Assignment Task: Loan Application Process
Task 1: Case Study: Loan application preparation
You will notice that there are two options of Case Study within this assessment - the first (A) is more specifically for Mortgage Brokers, the second (B) for brokers in the Plant &Equipment and Motor Vehicle field. Please complete only the stream relevant to you and indicate this on the assessment cover sheet.
Choosing only one of the case studies presented below, prepare a loan file from your initial contact with the clients to preparing the loan application for lodgment with the client's lender of choice, through to settlement. Please refer to the document checklists in this Task for the relevant steps required.
In completing this task, you need to demonstrate to your assessor that you are competent in the following areas and able to:
- Communicate ideas and information
- Collect, analyze and organize information
- Plan and organize activities
- Work with others in a team
- Use mathematical ideas and techniques
- Solve problems by providing solutions
- Use technology.
To do this you will need to compile a report (Client Needs Review/Fact Find) indicating your thoughts and processes on different aspects of your application. These may include, but are not limited to:
- The choice of loan product for your client and the information about the loan product that you presented to them. Where you located the product information. Remember there is no right/wrong answer to this area, it is always subjective.
- The use of technology to compare the product/fees, find information on the products etc.
- How you would work in a team situation with your co-workers, lenders, real estate agents, mentor etc.
In areas where you do not have copies of actual supporting documentation, insert a page with the name of the document you would include e.g. copy of driver's license for the client.
There are a number of templates in the Member's Area under 'Useful Resources' that you could use in your submission.
Remember there is no right or wrong answer as each client you see presents a new challenge and if you can provide solutions for those challenges you will be well regarded and successful in this industry.
Because this course is taken nationally, we ask that you localize addresses and places of employment so that you can have familiarity with the assessment.
You will have to take into account any necessary adjustment of stamp duty concessions for first home buyers. This will have to be considered when discussing and setting out the fees and costs with your clients. You will have to contact your Office of State Revenue to determine the correct amount of benefits to which your clients are entitled.
Case study A - Residential mortgage
Case study B - Plant & Equipment, Motor Vehicles
Task 2: Report/Written Test
Process Applications for Credit (Mortgage Loans Only)
You are required to demonstrate that you understand the lenders policy and procedures for processing an application for credit i.e. from the point of view of a lenders credit analyst. Once your loan application is ready to be submitted you must provide supporting evidence that you have:
Checked and verified application details including all information to support the application are in accordance with the lenders credit policy and procedures.
Your assessment decision to recommend the credit application refers to/is within the lenders policy and procedures.
Maintaining application records and completing necessary documentation are according to the lenders legislative requirements and lenders organisational policy and procedures.
Overall, to support your understanding of how an application for credit is processed by the lender; you are required to complete research and provide the following information which is also covered in the learning material:
Detailed notes regarding the lender's organisational approval policy and procedures for the chosen product in your selected case study. Briefly explain why the loan met the policy guidelines and how you researched the product and the guidelines. Including maximum LVR, serviceability ratio, minimum loan etc. If you are unable to access the lenders information readily the alternative is to access the Lender Mortgage Insurers (i.e. Genworth/QBE) guidelines which are readily available on their web pages. Although the case studies provided did not require LMI it is helpful to understand policy guidelines as many types of lenders and loans require LMI cover.
Explain the approval guidelines i.e. who can approve/delegation; timeframes etc.
Ensure you are adherence to relevant legislation with reference to checking and verifying application/client details and maintaining records i.e. how file and records are maintained, how movements/milestones are monitored etc.
Task 3: Report/Written Test - Completing Customer File
You are to submit a fully completed loan application form as well as:
A lenders cover sheet detailing the background of the applicants, structure of the loan, loan product applied for, serviceability criteria.
Supporting documents for the loan submission as requested by the lender
Finally as a result of your client interview, completing relevant client documents and loan application for the lender; you are now required to complete the remainder of customer file supporting several of your obligations and responsibilities as a Finance Broker. These important steps being the approval process, documentation, settlement and ongoing relationship management. In areas where you do not have copies of actual supporting documentation, insert a page with the name of the document, an explanation of the document and its purpose. You would include e.g. copy of formal/unconditional approval stating conditions of settlement.
There are a number of templates in the Member's Area under 'Useful Resources' that you could use in your submission.
You are required to submit your customer as determined by the chosen case study. Therefore your file information must contain the following:
1. Adding to your Interview Notes - Customer Contact Sheet/Record
You should have already documenting regular communication pre your loan submission. These interview notes incorporate all the correspondence from initial contact to loan preparation and submission. You are now required to provide interview notes from loan submission to post loan application process; with all parties specifically including:
- Customer
- Bank/s
- Referrer/s
- Government bodies, i.e. Stamp Duty, FHOG/ Revs
- Property Valuators
- Settlement Agent
2. Advice of Loan Approval
Evidence of communication with customer and other relevant parties regarding:
- Communication of formal/unconditional approval to customer i.e. lender letter of offer;
- Letter to client regarding documentation/settlement expectations;
- Communication with Real Estate Agent, Settlement Agent, etc.
3. Document Sign-Up/Settlement Preparation
- Document sign-up checklist and covering letter /communication;
- Correctly signed mortgage documents;
- Insurance details;
- Authority to disburse funds;
- Settlement checklist.
4. Advice of Transaction Completed/Finalized
- Communication of successful settlement;
- Letter/survey to client asking for client satisfaction feedback on services/support provided. You may wish to ask for referral to friends and family.
Task 4: A (Activity) and B (Short Answers)
Create a customer/referrer database
A. The relationships built in Task 1 Case Study were the clients, referrer, settlement agent and real estate agent.
Prepare a database on contacts made from this task by using your internal customer record system or suitable program, i.e. Microsoft Excel spreadsheet. You are required to submit the Excel file (or PDF/screenshot if other software is used), showing your database layout.
B. Please answer the following questions in relation to your database and building/managing your business contacts:
1. Why is important to build a database of clients/referral sources?
2. Why is it important to develop professional relationships?
3. When is it not appropriate to contact a person and why?
4. Why is it important to have effective interpersonal styles and methods when dealing with clients/referrers? Why is it important to consider special needs, culture, race, religion, origin, demographics?
5. Explain why you think it would be important to follow up any business referrers as quickly as possible.
6. What methods could you use in developing new business i.e.; advertising and promotion of your services?
Attachment:- Loan Application Process.rar