FNSFMB501 - Settle Applications & Loan Arrangements Assessment 1

FNSFMB501 - Settle
Applications & Loan
Arrangements
Assessment 1

Table of Contents
ASSESSMENT 1.............................................................................................................................1
ACTIVITY1.....................................................................................................................................1
Explanation of why it is potential risk for all involved...............................................................1
ACTIVITY2.....................................................................................................................................1
Describing some ways wherein potential borrowers fail for providing correct pre settlement
evidence that are required by mortgage lenders..........................................................................1
ACTIVITY 3....................................................................................................................................2
What is primary benefit of Lenders Mortgage Insurance to home loan applicant.......................2
ACTIVITY 4....................................................................................................................................2
Explanation of certain benefits along with drawbacks of a family guarantee.............................2
ACTIVITY 5....................................................................................................................................3
Explanation of role of conveyancer for property vendor.............................................................3
ACTIVITY 6....................................................................................................................................3
Identification of some common issues which could cause property settlement delays along
with crashes..................................................................................................................................3
ACTIVITY 7....................................................................................................................................4
Reverse mortgages now fall under the National Credit Act, which includes a statutory
‘negative equity protection’ on all new reverse mortgage contracts (introduced September
2012). What are the risks of reverse mortgages which make them subject to this form of
legislation.....................................................................................................................................4
ACTIVITY 8....................................................................................................................................4
Explanation of rights of a mortgagee and mortgagor when property is mortgaged under
Torrens title regimes....................................................................................................................4
ACTIVITY 9....................................................................................................................................5
Identification of some of deposits along with payments of real estate agents trust account.......5

ASSESSMENT 1
ACTIVITY1
Explanation of why it is potential risk for all involved
The provided scenario is potential financial risk for all people involved as there are certain pre
settlement conditions that are necessary to be carried by lenders which are part of Australian
residential property. One of pre settlement condition that is needed by lender is to gain consent
of prior mortgagee. In context to the case, collecting consent from all the Chinese borrowers for
Australian property is important at the time when second mortgage security is taken. At same
time, another pre settlement condition is to check documents properly in order to ensure that all
are correctly executed, witnessed together with dated prior sending them to approving personnel
as it have high chances of causing reputation risk for all people involved in the mortgage. Other
conditions includes confirming amount needed for discharging other debts, ensuring contracts
for sale and provision of evidence of insurance.
ACTIVITY2
Describing some ways wherein potential borrowers fail for providing correct pre settlement
evidence that are required by mortgage lenders
Pre settlement evidence are physical proof that are used to complete all activities or formalities
in settlement procedures of mortgage. In context to mortgage lender, pre settlement evidence
that is required includes the following:
Loan terms: It is said to terms and conditions that are required to lend a property to others.
Mortgage lenders require loan terms in physical form that involves information about amount to
be landed or borrowed, collateral, penalties for default, interest charged and late fees.
Proof of insurance: It is a kind of documentation which is required by mortgage lender to
prove that the person have valid insurance of property with an insurance organisation. One of
most common proof of insurance is paper card that is provided by insurance entity listing policy
information as well as effective dates.
1