FNSFMB401 Prepare Loan Application Assessment 3

This assessment covers the responsible lending obligations of a mortgage broker, regulatory framework for finance and mortgage brokers, legal validity of hand-written signatures, debt commitments of home loan applicants, obligations of applicants, and services that a mortgage broker could provide to clients after a home loan has been approved and settled.

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FN S F M B 4 0 1 P r e par e l oan ap pl i catio n o n be h al f o f f i na nc e o r mor tg age

broking clients
Assessment 3

A c t ivit y 1
Describe the responsible lending obligations of a mortgage broker.
A c t ivit y 1 An s w er
Responsible lending obligations includes the following:
 Making inquiries regarding the client's financial situation, their objectives and requirements in
reasonable manner ( PwC's Skills for Australia (Skills Service Organisation), 2018).
 Also, reasonable steps must be taken by the broker towards verifying the client's financial
situation.

A c t ivit y 2
Identify the regulatory framework under which finance and mortgage brokers operate.
A c tiv i ty 2 A ns w er
Regulatory framework applicable on finance and mortgage broker are as follows:
 Australian Security and investment commission (ASIC)
 National Consumer Credit protection act.
NCCP is meant for regulating those individuals indulged in the activities related to credit such as
provision of credit assistance or any other intermediary ( Walpole and Langford, 2021). Also, ASIC
regulates the whole mortgage industry and credit providers therein in general.

Activity 3
Identify and describe the four elements which are required to determine the legal validity of hand- written
signatures.
Activity 3 Answer
Integrity: The signature must be done with the actual intent of signing the contract where the signatory
must be well aware and agreed to the terms therein.
Non-repudiation: The signature must indicate an assurance ensuring no further disputes and denied
would take place.
Authenticity: Signature should facilitate identification of the parties related to the transaction.
Confidentiality: Signature signifies that the communication and documentation containing it must be
kept private & confidential.

Activity 4
Why are the debt commitments of a home loan applicant important information for brokers and lenders?
Activity 4 Answer
Information pertaining to debt commitments of an applicant is important because it indicates character
and capacity to repay the loan and if it is not disclosed aptly or assesses in depth, it would result in
giving false information and hope to the lender or broker and ultimately there would be a poor
situation for them.

Activity 5
Identify situations where a lender my not need to comply with the Privacy Act as it applies to personal
information.
Activity 5 Answer
Situations are:
 Law has made the disclosure of certain information compulsory.
 It is considered as the duty of the client to disclose.
 The lender's interest is such making it necessary to disclose certain information.
 When the client's consent either implied or expresses has been obtained prior to the disclosure.

Activity 6
Identify and describe the obligations and responsibilities of home loan applicants.
Activity 6 Answer
 Provide true, complete and fair information pertaining to their financial situation such as their
income, credit score and employment status related information.
 Must make consistent and timely repayment to ensure no default on the amount borrowed.
 Must understand the criteria put forward by the lender for lending the loan amount and meet
the same.

Activity 7
In what circumstances might someone, other than the applicant, complete home loan application forms on
behalf of an applicant?
Activity 7 Answer
When the client itself need an assistance from lender or broker to act on their behalf. Also, if the client
is not feeling well or not able to arrive at the lender's location, then the application forms can be
completed by someone else. This could be done through correspondence where the mortgage broker
managed the whole communication between the applicant and co-applicant.

Activity 8
Describe some services that a mortgage broker could provide to clients after a home loan has been
approved and settled.
Activity 8 Answer
Services such as provision of up to date information must be there from broker's side regarding the
changes in interest rates. Also, broker must provide for a platform for resolving their client's queries
and issues along with educating them how well they can manage their loan accounts. Furthermore,
option must be provided for swapping between the fixed and variable interest rates.

REFERENCES
PwC's Skills for Australia (Skills Service Organisation), 2018. Industry skills forecast and proposed
schedule of work [financial services].
Walpole, S. and Langford, R., 2021. Regulating for loyalty in the financial services industry.