties.
Mark
Australian Prudential Regulation Authority (APRA) introduced restrictions that have impacted
lending for investment purposes. The banks have responded to the APRA changes by changing
serviceability requirements on investor loans; making it more difficult for investors to gain finance.
Borrowing capacity has been downsized, interest rates have risen and the repayments on existing
debt are assessed at a much higher rate.
/2
Sub-total /10
Continued
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
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1. Find a lender /1
2. Complete the loan application. /1
3. Submit the loan application to the bank,and wait for the approval. /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. ASIC- Application-specific Integrated Circuit /1
2. ACL – Australian Consumer Law /1
3. NCCP – The National Consumer Credit Protection ACT 2009 /1
(c) How does your organisation monitor your compliance?
Mark
Carrying out audits and monitoring on compliance areas and procedures is both an essential
business function and an ASIC regulatory requirement. The only way to ensure that processes work
is to audit them and assess the results, carrying out gap analysis and reviews on a frequent and
rolling basis. It is also important for a business to have regular, perhaps annual, compliance reviews.
Essential components of a compliance review include a review of the licensee’s policies and
procedures and a check of client files to make sure that the policies and procedures are being
followed.
/2
Sub-total /8
Total /27
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
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Empathy is the capacity to understand or feel what another person is experiencing from within their
frame and reference i.e., capacity to place oneself in another’s position.
/1
(b) List three open-ended questions that assist in developing empathy with a client? How do such
questions indicate empathy?
No. Mark
1. What makes you think it may be time for a change?
2. So, what’s going on?
3. How’s business?
/2
These open Questions provide information about needs and wants, and this is information
that any mortgage broker must have. /1
(c) List and explain the steps involved in an ‘active listening approach’.
Mark
Ask Questions - Find out about needs and wants of the client.
/1
Go BACK - Restate what the client has said about his or her needs to be sure the relevant details have been
heard and understood and to encourage the speaker to proceed further. The client’s thoughts and feelings
can then be used as a lead-in to further questions.
/1
SUMMARISE - to make sure both sides agree on the facts.
/1
(d)How is client service commonly monitored in your organisation? What are the two possible
outcomes?
No. Mark
1. Questionnaires /1
2. Client Surveys /2
Sub-total /10
Continued
Task 2: Deliver and Monitor a Service to CustomersContinued
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 Maisteras ‘over-
servicing’.
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(a) Describe three ways in which a mortgage broking organisation can attempt to ‘overservice’
clients?
No. Mark
1. Meeting up with the clients on a frequent basis in order to listen to their concern. /1
2. Provide wishes and birthday gifts and greets to the client on their birthday, anniversary etc. /1
3. Making the clients aware of the new products that have been launched and the changes that are
taking place in the market.
/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. The time lapse between interviewing the client and forwarding the credit application to the
credit provider, along with the advice to the client, should not be longer than two days
/2
2. It is important that the information should be passed on to the credit provider in a timely
manner. The key word is promptly, as soon as practicable after completion of the
preliminary assessment – on the same day if possible
/2
(c) Describe how you might attempt to resolve conflicts with clients.
Mark
1. Don’t react,respond
2. Let your position go
3. Focus on the other person
4. Seek Clarity
5. State your position.
Recognise the situation that is developing and immediately change the pattern by developing a
non-aggressive approach. Then change the situation from an adversarial struggle to a situation in
which both sides can win. This is commonly referred to as a “win win” situation.
/2
(d) How do you can prepare clients for the hiccups that can happen while their credit application is being
processed
Mark
Provide the borrower with interim updates, if practicable. Do not ask the borrower to provide
unnecessary information, particularly information that is not strictly relevant or which the lender
already has in its possession.
/2
Sub-total /11
Continued
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(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. New products are introduced from time to time, and features of existing products may
change. Mortgage brokers need to be alert to any information regarding change from
product providers, with information being disseminated through such means as team
meetings and seminars.
/2
2. Brokers should also be prepared to discuss the different products with theirs clients and
point out their different features so that an informed choice can be made.
/2
(f) How could you prepare yourself to deal with client concerns?
Mark
Sometimes it exists in the form of concerns about the broker or resistance to product terms such as
the interest rate. At other times it takes the form of a more formal complain. Either way, there is
resistance that needs to be overcome as best as possible. Once the need for a win win situation is
recognised and a more normal conversational tone and speech pattern have been adopted, if that
is required, the challenge is to make the win win outcome happen.
/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
1. A broker owing a customer a duty if their negligence results in them tripping over a piece of
carpet. Likewise, they owe a customer a duty of care if advice that is negligently provided
causes them financial harm.(breach of the duty of care)
/1
2. A situation there may also be more fraudulent activity such as providing a false occupation
and forging documentation.(false and misleading conduct)
/1
3. The Business not giving the applicant enough time to, read an agreement, ask questions or
seek advice; and not disclosing or explaining the key terms of a contract. (unconscionable
conduct)
/1
4. Conflict of interest is where a mortgage broker recommends a specific financial product
because it allows them to obtain a larger commission, even though the product is
unsuitable for their client.(conflict of interest without disclosure)
/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
By working with ideal clients, brokers are more likely to have the level of concern that is an
essential quality of professionalism. They are also more likely to develop the communication
with clients that leads to “engagement” – that is, a longer-term relationship that comes from
personal connection.- Look at your own ethnic and social background, the types of people you
/2
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grew up with and the types of people you went to school with. Considerations such as this
should lead you to the types of people you prefer to deal with. Likewise, it may be that you are
the sort of professional that they prefer to deal with.
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
Mortgage brokers need to be alert to any information regarding change from product providers, with
information being disseminated through such means as team meetings and seminars. Also, if
necessary, training programs should be put in place to ensure that changes are properly
understood.Subscribe to online news letters such as Mortgage Choice, ING
Direct, Brokernews.com.au etc. All up to date news on product changes can be e-mailed to all staff
then presented at meetings. Brokers should also be prepared to discuss the different products with
theirs clients and point out their different features so that an informed choice can be made.
/2
(j) What are the procedures for dealing with client complaints in your organisation?
Mark
- Listen to the complaint.
- Accept ownership of the problem.
- Be understanding. Remember, the person is complaining about your business, not about
you personally.
- Record the complaint. Make sure you have all the facts.
- Discuss options for fixing the problem.
- Keep your promises.
- Be quick and Follow up regularly.
/2
(k) What normal protocols should for protecting the confidentiality of client files?
Mark
All client information is confidential, all client records will be stored in a secure environment at all
times. Only authorised staff will have controlled access to client information/records. Client records
are the property of the organisation, but clients may have supervised access to their own records
following written a request, either by mail or electronically, and authorisation by the general
manager, independent living services.
/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/SW08367-
1117-395314.pdf
Other ‘Tip Sheets’ from the same website may also be useful.
(a) How would you define workplace stress?
Mark
- Struggling to keep up or cope with Demands of the jobs within the workplace.
- Employees indicate that they are unable to have a say about the way they do their work
(lacking control).
- Employees indicate that they are subject to unacceptable behaviors at work especially
bullying.
- Employees indicate that the organization engages them frequently when undergoing an
organizational change.
/4
(b) Suggest at least two ways in which work-related stress may affect client relationships.
Mark
- Conflict may increase
- The quality of relationships may decline -client satisfaction may be reduced
/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
Track your Stressors - Keep a journal for a week or two to identify which situations create the most
stress and how you respond to them. Record your thoughts, feelings and information about the
environment, including the people and circumstances involved, the physical setting and how you
reacted
Notice-Keep an eye on your colleague’s mental health. Has there been a change in their behavior
or are they complaining more often than usual.
Be supportive-Keep an eye on your colleagues and be mindful of their workloads. Sometimes just
asking a co-worker if they need help will make them feel better and more supported by the team.
Develop Healthy Responses - Instead of attempting to fight stress with fast food or alcohol, do your
best to make healthy choices when you feel the tension rise. Exercise is a great stress-buster.
/4
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Take time to recharge- To avoid the negative effects of chronic stress and burnout, we need time to
replenish and return to our pre-stress level of functioning. This recovery process requires “switching
off” from work by having periods of time when you are neither engaging in work-related activities,
nor thinking about work.
Get some support - Accepting help from trusted friends and family members can improve your
ability to manage stress. Your employer may also have stress management resources available
through an employee assistance program, including online information, available counseling and
referral to mental health professionals, if needed
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 demand is the extent to which the environment has certain stimuli that essentially require attention and
response. It is seen that demands are the things that have to be completed. Job demands have been the
psychological, physical, social or the organizational elements of the job that need sustained physical
effort and hence related with certain physiological expenses.
Job resources addresses to those psychological, physicaland communal or the organizational elements of
the job that looks to reduce the demand for the jobs and the related costs, stimulate the personal
development, learnings and growth and even are functional in attaining the work objectives.
/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. Health risk: These are the risks associates to the health issues related to the employees and this can
have adverse impact on the operational activities of the company.
/ 2
2. Occupational Risks: This relates to the risk that takes place due to the operational activities that takes
place in the company and therefore these risks need to be mitigated in order to maintain
effective performance of the company.
/ 2
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Sub-total /8
Continued
Task 3: Contribute to OHS Hazard Identification & Risk
Assessment Continued
3.2Contribute
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. Interactive session within the working environment should be started with the help of which stress
from the employees can be mitigated.
/ 1
2. Providing leaves to the employees at least once in a month in order to reduce their mental distress
and provide relaxation.
/ 1
(b) Select one of the job resources listed and suggest how you could apply it in your work
situation.
Mark
Interactive sessions can be initiated and this can be done by the management by taking sessions with the
employees by undertaking informal interactions and discussions on informal topics in order to freshen
the mind of the employees and divert them from the day to day work.
/ 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
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The risk that has been identified has been the satisfaction level of the
employees. The employees have a significant role to play with the help
of which the effectiveness of the company can be maintained. Hence,
plans and strategies need to be initiated with the help of which the
better employee benefits can be given and accordingly these issues
can be mitigated and the performance of the company can be
enhanced.
/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. The triple bottom line, sometimes referred to as “3BL”, takes into account three criteria for
assessing organisational performance:
- social (people);
- environmental (planet); and
- financial (profit).
/ 2
2. The financial or economic performance of an organisation is the easiest of the three criteria
to measure accurately.
The social criteria of the triple bottom line takes into account the impact that a business has
on people within the business (employees) and people outside of the business (the
community). Social factors that might be considered include labour utilisation and wages,
working conditions and contribution to community living standards.
Environmental performance is concerned with a business' total impact on the natural
environment. The social and environmental sides may be reported as verbal accounts rather
than in financial terms, but their reporting still recognises the importance of all risks being
considered in management decision-making.
/ 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
The bank that has been selected is ANZ Bank and the bank in their
annual report has a sustainability report section where they have
mentioned that they take care of the environment and therefore look to
plant trees and spread awareness about the maintenance of the
environment with the help of which sustainability can be maintained.
The bank has their plans and policies and take the initiation of taking
care of the environment as well.
/ 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
The state government provides assistance in accordance to the environmental protection
that is undertaken by the business organization by providing tax concessions on the
/ 2
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activities and the actions that are taken by the company in order to spread awareness
regarding the environment in the society and the government even acts as a sponsor to
the events related to environment awareness that are undertaken by the company.
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
- Creates space for giving each other feedback-Learning and improve opportunity
- Great for Building Supportive relationships
- Allows attendees to lift their head out of day-to-day operations
/ 2
(b) Consider your own role in team meetings and describe the approach you and other members
should take to information sharing.
Mark
Team members should always speak clearly and give sound and logical reasoning for their
opinions. They are also always polite in their behaviour and way of speaking. Using a rude tone or
negative body language is likely to creative negative feelings in the team.
If behaviour is being corrected it is better to concentrate on the form of behaviour rather than the
character trait leading to it. Such an approach is much less likely to cause offence. It is also far
more likely to create change.
For example, telling someone that they lack initiative is likely to cause offence. Highlighting that
they rarely identify the risks that are apparent in their
/ 2
(c) Give examples of the types of risks that should be considered in all team meetings.
Mark
The kind of risks that needs to be taken into consideration in all team meetings are:
 Maintenance of respect among the members during the meeting
 Lack of communication among the members of the meeting
 The unavailability of active listening among the members during the meeting
 Improper sharing of the information of the decisions that are taken in the meeting
/ 2
(d) Explain why leadership is important in risk management.
No. Mark
1. Behaviour of the leaders determine the tolerance and culture of the company /1
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2. Helps in the integration risk management in the organizational culture /1
3. Leadership helps in the maintenance of work ethics /1
4. Establishes the working environment /1
Sub-total /10
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
Not Urgent – Important. These are the things that matter in the long-term but will yield no tangible
benefits this week or even this year. They are things we know we need to get to but probably will
push off. It is having a lunch with an important contact or client. This is relationship building.
/2
(b) List three of your work activities that should belong in Covey’s Quadrant 2.
Mark
- Set goals
- Write personal mission statement
- Engage in professional development
/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
1. Work with Colleagues
2. Exercise
3. Having a Lunch with an important Client
/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 play a significant role in the management of the personal work priorities because of the fact
that these diaries would be helpful in the maintenance of the schedule so that proper time and record
can be maintained and an alarm can be set so that the work priorities would be highlighted to the
individual at the correct point of time.
/2
(e) Describe the importance of setting goals in terms of personal well-being.
Mark
Rhonda Addams, a small business planning consultant, has two rules that sum up the essence of
goal setting: 1. You can’t reach a goal you haven’t set 2. If you want something, you also have to
“do” something”. Never underestimate the importance of goals. Setting goals increase our feeling of
wellbeing.
/2
Sub-total /11
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Continued
(f) What does Stephen Corvey recommend for “re-creation” (a Quadrant 2 activitiy),
Mark
Quadrant 2 Activity
- taking breaks, such as a lunch break, a weekend, a holiday;
- having an outlet, such as socialising, reading or having a hobby;
- exercising, eating a health diet and getting plenty of sleep.
/2
(g) What are the common characteristics of work goals?
Mark
- Specific;
- results-focussed;
- measurable;
- realistically attainable;
- relevant; and
- have a timeframe for accomplishment
/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. Reading relevant publications, trade newspapers, magazines, and newsletters is another
way to learn about industry and becoming aware of business opportunities.
/1
2. Read or listen to financial news. Mortgage brokers, for example, need to know what is
happening to interest rates and what their main competitors – the banks – are doing. If
brokers are properly in tune with their industry they will pick up relevant information in the
daily newspaper or TV news.
/1
3. Join a professional association and receive its eNewsletters, which are sometimes provided
on a daily basis. Amongst other things, this is a good way of keeping up with changes in
legislative and regulatory requirements.
/1
(b) Describe how you can obtain ideas for professional development from (i) feedback and (ii)
competency standards.
No. Mark
1. Identify the skills, abilities and behaviors you need to perform your role to the required level.
You should also identify any additional skills, abilities and behaviors you need to be
promoted or selected to undertake a higher level role to which you aspire
/1
2. Evaluate your present skills, abilities and behaviours. Identify any areas that need
improvement or where competency has not been reached.
/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.
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Mark
1. In three year time one would look to get a promotion and work in
a better position than the current position
/1
2. The competencies are:
Good communication skill
Ability to take on workload
Punctual and ability to meet the deadline
/1
(d) Suggest ways in which mortgage brokers may network to assist other mortgage brokers.
Mark
- To organise a broker forum of 3 to 8 like-minded brokers in your area that meets monthly to
talk about their business challenges and experiences.
- Publish your experiences, tips and advice in a blog/article.
/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. At the outset of the client relationship, one has to address all the related factors
and the steps and the actions that would be undertaken in order to establish the
relationship.
/1
2. It is suitable to demonstrate competence at the time when the process of delivering
the service would be undertaken.
/1
(b) Imagine that you are explaining the function of mortgage broking to a client. What words
would you use?
Mark
Being the mortgage broker one would look to make use of the words like financial advices, financial
statements, loan, application process for the loan etc.
/2
(c) Explain the importance of a code of ethics in the relationship between a professional and
clients.
Mark
The maintenance of code of ethics in the relationship among the professional and the /2
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client because of the ethical codes addresses the fact that all the information that has
been provided to the client are true and fair and have been gathered from relevant and
authorized sources. It is even addressed that the information that would be provided by
the client would remain confidential and therefore would not not be leaked to any other
external parties who would make use of these information. The maintenance of ethics
leads to the creation of trust and loyalty and thereby better services can be given.
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. This has been discovered in the case where a client are a couple and the wife is a
Russian. She is not very competent in English and therefore she is having
difficulties in understanding the advices and the services that have been offered.
The lady being a Russian had cultural differences as well and therefore has been
facing troubles in providing adequate information.
/1
2. The need was finally met when an interpreter was brought in who would act as a
mediator and she would interpret all the products and the services that would
be offered to them by the mortgage broker. In this manner the cultural
differences would be met and the significance of undertaking an investment
and the benefits that would be received from these kind of investments and the
time that it would take would be mentioned so that the extent of dissatisfaction
among the clients remain minimum.
/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. Accountant: They provide financial assistance as they contract the financial statement and
would even provide the amount the clients need to invest in order to attain effective
returns.
/1
2. Solicitor: Providing legal advice to the client so that the legal obligations would
be known to the clients.
/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. Understanding each other /1
2. Realize and Vocalize the things that one agrees upon /1
3. Disputes related to the services and the advices offered can be understood /1
4. Body language can be understood so that the requirement of the client can be
understood and effective advice can be given.
/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. David Maistre place the COI in the second tier of the effectiveness because of the
fact that COI are undertaken only after proper and effective client relationship is
created and the client is ready to undertake the mortgage broking services.
/1
2. The first tier of David Maistre comprises of the development of long term customer relationship
thereby development in order to recognise the key success factors for the customer service and
gain effective customer feedback with the help of which better services can be provided.
/1
Sub-total /8
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Continued
(d) List four occupations and professionals that may become Centres of Influence.foryour
organisation.
Mark
The four professions are:
 Real Estate Professionals
 Philanthropist
 Property and Casualty Agents
 Certified Public Accountant
/1
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. The two financing options are;
 Personal Loan
 Car Loan
/1
2. The features of each of them have addressed the fact that personal loan
associates to the loan which can be utilized by the client in any other sort. The rate
of interest in this loan is a bit higher but the tenure of repayment can be fixed by the
client.
Car loan on the other hand associates to the loan that is used for the purpose
buying the car. The rate of interest is low and the tenure starts from the purchase of
the car. The money sanctioned can only be used for the purpose of only
purchasing the car and not in anything else.
/2
3. Personal Loan should be taken as it is seen that the client can increase the loan
amount from the actual price of the car and can make use of the same if required.
There are no limitations in regards to the use of the money however, the
disadvantage has been that the rate of interest is high.
/2
Sub-total /5
Continued
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Task 6: Promoting the Effective Use of CreditContinued
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
Dear Roslyn,
This is to inform that after going through your case history and the need of a car in order
to travel to your office I recommend you to purchase a personal loan. Personal loan is
way better than any other loan as you can opt to apply for a higher amount and that
money can be used in order to meet the daily demands. Even though the rate of interest
is high but it is seen that this loan is ideal because of the fact that there are no limitation
of the tenure and therefore one can start to payoff for the loan whenever they want. This
option would be able to cater the needs and therefore I feel that this option is ideal for
you.
I hope you like my option and in case of any doubt feel free to share your concerns.
Regards
Malcolm Wilson
/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. The process involves the writing of an application letter to the Equifax provider
where the client in the letter asks to provide a copy of the credit
report. There are no cost related to the attainment of the report as it
is provided for free.
/2
2. The lender can access the credit report information only after the approval of the
client.
/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
Dear Roslyn,
This is to inform you that the plan that is taken on your part is not perfect as this may have
an impact on the credit score. Therefore, it is advisable to you to take a personal loan
where you can apply for a sum that would be inclusive of the price of the washing machine
and in this manner the additional burden for the credit card would be eliminated.
/2
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Hence, I would suggest to incorporate this strategy in order to in order to improve your
financial scenario.
Regards
Malcolm Wilson
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 MelissaCooper 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 Melissa that you have collected are as follows:
Applicant 1 Applicant 2
Loan purpose Purchase home (owner occupied)
Amount and type of loan sought $480,000 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
$2,000 $300
Deposit paid on
property
$60,000 Credit card limit:
$3,000
$3,000 $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 points that would be highlighted are as follows:
 Provide an introduction about oneself and thereafter provide a brief overview of the
company from where the client is looking to take advice.
 Name the kind of services they offer and the percentage of accomplishment
attained form their part.
 Provide an assurance of the level of services that they would provide and provide
a detailed statement in relation to the information about the broker.
/2
Task 7.2.
List in point form the important information a Credit Guide conveys to the credit applicant.
Mark
• Licensee's name and contact details
• Licensee's ACL no
• Information and method for working out any fees payable by the consumer to the Licensee
• Information of the top 6 Lenders that the Licensee has introduced consumers to
• Information of the top 6 Lenders that a Credit Rep has introduced consumers to
• Any commissions that the individual (employee, director or credit rep) is likely to receive
• If the Licensee has a volume bonus arrangement with the lender, a statement that the commission
payable by that lender may depend on volume written and that the commission may be volume driven
• Any commission that a third party is likely to receive for introducing the consumer to the Licensee
(including how that payment will be worked out)
• The Licensee's IDRS and EDRS detail
/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
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Primary document
Document about the client’s funding source
Financial statement of the client
Secondary Document
Copy of any previous loan taken and the process of payment.
/3
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 U Bank ANZ AMP /6
Product Name U Home Loan ANZ Fixed
Home Loan
Variable rate
loan
Interest Rate Type (%) 3.69% 3.99% 3.64%
Comparison Rate (%) 3.69% 4.96% 4.02%
Minimum Loan Amount ($) $200,000 $150,000
$750,000
Maximum Loan Amount ($) $699,999 $2,000,000
$2,000,000
Minimum Loan Term NA 5 years 6 years
Maximum Loan Term NA 30 years 30 years
Maximum LVR (%) 80% 80% 90%
Maximum Insured LVR (%) NA Na NA
Mortgage Offset Account
(Yes/No) No No
Yes
Loan Redraw Facility (Y/N) Yes Yes Yes
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Split Loan Facility (Y/N) Yes Yes
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 product that is suggested to the client is the loan product offered by ANZ Home
Loan due to the fact that the interest rates are high but the minimum loan amount is higher
than that of the other products. The loan is a fixed one and therefore rate of interest would
be fixed and therefore would not have an impact of the changes that are taking place in
the economy. It is seen that this product has the ability to offer numerous kinds of other
features as well which would help the couple to attain their objective.
/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
The loan that has been selected has an upfront fee of $395 and there
are no other associated fees related to it.
/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.
Mark
The documents that are required from the client are:
 Income statement of the client
 The address proof
 Income proof
 Proof of the client
/3
Task 7.7
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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. The LVR is the amount one borrows and is represented as a percentage of the
value of the property being used as security for the loan.
/1
2. Insured LVR is the amount that is kept in order to protect oneself from any kind pf
defaults.
/1
3. The amount of LVR is paid from the interest that is paid by the client for the loan. /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
ClientsContinued
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. The likely normal intervals for each and every step for the approval of the loan
takes around 2 to 3 days and this process is informed to the applicant with the help
of the mail and direct communication or telephonic communication by the broker.
/2
Task 7.10
Assess the loan application of Ross and Melissa Cooperagainst the five C’s.
a) Character
How would you assess the applicants’ character?
Mark
The character would be understood with the help of assessing the credit score of the
applicant. This would determine the extent of the morale that is seen within the client.
/2
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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. $2518.11 /1
2. The income percentage method which calculates the capacity of the client to repay
the loan indicates the fact that the client has full potential to pay back the loan and
therefore loan can be sanctioned for the client.
/1
Sub-total /6
Continued
Task 7: Prepare a Loan Application on Behalf of Mortgage Broking
ClientsContinued
c) Capital
(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. This would be done with the help of the assessment of the risk
profile of the candidate.
/1
2. The aspect that would be taken into consideration would be the environmental risk
and other external factors that would be helpful in determination of the aspects that
can have an impact. The risks associated to the client needs to be taken into
consideration as well and therefore it can be said that these aspects need to be
considered.
/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)
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No. Mark
1. 87.50% /1
2. As the LVR calculated is high therefore the banks look to reduce the same by
taking a guarantor for the loan so that in case of default they would be safe to attain
the money from the guarantor.
/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
The health condition of the client as well as any kind of unprecedented events can have
an impact on the loan and this should be managed by assessing the income statement as
well as the health condition of the client in accordance to whether they smoke or have any
major sickness.
/2
Task 7.11
What is your organization’s policy about notifying applicants of the outcome of their application?
Mark
The company notifies the applicants about the outcome of the application with the help of
a formal mail to the client that would act as an evidence for the outcome provided by the
company.
/2
Sub-total /8
Continued
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
six types of document that are likely to be forwarded. In the case of Ross and Melissa Cooper.
No. Mark
1. Income statement of the couple /1
2. Document of any past loans and credits taken /1
3 Address proof /1
4. Completed loan application form /1
5. Document of the guarantee given for the loan /1
6. Credit disclosure statement /1
Task 7.13
What should be the rules regarding access to client files?
Mark
There are certain rules that are applicable for the access of the files
and this applies to the fact that confidentiality of the personal
information of the client would be maintained so that their private data
/2
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and the financial information would be kept secret and would not be
revealed in public.
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
This would be suggested due to the fact in variable interest loan, there are chances that
are interest rate would increase and this may have additional burden on the client and
therefore in order to reduce the chances of such interest rate burden, it is advisable to
take a fixed interest loan.
/1
Task 7.15
List the information you should include on a client file.
Mark
The information that is to be listed in the client file are:
 Amount of loan applied for
 Financial information
 Social insurance number
 Appraisal reports
 Lender correspondence
 Underwriting reports
/2
Sub-total /11
Total /64
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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
The responsibility of the officers in accordance to the NCCP Act is that
the consumers are obliged to receive certain documents from the officer
in order to provide them with the information they require to understand
the credit activities that would be provided to them.
/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 information that is asked by the mortgage broker to the client are:
The credit disclosure statement, income statement of the client, any
document in accordance to the ability to pay for the loan and proposal
document.
/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 mattersnormally obtained?
No. Mark
1. These supports and assistances are required when the income
disclosed by the client is not sufficient in accordance to the loan
amount that is applied for. The other situation has been that if
the health situation of the client is not good.
/1
2. The matters that the credit providers would look to be satisfied is looking into the
fact that the guarantee provided by the client is sufficient in order to pay for the
loan in case the client is unable to pay for the loan..
/1
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3. The information about the third party guarantee is obtained by asking the client to
provide additional information about the guarantee so that an idea can be attained
with the help of which sanction for the loan can be given.
/1
Sub-total /7
Continued
Task 8.4.
Distinguish between the credit provider’s final assessment and the credit review carried out by
the credit provider?
Mark
The credit provider final assessment constitutes of the final review of all
the information prior to the final outcome of the loan. On the other hand,
credit review that is carried out by the credit provider comprises of the
assessment that all the desired documents needed are submitted and
the information are precise and authentic.
/3
Task 8.5.
List five of the checks the credit provider would normally perform before preparing an offer letter.
No. Mark
1. Credit worthiness /1
2. Size of the debt burden /1
3. Building inspection /1
4 Finances of the client /1
5. Length of the commitment /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. The mortgage broker gets involved after the offer letter is
provided in order to initiate the process of arranging the approval
of the unconditional loan. The broker assists the client in order to
complete the final settlement process.
/2
2. This is in accordance to the disclosure obligation of the broker that has been
brought constructed by NCCP Act.
/2
Task 8.7.
List four other matters relating to the offer letter that the mortgage broker should check.
No.
1. Amount of loan sanctioned
2. Tenure of the loan
3. Annual rate of interest
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4. The frequency of the repayment i.e monthly, weekly, yearly or fortnightly /1
Sub-total /13
Continued
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 the time of settlement, offer letters and all the related documents would be
signed and all the obligations and the other conditions would be addressed in front.
/1
2. The funds would be disbursed in the bank account that has been linked with the
credit provider with the help of which the amount will be credited to the bank
account automatically
/1
3. The title document is registered in the land and land registration department and
there exists a certain time within which the land will be registered.
/1
Sub-total /3
Total /23
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