Reference no: EM131997005 , Length: word count:5000

Written Assignment

Task 1 - Gathering and documenting client information

Complete the Client Information Collection Tool (located at the end of the assignment in Appendix 1) using the information provided in Case Study 1.

Task 2 - Assessing the clients' situation
1. Based on the information provided in the case study and using the tools available to you
(e.g. loan calculators, including those available on lenders' websites), provide your assessment of the clients' loan application. This assessment of the clients' needs is a critical prelude to you completing Part 4 of the Oral Assessment requirement for this course.
Consider and comment on issues such as:
- maximum borrowing capacity of client
- capacity to meet deposit and total cash contribution for the loan required
- repayment requirements based on the loan required
- do they require Lenders Mortgage Insurance (LMI), and if so, how much will it cost and what are the options to pay fee
- what loan amount would you recommend
- likelihood that the clients will be able to meet all their financial obligations
- any other issues that may impact, now or in the future, on the clients' ability to meet their obligations, including any possible risks.
Provide data to support your comments and conclusions. (750 words)

2. (a) Most lenders stress test loan repayments by adding an additional 2-3% on to the loan repayments to make sure a borrower can afford the repayments. If interest rates moved 3% higher, what would Philip and Jennifer's loan repayments be and do you think they would be able to cope with the extra repayments?

2. (b) What could you recommend that may remove this consideration as a risk factor?

Task 3 - Borrowing options
Although Philip and Jennifer are looking to borrow at approximately 90% LVR, what other options could you present that would avoid the cost of LMI? (100 words)

Task 4 - Reasonable enquiries
In the course of gathering information about the couple, you are required under the National Consumer Credit Protection Act 2009 to make all ‘reasonable' enquiries to determine a borrower's objectives, requirements and financial situation.
Identify at least six (6) ‘reasonable' enquiries that you would make with the clients in the case study and explain why these enquiries are important in terms of NCCP compliance. (200 words)

Task 5 - First Home Owners Grant
Describe the First Home Owner's Grant or home buyer assistance scheme benefits and stamp duty concessions that are available in your State or Territory, who would be eligible and what would be their benefit? Are Philip and Jennifer eligible for any assistance?
Note: Please identify which State or Territory you are from in your answer. (150 words)

Task 6 - Philip and Jennifer's professional network
1. Name three (3) parties, who are not directly involved in the loan processing, Philip and Jennifer may wish you, as their broker, to keep informed of the progress of their finance application? (25 words)

2. Briefly explain why is it important for the broker to remain informed of developments in the lending process despite not being actively involved at every stage? (100 words)

Task 7 - Interest rates
Clinton and Jennifer have reconsidered the loan proposed and have called in to discuss whether they should consider fixing the interest rate on their proposed loan - they have conflicting opinions and are seeking your guidance.
1. Firstly, they need to understand the role of the RBA with respect to interest rates and why it is necessary to have these controls. Conduct some research and answer the following:
(a) What is the role of the RBA with respect to the movements of interest rates?
(b) Why is it important to have these controls and how do they impact mortgage loans in Australia?
(c) Are banks obliged to follow the RBA cash rate? Explain the reason for your answer.
(200 words)

2. Philip and Jennifer have called to discuss whether they should fix the interest rate on their loan after having received several conflicting viewpoints from family and friends.
Explain to Philip and Jennifer some of the advantages and disadvantages of fixing a loan. (150 words)

3. What other option/s can you suggest if they remain uncertain about whether to fix the rate on their loan? (100 words)

Task 8 - Establishing level of financial knowledge
What communication skills might you use to confirm Richard and Pauline's understanding and knowledge about credit and finance, as well as their current position, including establishing their requirements and objectives with the refinance? (150 words)

Task 9 - Responsible lending obligations
The National Consumer Credit Protection Act 2009 imposes ‘responsible lending' obligations on brokers that must be satisfied by all people arranging loan applications. The primary objective under responsible lending guidelines is that the credit facility offered to the borrower is ‘not unsuitable' for the borrower, meets their requirements and objectives and will not create substantial hardship.
1. In your own words how would you define ‘substantial hardship' (detailed information on this subject is found at RG 209 issued by ASIC)? (150 words)

2. What are the benefits of debt consolidation for Richard and Pauline? (100 words)

3. Richard and Pauline have decided to consolidate their debts into their home loan with two splits, one for the existing home loan and a second split for the all other debts. They will not be including the landscaping supplies account as they pay this in full each month and will clear the outstanding $500 from business account.
In the template below provide a new liabilities summary once Richard and Pauline have completed the debt consolidation including their new monthly repayments.
Note: They have chosen to refinance with ‘One State Bank' who are offering a 4.5% interest rate on a variable, principal and interest loan over 30 years.

4. What savings will Richard and Pauline obtain in monthly repayments?
(Include calculation of how you determined the savings.)

Task 10 - Self Employed special considerations
1. As Richard and Pauline are self-employed, what documents will you need to obtain and assess their income? (150 words)

2. If a Low Doc application is an option for the customer, name three (3) extra documents you will need to obtain and assess. Explain how each these documents will establish their income? (150 words)

3. Explain how applying for a ‘Low Doc Loan' could lead the mortgage broker to be accused under NCCP of recommending an ‘unsuitable' product. (250 words)

Task 11 - Advising on strategies

Following the presentation of your proposal, Richard and Pauline say that they would like your advice regarding loan and debt management strategies that could help them to repay their home loan as quickly as possible.

- List at least three (2) strategies or methods that will help them achieve their aim.
- Provide the advantages and disadvantages of each.

Note to students: You may refer to the MoneySmart website for information on this subject and your answer may also include, but not be restricted to, available mobile phone apps used for debt management. (300 words)

Task 12 - Impact of credit history

Richard tells you that his former wife failed to properly meet their unsecured personal loan debt obligations before they separated. Although he eventually repaid the debt he is afraid that this incident may count against him when he applies for a loan. There are a few things Richard can do as he is concerned about his credit rating. What information would you provide in the following situations?

1. Provide Richard with the details of two (2) major credit reporting agencies and explain what information may be recorded on his credit file. (200 words)

2. Richard has decided he would like to obtain a copy of his credit report from either Equifax or Dun & Bradstreet. Explain what options are available for the chosen provider, how long it takes to obtain a copy, and the associated costs. (100 words)

3. If there are errors on file, what are the options for Richard to follow in order to have these errors rectified? Hint: Refer to the Equifax website. (150 words)

4. What is the Lender legally obliged to advise the client if they decline an application due to the content of the credit agency file? (100 words)

5. What alternate options can you suggest to Richard and Pauline in the event that the loan was rejected by the lender you initially proposed due to a credit report. (150 words)

Task 13 - External dispute resolution

During the loan process, Richard is starting to become upset with the time it's taking to get him an approval. Although you've explained that this is because of delays with the lenders processing system due to staff being away, you're concerned the matter may escalate beyond your control.

1. As a broker it is important to understand the role of the Credit Ombudsman. Explain the function and role of the Credit and Investment Ombudsman (CIO) in the EDR process and the options available to the claimant once a determination is made. (200 words)

2. What could be the maximum financial compensation limit imposed by the CIO?
(You can obtain this information on the CIO website.) (10 words)

Task 14 - Effective access to files

The loan application is finally approved. Loan offers have been produced by the lender, as have numerous documents that the client needs to access and review. The lender has requested these documents be forwarded as soon as they are available. Richard and Pauline are away at the moment and their email provider has a size limit on the data that can be sent via email. Name a service provider that could assist in solving this problem?

Oral Assignment

Part 1: Instructions for completing and submitting this oral assignment
Completing the oral assignment
For this oral assignment you are required to complete the following tasks:
- Part 2: Preparation for oral assessment: You must complete and submit your responses in this document.
- Part 3:Oral response to questions: To be completed by audio recording. Your assessor will complete the checklist.
- Part 4: Role play: To be completed by audio recording with a volunteer. Your assessor will complete the checklist.

Part 2: Preparation for oral assessment
To prepare for your oral assessment you are required to complete the following questions:
Question 1
How do you assess theneed to adjust your interpersonal style to talk with different types of client? Provide two (2) examples(e.g. where there is a language difficulty).
Question 2
You have a new client, Jeff Smith, and have just made an appointment to meet with him.
Compose a professional email to send to Jeff, confirming the appointment, outlining the purpose and time of your firstmeeting. Your email should also name the document/s you have attached for him to read prior to this meeting. (For this assessment there is no need to attach the document/s.)
Question 3
In Parts 3 and 4 to this assessment you will act as a broker and will be required to make an audio recording. Prepare a list of resources and equipment you will need for these oral assessments.
Question 4
Aside from the resources and equipment identified in Question 3 what will you do to prepare for the delivery of the loan proposal in Part 4 Role play?You can refer to the case study information in Part 4. What communication techniques would you use to respond to any difficult questions.
This question demonstrates your ability to plan ahead for your interaction with the customer.

Part 3: Oral response to questions

Make a 10 minute recording of yourself answering the following questions. Before you start make sure you have read the resources in your subject in KapLearn to assist you with your oral assessment by audio recording. Leave the second column blank so your assessor can record a summary of your oral response. You will need to rehearse your responses before the oral assessment, to ensure that your responses are within the maximum timeframe.

Questions

1. You are a broker who charges a fee for your service. You are meeting a new client, Stephanie Jones, for the first time at your office after an initial cold call. The purpose of the meeting is so that you can start to gather information about her existing financial situation and needs. After introducing yourself to Stephanie, there are two documents you must provide her with, as well as disclosures you are required to make.
Name the two (2)documents you must provide to Stephanie and explain the disclosures. In your answer, give one (1) example of how you would check with her that she understands these disclosures.
(Disclosures should include, but are not limited to, the range and limitation of your services, complaint handling process and the way you are remunerated.)

2. Stephanie has acknowledged that she understands the two documents and disclosures. She then begins to tell you more about her current financial situation.
Describe how you could:
- encourage Stephanie to express her needs and goals
- determine her current investment and assets position
- consider various home loan options for her.

3. This is Stephanie's first home purchase. She is very happy with all of your advice and has made a decision on which loan option she would like to take. She now asks ‘what happens from here?'
Describe to Stephanie how you will assist her by:
- outlining the key documents you will require from her
- describing the steps that will occur from this meeting through to the settlement
- liaising with all relevant parties to keep the loan on track
- describing how you will keep her informed.

4. After talking with friends, Stephanie expresses some resistance with committing and says she is a little worried that possible increases in interest rate will be too difficult for her to handle.
Identify and address the concern underlying Stephanie's resistance. To address her concern, provide her with options that will limit the impact of such rises and reduce her risk.

5. A final decision on Stephanie's loan application has been deferred by the credit approver due to property valuation coming in $15,000 lower than purchase price and taking LVR to just over 81%. The loan required is 80% of the purchase price and you are not sure Stephanie can come up with more cash contribution right at this time. You have spoken to the valuer, who will not change the value.
Describe how you would approach the lender to try to get the loan approved. Assuming that all other aspects of the proposal are strong, what would be some key points of the applicant or the proposal that you would emphasise to the lender in a bid to get loan approved. You may make positive assumptions about the applicant, as considered appropriate.

6. A few months have passed since Stephanie's loan was approved and settled. Your broker business has now grown substantially to the point you now employ four staff members in support roles to assist you and the two other brokers in meeting clients' demands and liaising with lenders and other parties. You need to restructure the business to improve teamwork and processes.
Briefly outline what you would do to initiate these improvements, taking into account:
- how current allocation of duties could be improved
- how data collection and storage could be better managed across the team
- that you want to see improved communications within the team.

Part 4: Role play
You will participate in a role play for a maximum of 10 minutes. The role play will be conducted by audio recording.You will need a volunteer to assist you in the role play.
The role play will include you and a volunteer.
The volunteer needs to understand that this is part of your assessment. Provide a copy of the ‘Volunteer Guide' in your KapLearn subject to your volunteer so they understand what they need to do in your assessment.
Please note, that you will not be assessed on your acting ability, however you will be assessed on the criteria listed below the task under assessor feedback.
When you have just started recording your role play, ask your volunteer if they give permission to be included in the audio recording. The volunteer needs to agree before the recording may continue.
See the ‘resources' in your subject in KapLearn to assist you in preparing for your role play.

Task - Role play
You are required to complete the ‘role play oral assessment' which should take a maximum of 10 minutes.
To set the scene for this role play:
- You are required to present your analysis and recommendations to your client (your volunteer).
- Due to the need to get an approval so contracts can be signed, an appointment has been made but unfortunately one of them (this will depend on which role your volunteer plays- Philip or Jennifer) cannot be present as he/she has had to go interstate urgently to visit a sick brother.
- Your clients do not wish to delay this meeting as they are keen to hear what you have to present - information can be passed to the other over the phone, when needed.
- This oral presentation should focus on presenting your analysis of the couple'scurrent position, loan prospectsas well as your recommendation, covering the following essential points:
- a summary of your understanding of the clients' needs (this could be an outline summary of their proposed loan structure)
- a summary of their current financial position (use information from the case study)
- the product options you have considered that meet their needs (you should have researched at least two lenders) and details of the loan features; use the internet or if working in industry, internal software to do this
- the option you recommend and the reasons for the recommendation - explain how the recommended product meets the clients' needs (refer to the case study and explain why you are recommending this lender)
- confirm the key disclosures that have already been supplied to clients in the Credit Guide
- invite questions from the client and respond accordingly.

There are no rules regarding the format of your presentation, however it must be presented so that it is succinct and easily understood by clients. Please use the format that best suits you- this could include covering the detail you have prepared in a written proposal document.
The role play requires the volunteer to ask at least three(3) questions- with suggested questions provided in Volunteer Guide. However, the volunteer can ask other ‘unrehearsed' questions if they wish. Remember, you are not being judged on your acting ability. Your assessment is about how you communicate and interact with the customer. You may need to adjust your presentation of the proposal, depending on the time that the questions are asked. However; to manage time, you may ask the volunteer to keep their questions until you have finished presenting your recommendations.
The assessment criteria you will be assessed on includes the following:
- appropriate introduction and building rapport
- explore solutions that meet clients' goals and objectives
- present broker solution to clients' request
- explain relative fees and charges
- collaborate on risk identification
- response to questions,record customer feedback and actions taken.

Attachment:- Assignment.rar