Task 1 - Initial disclosures

Following a personal introduction and before you begin gathering information about the clients' existing financial situation or needs, there are certain disclosures you are required to make as a finance broker.These disclosures include the way you are remunerated and the range and limitation of your services.

1. There are four (4) documents listed in ASIC Information sheet INFO 146 ‘Responsible lending disclosure obligations - Overview for credit licensees and representatives'that must be provided to customers. Refer to this Information sheet and the information contained in your topic notes to answer part (a) and (b) below.

(a) Identify which of these four (4) documents you must provide your client before you commence providing credit assistance and explain the main disclosures relevant tothat document.

(b) Identify which of these four documents you will provide the client should you intend to charge a broker fee and explain what is required for it to be valid.

Task 2 - 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.

Note:Any assumptions you make should be listed and should not be in conflict with the case study information already provided.

Task 3 - Assessing the clients' situation

1. Using the Excel or Online version of the Genworth Serviceability Calculator, calculate the Genworth NDI for the borrowers. This will require you to enter all the data, including their future rental income.

Once you have completed the calculations, copy the data into the Serviceability Calculator (located at the end of this assignment in Appendix 2).

Do not upload the Excel spreadsheet as a separate file.

2. 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 an assessment of the clients' borrowing ability. Consider and comment on the following issues:

(a) the maximum loan using the Genworth calculator

(b) deposit requirements for the loan required

(c) combined net monthly income, less cost of living expense as specified by the borrower

(d) do they require Lenders Mortgage Insurance (LMI) and if so, how much will it cost?
Refer to Genworth LMI estimator for this figure

(e) 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.
(No word count requirement for questions (a) to (d)).
Question (e) (100 words)

Task 4 - Using equity

1. Although Clinton and Jenniferhave chosen to borrow 90% LVR on the investment property plus the LMI costs, what other option could you present that would avoid the cost of LMI?(100 words)

2. Explain how it could be possible for Clinton and Jennifer to borrow 100% of the purchase price ($450,000) and obtain a tax benefit for the interest charged. (100 words)

Task 5 - 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 6 - Recommendations

Note: Incorrect or uninformed advice can lead to significant financial detriment for your client and lead to possible complaints against you for misleading or deceptive and misleading conduct.Therefore, all three (3) questions of this task are ‘critical' and you must demonstrate the required knowledge in each to be deemed competent.

1. Based on the information presented in the case study, prepare a written proposal (letter or email) outlining your proposal to clients.

The style and language used in the proposal should be appropriate to the case study client's level of understanding. It should be clear and concise and written in language that is easy to understand, while still remaining professional in its presentation.

You may base your response to this part of the assignment either on your knowledge of the products currently offered by your own organisation or on the products offered by a lender you have researched.
In your proposal, you should include:
- 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 ‘funds to complete' template completed in Appendix 1)
- the product options you have considered that meet their needs (research two lenders and detail their loan features; you can use the internet or if working in industry, internal software)
- 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)
- disclosures applicable to the situation (a summary of likely applicable disclosures is adequate). Include disclosures in the Credit Guide and any conflicts of interest.

Note: List any assumptions you have made about the clients and their situation in order to complete this part of the assignment. There are no rules regarding the format. Please use the format that best suits you. Should you require it, an example of a written proposal format has been provided in topic 3.3.Note that the credit guide in your resources is not a ‘written proposal'.

2. (a) Describe the 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?

Note: Please identify what State or Territory you are from in your answer.

2. (b) Provide a summary of all additional costs and fees, that the couple should be made aware of.
Note: When considering your response, you can refer to your completed Appendix 1 which lists fees expected and charges. Apart from known costs, you can estimate other costs (i.e. pest inspection, rate etc.).

Task 7 - Clinton and Jennifer's professional network

1. Name three (3) parties Clinton and Jennifer may wish you, as their broker, to keep informed of the progress of their finance application who are not directly involved in the loan processing?

2. It is important that as a broker you understand the loan application process and how to effectively manage the progress of a loan application. Outline to Clinton and Jennifer the process that will occur from your first meeting through to post settlement. Please present nine (9) steps in the process.

3. 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?

Attachment:- Finance and Mortgage Broking.rar