Written Assignment
Complex Lending and Broking
(DIPMB2_AS_v3)
Student identification (student to complete)
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Feedback (assessor to complete)
[insert assessor feedback]
Before you begin
Read everything in this document before you start your written assignment for the Complex Lending and Broking (DIPMB2_AS_v3) subject.
About this document
This document is the written assignment and includes the following:
• Instructions for completing and submitting this written assignment
• Section 1: Case Study A – Ray Murdoch and Steve Brown – Commercial Equipment Finance
– Task 1a – Identify the clients’ complex broking needs
– Task 2a – Develop complex broking options
– Task 3a – Implement complex loan structures
– Task 4a- Detailing analysis findings
• Section 2: Case Study B – Bill Smith and John Jones – Commercial Premises Finance
– Task 1b – Identify the clients’ complex broking needs
– Task 2b – Prepare complex broking options
– Task 3b – Implement complex loan structures
– Task 4b – Detailing analysis findings
• Section 3: Improving practice performance
– Task 5 – Develop, research and monitor plans to improve performance
How to use the study plan
We recommend that you use the study plan for this subject to help you manage your time to complete the written assignment within your enrolment period. Your study plan is in the KapLearn Complex Lending and Broking (DIPMB2v3) subject room.
Instructions for completing and submitting this written assignment
Saving your work
Download this document to your desktop, type your answers in the spaces provided and save your work regularly.
• Use the template provided, as other formats will not be accepted for this written assignment.
• Name your file as follows: Studentnumber_SubjectCode_Assignment_versionnumber_Submissionnumber
(e.g. 12345678_DIPMB2_AS_v3_Submission1).
• Include your student ID on the first page of the written assignment.
Before you submit your work, please do a spell check and proofread your work to ensure that everything is clear and unambiguous.
The written assignment
The information and data you need to complete this written assignment is presented in the case studies at the beginning of each task.
This written assignment covers complex lending and broking and requires you to answer the questions for Section one (1) or Section two (2) and Section 3. Each case study focuses on a different lending scenario.
Word count
The word count shown with each question is indicative only. You will not be penalised for exceeding the suggested word count. Please do not include additional information which is outside the scope of the question.
Additional research
When completing this assignment, assumptions are permitted although they must not be in conflict with the information provided in the Case Studies.
You may also be required to source additional information from other organisations in the finance industry to find the right products or services to meet your client’s requirements, or to calculate any service fees that may be applicable.
Submitting the written assignment
Only Microsoft Office compatible written assignments submitted in the template file will be accepted for marking by Kaplan Professional Education. You need to save and submit this entire document.
Do not remove any sections of the document.
Do not save your completed written assignment as a PDF.
The written assignment must be completed before submitting it to Kaplan Professional Education. Incomplete written assignments will be returned to you unmarked.
The maximum file size is 20MB for the written assignment. Once you submit your written assignment for marking you will be unable to make any further changes to it.
You are able to submit your written assignment earlier than the deadline if you are confident you have completed all parts and have prepared a quality submission.
Please refer to the Assignment submission/resubmission instructions (pdf) in the Assessment section of KapLearn for details on how to submit your written assignment.
Your written assignment must be submitted on or before your due date. Please check KapLearn for the due date.
The written assignment marking process
You have 12 weeks from the date of your enrolment in this subject to submit your completed assignment.
If you reach the end of your initial enrolment period and have been deemed Not Yet Competent in one or more assessment items, then an additional 4 weeks will be granted, provided you attempted all assessment tasks during the initial enrolment period.
Your assessor will mark your written assignment and return it to you in the Complex Lending and Broking
(DIPMB2v3) subject room in KapLearn under the ‘Assessment’ tab.
Make a reasonable attempt
You must demonstrate that you have made a reasonable attempt to answer all of the questions in your written assignment. Failure to do so will mean that your assignment will not be accepted for marking; therefore you will not receive the benefit of feedback on your submission.
If you do not meet these requirements, you will be notified. You will then have until your submission deadline to submit your completed written assignment.
How your written assignment is graded
Assignment tasks are used to determine your ‘competence’ in demonstrating the required knowledge and/or skills for each subject. As a result, you will be graded as either competent or not yet competent.
Your assessor will follow the below process when marking your written assignment:
• Assess your responses to each question, and sub-parts if applicable, and then determine whether you have demonstrated competence in each question.
• Determine if, on a holistic basis, your responses to the questions have demonstrated overall competence.
You must be deemed competent in all assessment items in order to be awarded your qualification, including demonstrating competency in:
• all of the exam questions
‘Not yet demonstrated’ and resubmissions
Should sections of your assignment be marked as ‘Not yet demonstrated’ you will be given an additional opportunity to amend your responses so that you can demonstrate your competency to the required level.
You must address the assessor’s feedback in your amended responses. You only need amend those sections where the assessor has determined you are ‘Not yet demonstrated’.
Make changes to your original submission. Use a different text colour for your resubmission. Your assessor will be in a better position to gauge the quality and nature of your changes. Ensure you leave your first assessor’s comments in your assignment, so your second assessor can see the instructions that were originally provided for you. Do not change any comments made by a Kaplan assessor.
Units of competency
This written assignment is your opportunity to demonstrate your competency against these units:
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Unit code |
Unit name |
DIPMB2 Complex Lending and Broking |
DIPMB3 Business Management Skills |
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Identify and develop broking options for clients with complex needs |
Started |
Completed |
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Started |
Completed |
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Started |
Completed |
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Develop and nurture relationships with clients, other professionals and third party referrers |
Started |
Completed |
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Started |
Completed |
Note that the written assignment is required to meet the requirements of the units of competency.
We are here to help
If you have any questions about this written assignment you can post your query at the ‘Ask your Tutor’ forum in your subject room. You can expect an answer within 24 hours of your posting from one of our technical advisers or student support staff.
Section 1: Case study A — Ray Murdoch and Steve Brown – Commercial Equipment Finance
Note: You only need to complete Section 1 or Section 2 tasks 1-4 in this assignment, plus Section 3 task 5.
Background
You have just met with Ray Murdoch and Steve Brown, referred to you by another commercial client.
Ray Murdoch and Steve Brown jointly own a successful and growing business that manufactures metal pallets. They trade under the name Pallets-R-Us Pty Ltd. The pallets are manufactured using material that is lightweight and durable. There has also been a very structured approach to the research and development for the engineering and design of the pallets. The pallets are used in all industry sectors. Part of the process involves powder coating the finished product, which is currently outsourced to a local well-established contractor.
It is critical that Ray and Steve’s product meets market needs. They need to maintain sustainable production and operating costs if they are to forecast their sales and cost of sales.
They have a well-established client database that provides them with repeat ‘business-to-business’ dealings. While they have only been trading for 30 months, they have a solid business plan with written supply contracts with three major business clients and several smaller business clients.
Ray and Steve now require finance to assist them with the purchase of a sophisticated machine that uses the technical platform system CNC. This machine can be programmed to rapidly fabricate multiple components. The machine has an expected commercial lifespan of at least 15 years with operating software to be updated every three years. This software and upgrades is included in the purchase price of $800,000. They will have to import the machine from the US. Initial enquiries with the US supplier have indicated that they will require a letter of credit for the import of the machine. Once the machine has arrived and installed on the premises the letter of credit will be replaced with an asset lease. The asset lease requested by the borrowers will be for a seven-year term with a residual of 15%.
Their business employs five people and, with the expected increase in business through the automation of production, they have forecast that they will need to recruit an additional two staff members in the next 3–6 months to meet sales/production demands.
Ray has been in the metal fabrication field all his working life. He has an MBA and understands financial management. He also has solid engineering skills and developed the majority of the design works for the business. He is divorced and has no dependants. Steve is married and his wife is a school teacher and she will be retiring at the end of the year.
Steve worked with Ray at ‘Protech’ as a foreman. His skills are in production and managing project/job flow. He has high level technical skills and can complete works to specification at a high standard.
Steve and Ray have provided the last two years financial accounts for the trading business, as well as interim accounts for the current financial year. Ray’s brother provided business with a loan $500,000 when the business commenced and he is being repaid interest plus a principle repayment of $30,000 per annum.
Applicant information
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Client |
Ray Murdoch |
Steve Brown |
| Current address: | Unit 43, 25 High St Northville, <Your State> and has lived there for six years | 23 Desmond Lane Northville, <Your State> and has lived there with Kate for seven years. They own property jointly. |
| Home phone: | 9001 2121 | 9002 1212 |
| Status | Ray is divorced with no dependent age children | Steve is married with no dependents |
| Employment | Self-employed business owner | Self-employed business owner |
| Income | $100,000 per annum | $100,000 |
| Property value | $750,000 | $900,000 |
| Cash at bank | $12,500 | $9,600 |
| Contents | $100,000 | $85,000 |
| Superannuation | $250,000 | Steve $350,000, Kate $60,000 |
| Motor vehicle | $40,000 | $55,000 |
| Home loan | $250,000 repayments $2,068p.m., P & I, 18 years remaining | $350,000 repayments $2,645 p.m., P & I, 22 years remaining |
| Credit card | $25,000 limit with debt of $15,000, monthly payment calculated @3% of limit | $10,000 limit with debt of $3,000, monthly payment calculated @3% of limit |
| Car loan | $0 | $15,000 repayment $746p.m., remaining term 4 years |
The business
| Year 1 net profit after tax | $200,000 |
| Year 2 net profit after tax | $220,000 |
| Current year interim profit (10 months trading) | $200,000 |
| Wages to partner 1 – years 1 and 2 | $100,000 |
| Wages to partner 2 – years 1 and 2 | $100,000 |
| Principal repayment to Ray’s brother repaid annually | $30,000 |
| ABN: | 64-123-123-123 |
| Business name: | Pallets-R-Us Pty Ltd |
Key balance sheet items
| Cash | $25,000 |
| Trade Debtors | $220,000 |
| Trade Creditors | $100,000 |
| Notes | The business currently meets all creditor payments at 30-day terms.
Debtor collection has been solid. They invoice an upfront payment of 50% of the sale price, which assists in funding their production. They have orders of $1m over the next 3 months and have made an increase in their gross profit margin. The orders are from several clients, so their debtors will be well spread. Outstanding balance on loan from brother $440,000. |
Task 1a — Identify the clients’ complex broking needs
Prepare a list of questions that you would need to ask Ray and Steve about their history, experience, business performance and the intended equipment purchase.
In preparing your list of questions you should ensure that you cover the following:
• the complex features in importing and purchasing this equipment and benefits that will come to the Company from such purchase
• the identification of potential risks in such a transaction and Ray’s and Steve’s tolerance of risk
• the financial aspects of the transaction and current financial position of the business.
(800 words)
Student response to Task 1a
| Answer here |
Assessor feedback for Task 1a — Identify the clients’ complex broking needs
| (Insert Feedback) | |
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Question(s) that need to be resubmitted (if required) |
(List question numbers) |
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First submission |
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Resubmission (if required) |
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Task 2a — Develop complex broking options
You are required to prepare a full report addressed to Ray and Steve outlining available loan options; the process and the risks (potential and real) of which they should be made aware.
In a suitable report format you should cover the following:
1. the parties to the loan
2. Outline the type of letter of credit (LC) likely to be used, the parties to the LC and the high-level steps involved in setting up and establishing LC to enable import of the equipment
3. the product options that are available to finance an equipment purchase once it has arrived in Australia
4. your recommendation of best product option, including amount, security/collateral, term, potential interest rate and residual value (if any)
5. name three (3) lenders that would consider and potentially approve this transaction and advise Ray and Steve about product type, loan term, interest rate, balloon payment (if applicable) and monthly repayment they offer
6. the procedure to commence the import of the equipment and the loan, including documentation Ray and Steve need to provide
7. the client responsibilities, so Steve and Ray fully understand the facility being proposed
8. outline the risks (potential and real) of which Ray and Steve should be made aware
9. whether personal guarantee will be required from the Director’s spouse
10. a summary of all fees and charges — including those for setup and those of the lender
11. advise which relevant disclosures need to be made
12. a request for client to inform you of any questions about the transaction and/or provide an instruction to proceed.
(800 words)
Notes: Any assumptions you make should be listed, and not be in conflict with the case study information already provided.
You are to write a report to your clients, demonstrating your professional writing skill — not simply commenting on each of the points detailed above.
The use of tables in the report to set out some of the numeric information may be of benefit.
Student response to Task 2a
| Answer here |
Assessor feedback for Task 2a — Develop complex broking options
| (Insert Feedback) | |
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Question(s) that need to be resubmitted (if required) |
(List question numbers) |
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First submission |
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Resubmission (if required) |
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Task 3a — Implement complex loan structures
Ray and Steve have accepted your recommendations and have given you authority to proceed with their application.
As part of implementing their loan application you are required to prepare a formal written loan submission to the lender for pre-approval. Note: Lenders have different credit policies and submission requirements do vary from lender to lender.
Your loan submission must include the following:
• details of borrower, guarantors and all contact details
• borrowers background
• an overview of the proposal — what the finance is for
• the proposed structure of the facility being recommended — product type, deposit amount (if required), loan amount, term, interest rate and residual value (if any)
• full details of the security/collateral that is to be provided
• serviceability calculations including Debt Service Cover Ratio (DSCR) calculations, including all personal borrowing facilities of the directors
• provide a ‘funds-to-complete’ table including statutory costs and any relevant fees
• highlight the relevant risks — industry, business, transactional — and how they are mitigated
• any other information that is relevant to assist the lender provide an approval
• your comments and recommendations
• list attachments
(800 words)
Notes: Any assumptions you make should be listed, and not be in conflict with the case study information already provided.
You are to write a formal submission to the lender; not simply commenting on each of the points detailed above.
The use of tables in the report, to set out some of the numeric information, may be of benefit.
Student response to Task 3a
| Answer here |
Assessor feedback for Task 3a — Implement complex loan structures:
| (Insert Feedback) | |
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Question(s) that need to be resubmitted (if required) |
(List question numbers) |
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First submission |
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Resubmission (if required) |
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Task 4a — Detailing analysis findings
This task will require you to assume the role of a credit assessor who is making a recommendation to their supervisor for approval of the loan application being assessed.
This will require you to provide a detailed analysis of your research into the applicant and their industry (based on case study background), your findings and risk analysis for the lender.
Verification of the applicant’s information and supporting documents includes testing and checking the integrity of information supplied.
1. Using the the information in the case study, check the legal entity of the business and identify which Australian Business Number (ABN) is correct:
(a) 64-123-241-193
(b) 64-123-123-123
(c) 64-123-123-163
Student response to Task 4a: Question 1
| Answer here |
2. Identify two legislative requirements that should be reviewed to test and check compliance with identification processes for commercial borrowers.
Student response to Task 4a: Question 2
| Answer here |
3. What sources could you rely on to verify the financial data supplied by the client?
Note: As this is a case study only, you will need to explain where you would source the information, what processes you use and what documents would verify the financial data.
Student response to Task 4a: Question 3
| Answer here |
After reviewing the background information and business details of the applicant, complete the following questions.
4. Provide a summary of the impact that the new leasing costs will have on the applicant’s net profit, assuming an anticipated 50% increase in the net profit based on the Year 2 of trading results.
Student response to Task 4a: Question 4
| Answer here |
5. Provide a costing of the lease as described in the background information. The interest rate for the lease will be 6%.
Student response to Task 4a: Question 5
| Answer here |
6. Detail the security instrument to be used for this transaction and what impact this may have on the business.
Student response to Task 4a: Question 6
| Answer here |
7. Outline any legal or other complex requirements identified.
Student response to Task 4a: Question 7
| Answer here |
(Task 4b questions 1-7, 500 words)
Notes: To complete this task you will need to refer to the Toolbox in the sections Pallets-R-Us Pty Ltd and ‘Lending organisation’s guidelines, policies and procedures, Legislative requirements, Loan verification and loan standards’ found in the Toolbox. You may also need to conduct your own independent research to answer these questions.
Assessor feedback for Task 4a — Detailing Analysis Findings:
| (Insert Feedback) | |
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Question(s) that need to be resubmitted (if required) |
(List question numbers) |
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First submission |
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Resubmission (if required) |
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Section 2: Case Study B — Bill Smith and John Jones – Commercial Premises Finance
Note: You only need to complete Section 1 or Section 2 tasks 1-4 in this assignment, plus Section 3 task 5.
Background
You are meeting with prospective clients, Bill Smith and John Jones. They have been referred to you by their accounting firm, Buckland Accountants.
The prospective clients need assistance with the acquisition of owner-occupied premises to replace their current business premises, which they rent and is becoming too small for their growing business.
True Blue Pty Ltd trades as True Blue Real Estate and was purchased as an existing real estate business three years ago. Bill Smith and John Jones are the directors.
The shareholders of True Blue Pty Ltd are Bill Smith, John Jones and a private investor, Amanda Williams, who does not work in the business and has no involvement in its day-to-day operation. Each holds an equal one-third share in the company.
Bill and John have each been in real estate for approximately 15 years, focusing on residential sales and leasing. They have gained their work experience in the local area. A wealth of knowledge of the area, coupled with an ever-expanding client base, has resulted in sustained and solid growth for the business.
Sale price of the property is $950,000. (There is no GST requirement as it is being purchased as a going concern.)
A deposit of $95,000 has been paid and is being held in the trust account of the settlement agent/solicitor.
A cash contribution of $233,240 will be made from the general working account of the business.
Property purchase and loan to be in the name of a new entity — True Blue Pty Ltd as trustees for the Smith Jones Unit Trust. There are a total of 99 units in the trust and the unit holdings mirror the shareholding of the trading entity, True Blue Pty Ltd.
The property is situated at 100 Smith St, Yourtown, with contracts exchanged at today’s date and an anticipated settlement date of 90 days.
General observations about the property
The property is in good condition and is well located in the same street as the current rental premises.
It is anticipated that the premises will meet the needs of the business for the next 10 years.
Summary of initial client fact find
Bill and John have provided the last two years financial accounts for the trading business, as well as interim accounts for 10 months of the current financial year.
True Blue Real Estate’s financial accounts
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Year 1 (previous) |
Year 2 (current) |
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| Net profit after tax | $92,000 | $140,060 |
| Current year projected – $175,000 | ||
| Add back (rent) | $47,000 | $49,142 |
| Additional superannuation to director | $31,400 | $34,539 |
| Wages to partner one | $70,640 | $70,640 |
| Wages to partner two | $70,640 | $70,640 |
| Payment to private investor (fixed flat profit fee) | $45,000 | $45,000 |
Applicant information — Bill Smith
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Personal details |
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| Address | 26 Nowry Road, Yourtown, 1234 |
| Date of birth | 17 February 1958 |
| Phone | 7890 1234 |
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Financial details |
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| Gross income | $70,640 |
| Owner-occupied property valued at | $550,000 |
| Outstanding debt on owner-occupied property | $210,000 repayable at $1,379 per month P & I, 6.2% p.a. interest rate |
| Credit card with limit $15,000 | Outstanding debt — $5,000 |
| Superannuation | $250,000 |
| Motor vehicle valued at | $30,000 (nil debt) |
Applicant information — John Jones
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Personal details |
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| Address | 14 Mary Street, Yourtown, 1234 |
| Date of birth | 14 October 1970 |
| Phone | 0146 234 577 |
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Financial details |
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| Gross income | $70,640 |
| Owner-occupied property valued at | $750,000 |
| Outstanding debt on owner-occupied property | $300,000 repayable $2,159 per month P & I, 6.2% p.a. interest rate |
| Credit card with limit $5,000 | Outstanding debt — $1,000 cleared monthly |
| Superannuation | $200,000 |
| Motor vehicle valued at | $45,000 |
| Outstanding debt on motor vehicle | $15,000 repayable $623 per month, fixed interest rate |
|
Additional Business details |
|
| Cash in business account | $400,000 |
| ABN | 64 123 123 123 |
| Business Name | True Blue Pty Ltd trading as True Blue Real Estate |
| Trust | Smith Jones Unit Trust |
Other information
|
Applicants’ solicitor |
Moffat and Co (contact is Maree Moffat)
16 Tatlor Street, Yourtown, 1234 |
| Phone | 7890 5678 |
|
Applicants’ accountant and registered office |
Buckland Accountants (contact is Simon Williams)
28 Mary Street, Yourtown, 1234 |
| Phone | 2982 0987 |
|
Applicants’ banker |
Westcoal Building Society, Yourtown, 1234 |
Notes:
• Assume for credit card debts, the minimum monthly commitment should be calculated at 3% of the credit limit.
• Each of the working directors has appropriate death, income and disability insurance in place.
• A sensitisation factor of 2% should be used when calculating financial commitments.
Task 1b — Identify the clients’ complex broking needs
Prepare a list of questions that you would need to ask Bill and John about their history, experience, business performance and the property purchase.
In preparing your list of questions you should ensure that you cover the following:
• the complex features of Company and Trust structure and benefits that will come to the Company from purchase of this property
• the identification of potential risks in such a transaction and Bill’s and John’s tolerance of risk
• the financial aspects of the transaction and current financial position of the business.
In addition to the list of questions, please also comment on any potential risks you identify (you are permitted to make assumptions here). In considering these risks you should consider:
– how you would identify the risks and the criteria you used to evaluate these risks
– how you would assess their current debt exposure; the tools you would use in terms of risk probability, impact and consequences.
(800 words)
Student response to Task 1b
| Answer here |
Assessor feedback for Task 1b — Identify the clients’ complex broking needs:
| (Insert Feedback) | |
|
Question(s) that need to be resubmitted (if required) |
(List question numbers) |
|
First submission |
|
|
Resubmission (if required) |
|
Task 2b — Prepare complex broking options
You are required to prepare a full report for Bill and John by outlining the process and the risks (potential and real) of which Bill and John should be aware.
In a suitable format, outline to the directors the options available to them and the process that will need to take place for them to complete the new property purchase and establish the loan.
In developing your report you should cover the following:
1. the parties to the loan
2. what is the best loan structure for this transaction — provide Bill and John with options to use their own residential properties as cross security or use a cash contribution and use the property to be purchased as the security
3. your recommendation of the best option, including amount, security/collateral, term, repayments and potential interest rate
4. name three (3) lenders that would consider and potentially approve this transaction, and advise the client of the product type, loan term, interest rate, ongoing fees, balloon payment (if applicable) and monthly repayment they offer
5. the procedure to commence the loan, including documentation Bill and John need to provide
6. the client responsibilities, so Bill and John fully understand the facility being proposed
7. outline the risks (potential and real) of which Bill and John should be made aware
8. the name in which the client will sign the contract to purchase and, given Trust involvement, in what name will it be registered (this varies state to state so please advise which state you are from)
9. a summary of fees and charges — including those for setup and those of the lender
10. a request for client to inform you of any questions about the transaction and/or provide an instruction for you to proceed
11. advise which relevant disclosures need to be made
(800 words)
Notes: Any assumptions you make should be listed, and not be in conflict with the case study information already provided.
You are to write a report to clients demonstrating your professional writing skill, not simply commenting on each of the points detailed above.
The use of tables in the report, to set out some of the numeric information, may be of benefit.
Student response to Task 2b
| Answer here |
Assessor feedback for Task 2b — Prepare complex broking options
| (Insert Feedback) | |
|
Question(s) that need to be resubmitted (if required) |
(List question numbers) |
|
First submission |
|
|
Resubmission (if required) |
|
Task 3b — Implement complex loan structures
Bill and John have accepted your recommendations and have given you authority to proceed with their application.
As part of implementing their loan application you are required to prepare a formal written loan submission to the lender for pre-approval.
Note: Lenders have different credit policies and submission requirements do vary from lender to lender.
Your loan submission must include the following:
• details of borrower, guarantors and their contact details
• borrowers’ backgrounds
• an overview of the proposal — what the finance is for:
– the proposed structure of the facility being recommended — product type, deposit amount (if required), loan amount, term, interest rate and residual value (if any) Note: Loan is based on a 70% LVR, a 7% interest rate and 15 year term.
– full details of the security/collateral that is to be provided
– Sensitised serviceability calculations including Debt Service Cover Ratio (DSCR) calculation and all personal borrowing facilities of directors (sensitisation rate is disclosed in case background)
– provide a funds-to-complete table, including statutory costs and any relevant fees
– highlight the relevant risks, industry, business, transactional and how they are mitigated
– any other information that is relevant to assist the lender provide an approval
– your comments and recommendations
– list attachments.
(800 words)
Notes: Any assumptions you make should be listed, and not be in conflict with the case study information already provided.
You are to write a formal submission to the lender, not simply commenting on each of the points detailed above.
The use of tables in the report, to set out some of the numeric information, may be of benefit.
Student response to Task 3b
| Answer here |
Assessor feedback for Task 3b — Implement complex loan structures:
| (Insert Feedback) | |
|
Question(s) that need to be resubmitted (if required) |
(List question numbers) |
|
First submission |
|
|
Resubmission (if required) |
|
Task 4b — Detailing analysis findings
This task will require you to assume the role of a credit assessor who is making a recommendation to their supervisor for approval of the loan application being assessed.
This will require you to provide a detailed analysis of your research into the applicant and their industry (based on case study background), your findings and risk analysis for the lender.
Verification of the applicant’s information and supporting documents includes testing and checking the integrity of information supplied.
1. Using the the information in the case study, check the legal entity of the business and identify which Australian Business Number (ABN) is correct:
(a) 64-123-241-193
(b) 64-123-123-123
(c) 64-123-123-163
Student response to Task 4b: Question 1
| Answer here |
2. Identify two legislative requirements that should be reviewed to test and check compliance with identification processes for commercial borrowers.
Student response to Task 4b: Question 2
| Answer here |
3. What sources could you rely on to verify the financial data supplied by the client?
Note: As this is a case study only, you will need to explain where you would source the information, what processes you use to verify the financial data.
Student response to Task 4b: Question 3
| Answer here |
4. Following your review on the borrower’s cashflow, provide a summary in the table below, by comparing current and future (projected) cashflow position after the new loan; and any cashflow impact it may have for the applicant.
Student response to Task 4b: Question 4
|
Current financial year |
Current year projected |
||
| Current year net income after tax | Answer here | Projected net income after tax | Answer here |
| Rental add back | Answer here | Add back rent | Answer here |
| Less new loan | Answer here | Less new loan | Answer here |
| Net surplus cash flow | Answer here | Net surplus income | Answer here |
| Cashflow impact:
Answer here |
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5. Detail the security instrument to be used for this transaction and what impact this may have on the business.
Student response to Task 4b: Question 5
| Answer here |
6. Outline any legal or other complex requirements identified
Student response to Task 4b: Question 6
| Answer here |
(Task 4b questions 1-6, 500 words)
Notes: To complete this task you will need to refer to the Toolbox and sections True Blue Pty Ltd trading as True Blue Real Estate and ‘Lending organisation’s guidelines, policies and procedures, Legislative requirements, Loan verification and audit standards’ document found in the Toolbox. You may also need to conduct your own independent research to answer these questions.
Assessor feedback for Task 4b — Detailing Analysis Findings:
| (Insert Feedback) | |
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Question(s) that need to be resubmitted (if required) |
(List question numbers) |
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First submission |
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Resubmission (if required) |
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Section 3: Improving practice performance
Note: You only need to complete Section 1 or Section 2 tasks 1-4 in this assignment, plus Section 3 task 5.
Task 5 – Develop, research and monitor plans to improve performance
As the owner of your mortgage brokerage practice, you have decided to undertake a review of the business and its processes with the objective: to improve its overall performance for the practice.
1. To achieve this, you will initially need to conduct some research on the internet. Reference sites are located in the Toolbox in the section: Improving practice performance. Once research is completed, you are required to develop and document your plans to introduce the new improvement into the practice. To do this, fill in the table below:
Student response to Task 5: Question 1
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Goals |
Current position |
Improvements |
| Answer here | Answer here | Answer here |
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Performance |
Current position |
Improvements |
| Answer here | Answer here | Answer here |
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Using data |
Current position |
Improvements |
| Answer here | Answer here | Answer here |
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Document |
Current position |
Improvements |
| Answer here | Answer here | Answer here |
2. While conducting this research you found that your credit representatives are failing to input all the essential data and document requirements into the aggregator software platform following a software upgrade. To avoid any potential breaches in compliance, provide an effective method you may use to negotiate an acceptable timeframe with the credit representatives to implement these new software processes.
Student response to Task 5: Question 2
| Answer here |
2. To monitor the progress of these changes you negotiated in question 2 above — with the credit representatives, complete the monitoring improvements table below:
Student response to Task 5: Question 3
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Monitoring Improvements |
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Before Software upgrade |
After software upgrade |
Record of changes made |
| Answer here | Answer here | Answer here |
(Task 5, Question 1 and 2, 350 words)
Assessor feedback for Task 5 — Develop, research and monitor plans to improve performance:
| (Insert Feedback) | |
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Question(s) that need to be resubmitted (if required) |
(List question numbers) |
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First submission |
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Resubmission (if required) |
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