Mortgage Broking: Short Answer Question 5 and Credit Application Processing

This study material covers mortgage broking and credit application processing. It includes a response to short answer question 5 based on financial information of Basil and Daisy. It also provides information on processing a sample credit application and the guidelines to follow. The content includes subject matter related to finance and banking.

Dear
Thank you for your submission of chapter 5, the following areas require
further attention
Short answer question 5b based on their financial situation which is
found in chapter 4 question 5 provide your recommendation to Robson
in regards to the approval of this loan, provide justification using their
financial information including the property that could be used as
security
Short answer question 5c using the excel from chapter 4 create an
updated client record and copy your response from 5b into this excel
and highlight the area.
Kind regards,
The Distance Education Team
The above is in response to the incorrect
answer from this project from my teacher.
Chapter 4 information needed
Pleased with the way you handled his complaint, Bob recommends
you to his 45 year old son, Basil. Basil Butler is a management
consultant who is living and working with his wife Daisy in
Manhattan. Basil sends you an email, explaining that his 41 year
old wife is expecting triplets in six months’ time. They plan to
return to Melbourne next month and take up residence in their old
warehouse apartment in Fitzroy. They need urgent help because
their neighbour is planning to sell her adjoining apartment, which
they wish to secure. Daisy loves her old place and dreams of
extending their living space by acquiring and renovating the
neighbour’s apartment. She envisions demolishing part of the
shared wall to join the two apartments into one large, liveable
space for a family of five.
Basil’s firm is relocating him to the Collins Street office. Daisy,
however, is a contractor who has successfully completed a series
of projects for Basil’s firm. She has been self-employed for 10
years and does not intend to work for the next five years. Basil
earns $200,000 p.a. and Daisy earns $130,000. They owe
$280,000 on the Fitzroy apartment, but they own a beach house in
Portsea outright. The beach house is valued at $650,000. With a
penchant for luxury cars, they also have $60,000 to repay on their
BMW and $10,000 on the vintage MG. They have put the majority
of Daisy’s earnings into her superannuation fund, which has now
accrued $400,000. Basil is unsure how much is in his
superannuation fund. Sadly, they invested the bulk of Basil’s
earnings in a share portfolio which crashed with the global

financial crisis. The portfolio dividends only paid $5,000 last
financial year. Together, they have $127,000 in a savings account
and $50,000 invested in a long-term deposit. The reserve price on
the neighbour’s property is $510,000, however, she is prepared to
sell it for $495,500 if she does not need to engage a real estate
agent and if they will commit to a 30 day settlement. She has
given Basil and Daisy the option of a private sale and two weeks
in which to make her an offer. As she is divorcing, she is not
prepared to extend the time to allow Basil and Daisy to secure
finance in Melbourne in person.
Basil and Daisy are too busy packing up their Manhattan loft to
search for finance options. They want you to find a suitable loan
with attractive terms and arrange all the necessary paperwork.
Timing is their utmost concern.
Short Answer Question 5
You begin work at your new place of employment. One of your key
responsibilities is to process applications for credit. Your new
manager, Robson Mischkulnig, is aware of your background as a
mortgage broker and wants to draw upon your existing
knowledge base. As such, he asks you to bring in the last credit
application you managed to help train you into your new role.
Equipped with Basil and Daisy’s application, you begin one week
of induction. You are given a copy of the ‘Sample Credit Policies
and Procedures Manual’, and told these are the guidelines that
inform you day to day decision making. Supplementing the
manual are other protocols and laws such as the National Credit
Act. You are told that in this office, decisions to reject or accept an
application are formed on the basis of two criteria; credit policy
and the total credit assessment which you should conduct. Any
decisions to advance funds or extend credit that fall outside your
approval or limits of authority must be referred to relevant
approving personnel. In your case, this is Robson. You are
expected to prepare and forward your recommendations to accept
or reject applications to Robson promptly and in accordance with
the organisation’s procedures. Of course, any required security
must also be attached. Your trainer emphasises another key
responsibility for those providing credit and credit reporting
services. That is to keep the records system up to date. This
means recording and monitoring file and record movements as
well as maintaining the records according to legislative
requirements and organisational policies and procedures.
Having worked through the essentials, your trainer throws you in

the deep end and asks you to follow the procedures and process
the sample credit application you brought with you. To test
whether you are competent, you are given the following questions
to complete.
(a) Provide financial and legal reasons including the security used
to justify your decision and present them in a format that
Robson can use to review your decision.
The reason for including the security of
home loan of $318000 it is very important
for the person to take proper decision.
Thus, the decision of home loan is good
because it will provide with the required
amount and this will beneficial to the
applicant as they are in position to pay off
all the interest and instalment of loan
easily with the provided income.
Refer to the So Sweet client record prepared in Chapter 4 short
answer 5cii. Copy and paste the client record and call it ‘Updated
Client record’ and update the client database with Basil and
Daisy’s details from a to b above (specifically referring to the
justification for approval based on their financial and legal
reasons, and the security used). Highlight the changes so that
these are clearly evident in the ‘Updated Client record’.