Certificate IV in Finance and Mortgage Broking Assessments

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Section 3: The lending process


Task 12 ― Understanding the client’s needs


Brokers have both ethical and legislative obligations to understand a client’s needs and objectives. There are obligations for making reasonable inquiries and verifications under NCCPs responsible lending obligations contained in ASIC’s Regulatory Guide 209 (RG209).

Research RG209.43 online and answer the following questions.


Task 12: Question 1


While it is important to understand your client’s needs and objectives to ensure that you recommend a product that has all of the features and benefits they require, it is also important to understand other requirements your client may have to ensure the product recommended is ‘not unsuitable’.

List at least four (4) types of ‘specific customer requirements’ your client may have.


Task 12: Question 2


When the loan is for a self-employed person, the lender will ask for financial information for the business. What are the common financial records the lender will ask for? Provide a minimum of three (3). (These must be in addition to what a PAYG client would provide.)


Task 12: Question 3


(a) Explain the information that is contained in a credit report.

(b) Why it is important that the client provides all the details about their credit report to their broker at the beginning of the loan process?

(c) What are the credit provider’s obligations to the client if a loan is declined due to their credit report?

(d) What would you advise your client to do if their loan was declined due to their credit report?


Task 13 ― Developing and presenting solutions


Task 13: Question 1


The client solution is not just about providing a product that will meet their product needs. Developing a solution for your client’s needs also involves the security or collateral that the lender will require for that loan product.

(a) List a minimum of three (3) types of assets that lenders may take as collateral to secure a loan. (This can be security for either consumer or commercial lending.)

(b) List a minimum of two (2) security documents that are required in order for the lender to have control over the asset while the loan is in place.

(c) If a director offers their home (in their personal name) as security for lending in their company name, what is the name of the security document that is required to link the asset to the loan?

(d) From time to time a client may need to offer a second property to support a loan in order to reduce the loan-value-ratio (LVR) to avoid LMI and meet lender requirements. What is this name of this practice?


Task 14 – Packaging the application to send to the lender


Packaging a home loan application is detailed and requires a mortgage broker to gather documents to prepare the lending submission in accordance with the lender’s requirements.

While it is important to know what documents you will need to gather, it is also important that you understand the information contained within the documents. For example, the frequency of income, if overtime is included.


Task 14: Question 1


(a) Explain what documents you would gather to in order to verify:

(i)        a PAYG employee’s income

(ii)       a self-employed person’s income

(iii)      rental income for an existing investment property.

(b) Choose three (3) documents that you listed in part (i). Write one (1) question that you could ask the client to confirm you understand the information contained within each of the documents provided.


Task 14: Question 2


When submitting your client’s loan application, you also need to submit supporting documentation.

(a) Explain how you confirm that you have the correct supporting documents for your client’s loan requirements in accordance with the lender’s requirements. (e.g. If the loan application was for an investment property, think of what may be required as specific supporting documents)

(b) Explain how you check the supporting documentation for accuracy and also to ensure that the documents are in the right format and legible for the lender.


Task 15 ― Monitor the lending process


Some loan applications may require further information following submission. This often means returning to the client to obtain the information.


Task 15: Question 1


Provide one (1) example of further information a lender may request. Explain common reasons for the additional information.


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