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.
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.
Introduction
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.
Suggest two financing options that Roslyn might consider.
Explain the main features of each.
Choose one of these options and explain your choice. Are there any disadvantages that need to be considered?
ContinuedTask 6: Promoting the Effective Use of Credit Continued 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. Task 6.3.Roslyn is concerned that the lender will apply for a credit report. Explain:
The procedure and cost involved in obtaining a copy of her credit file.
The right of a lender to access credit report information.
Task 6.4. Draft a letter to Roslyn providing advice about her plan. Sub-total /10Total /15
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 Melissa Cooper 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 Melinda that you have collected are as follows: ASSETS AND LIABILITIES 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 INFORMATIONAPRA 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.
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.
Task 7.2.List in point form the important information a Credit Guide conveys to the credit applicant. 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.
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. 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. Sub-total /8Continued 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. Task 7.6It 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. Task 7.7In 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. Task 7.8Mortgage 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,
Sub-total /23ContinuedTask 7: Prepare a Loan Application on Behalf of Mortgage Broking Clients Continued 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. Task 7.10Assess the loan application of Ross and Melissa Cooper against the five C’s.
Character
How would you assess the applicants’ character?
Capacity
What will the applicants’ monthly payment be, given the current variable lending rate of 6% p.a.? (Hint: visit a website such as:
Using the ‘income percentage method’, assess the applicants’ capacity to repay the loan (25 words)
Continued Task 7: Prepare a Loan Application on Behalf of Mortgage Broking Clients Continued
Capital
How would you verify the equity the applicants intend to contribute to the purchase?
What should you be careful about regarding this contribution? (50 words)
Collateral
Assuming the valuation placed on the property is $480,000, calculate the loan to valuation ratio (LVR).
Given the LVR that you have calculated, what steps might the bank take to protect its position? (25 words)
Conditions
Using the information that has been presented, identify any ‘conditions’ that might impact on this loan application. How should they be handled? Task 7.11What is your organization’s policy about notifying applicants of the outcome of their application? Sub-total /8Continued Task 7.12The 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 four types of document that are likely to be forwarded. In the case of Ross and Melissa Cooper.
Task 7.13What should be the rules regarding access to client files? Task 7.14There 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. Task 7.15List the information you should include on a client file.
Task
Assessments
Target
Mark
Pass Mark
Actual
Mark
1
Identify and Interpret Compliance Requirements
27
18
2
Deliver and Monitor a Service to Customers
39
27
3
Contribute to OHS Hazard Identification & Risk Assessment
41
28
4
Manage Personal Work Priorities and Professional Development
24
16
5
Develop and Nurture Relationships with Clients, Other Professionals and Third Party Referrers
17
11
6
Promoting the Effective Use of Credit
15
10
7
Prepare a Loan Application on Behalf of Mortgage Broking Clients
64
44
8
Steps Taken by the Credit Provider
23
16
Total
250
170
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 [email protected]
Statement of Completion
Upon successful completion of this assessment you will be awarded the Statement of Completion for FNS40811 Certificate 4 in Finance and Mortgage Broking.
No.
Mark
1.
/1
2.
/2
3.
/2
Sub-total /5
Mark
/4
No.
Mark
1.
/2
2.
/2
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.
Mark
/2
Applicant 1
Applicant 2
Loan purpose
Purchase home (owner occupied)
Amount and type of loan sought
$480,00, 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
0400 100 156
0418 960 000
Email
[email protected]
[email protected]
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
Note: All credit cards are repaid in full when due.
Personal credit card with Northern with a limit of $2,000. Current balance: $300
Store card with Wilson’s Department Store. Current balance: S250
Note: All credit cards are repaid in full when due.
Assets
Liabilities
Details
Market value
Details
Monthly payments
Amount owing
Cash at bank
$15,000
Credit card limit: $2,000
$3,000
$300
Deposit paid on property
$60,000
Credit card limit: $3,000
$2,000
$300
Motor vehicles:
1.
2.
$15,000
$7,000
Other:
Personal effects
$30,000
Business value
Nil
Total assets
$127,000
Total liabilities
$600
Mark
/2
Mark
à
/3
Mark
/3
Mark
Credit Provider
/6
Product Name
Interest Rate Type (%)
Comparison Rate (%)
Minimum Loan Amount ($)
Maximum Loan Amount ($)
Minimum Loan Term
Maximum Loan Term
Maximum LVR (%)
Maximum Insured LVR (%)
Mortgage Offset Account (Yes/No)
Loan Redraw Facility (Y/N)
Split Loan Facility (Y/N)
Fixed Interest Option (Y/N)
Mark
/2
Mark
/2
Mark
/3
No.
Mark
1.
/1
2.
/1
3.
/1
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
No.
Mark
1.
/2
Mark
/2
No.
Mark
1.
/1
2.
/1
Sub-total / 6
No.
Mark
1.
/1
2.
/1
No.
Mark
1.
/1
2.
/1
Mark
/2
Mark
/2
No.
Mark
1.
/1
2.
/1
3
/1
4.
/1
5.
/1
6.
/1
Mark
/2
Mark
/1
Mark
/2
USA 
India