Mortgage Broking: Short Answer Question 5 and Credit Application Processing

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.