Reference no: EM132192227

Case Study

As part of your marketing, Peng and Mia, who live in the same suburb as you, come to your office and during the initial interview with them, you establish the following facts:

1. After migrating into Australia, Peng and Mia, a young couple originally from Taiwan, obtained their permanent residency status and have settled in the same State or Territory as you to run a small bakery. Both have intermediate English language skills.

2. They have saved $95,000 in the last two years and now want to obtain a mortgage loan to buy their first property which is situated in the same State or Territory that you live in.

3. They would like to buy a one bedroom condominium, which was built 6 months ago. The cost of the condominium is $410,000.

4. They may consider having a baby in the near future in which case they may want to move to a larger apartment.

5. They are concerned about whether they satisfy the lender's income requirements because they don't have stable salaries. That being said, they earn good salaries and a small profit from their bakery business. Research on the internet to determine which lender is likely to treat them more favourably.

6. Peng and Mia would prefer not to pay any principal in the early years of their loan, if possible. Instead they want to make further investments in their business to grow it.

Role Play 1 of 2

When undertaking your role play please be organised and disciplined in your time frames. This MUST be done with at least one another person acting as your client. The International Institute of Technology take great pride in these role plays and they are a vital platform to the underlying pedagogy. Consider your timeframes when completing this roleplay, think of it as being receptive to the timeframes of your client. A mortgage broker needs to be knowledgeable in the presentation of the advice process so please be well prepared to answer questions clearly when asked by the clients.

Scenario
Peng and Mia have agreed to be on a list to be contacted, you have called them and after introducing yourself and establishing a relationship you try to persuade him/her to be your client.

Role Play 2 of 2 Duration:

Please allow 10-15 minutes

Scenario
After agreeing to be your clients Peng and his wife Mia have sent you their information and you are prepared for their appointment. During this appointment, you will explain the details of the loan you have chosen for them including the features of the loan, the associated costs and why you are making this recommendation. You will also explain the details of your remuneration to them.

Directions

Present your advice. Please use the guidelines below to assist in your presentation.

Topic to be covered	Time allocated	Delivery method	Suggestions and issues to be discussed
Introduction and brief overview	1 minutes	Oral	Welcome your clients, present them with your business card and Credit Guide.
Explain how you are going to help your clients obtain finance	4 minutes	Oral / Q & A	Whilst asking questions to ensure the client understands, you should: explain the details of the finance you have organised for your clients -         describe the type of loan you have arranged for your clients including the expected payments -         outline the features of the loan including any portability features you have recommended -         explain whether you think your clients will get the FHOG -         explain to your clients the LVR you have applied and ensure they are happy with it explain to your client your responsibilities under the anti-money laundering regulations ensure your clients understand what you are organising for them by using plain English
Explain the fees and commissions	1 minute	Oral / Q & A	Discuss the fees you are charging with the client and how they will be charged. Focus on critical aspects of service delivery. Disclose whether you have any exclusive relationships with banks or other lenders.
Explain the implementation process to the clients	3 minutes	Oral / Q & A	Confirm the clients are happy with the finance arrangements and seek feedback. Explain to your clients what documentation you will need from them. Explain the steps involved in the implementation process, including the roles and responsibilities of other relevant industry participants and their input into the process. Respond to any of your clients' concerns
Conclude appointment	1 minutes	Oral / Q & A	Ask your clients if they are happy and have any feedback.

Short Answer Question 1
Are your clients eligible for the First Home Owner's Grant or stamp duty exemptions given they plan to buy in the same suburb as you? So Sweet organizational requirements requires you in addressing such questions to access the most recent figures from the website, including the link and the most recent data in your response.

Short Answer Question 2
What documents would you request from your clients given their application for a mortgage loan? In what way do these documents meet organizational requirements?

Short Answer Question 3
When serving this young couple, how would you fulfil your responsibilities as a mortgage broker under the anti-money laundering legislation?

Short Answer Question 4
Given the fact that your clients have poor to adequate English language skills, what would you do to avoid committing unconscionable, misleading or deceptive conduct?

Short Answer Question 5
Using the internet to find the most current products, decide which sort of a loan you would recommend to your clients and explain why.

Short Answer Question 6
Would you recommend a portability feature within the loan for your clients?

Short Answer Question 7
Calculate the loan-to-value ratio and discuss whether a lender would be prepared to lend your clients their desired amount on the basis of the information they have provided.

Short Answer Question 8
What would be the monthly payments of an interest only loan be if the interest rate was 7% per annum?

Short Answer Question 9
What would be the initial monthly repayment if you recommended a variable loan if the interest rate was 7% and the loan term was 25 years?

Short Answer Question 10
How would you charge your clients? Please detail your remuneration arrangement in full in an email to your clients ensuring to sign off with your name.

Legislative and Regulatory Frameworks

Short Answer Question 1
(a) Which sort of loans does the National Credit Code cover?

(b) What evidence would So Sweet as a holder of an Australian Credit License be required to prove the following?
• Maintaining Australian Credit License
• Authorisations with aggregator.
• Mortgage brokers must complete their Continuing Professional Development points 2 months before the professional body's due date. Note: So Sweet keep training records.
• Audit loan documentation.

(c) What would you do to implement an audit of loan documentation for staff and authority holders?

(d) What statutory records does a financial services organisation need to maintain?

Short Answer Question 2
(a) How can a mortgage broker avoid perpetrating unconscionable conduct?

(b) What are the most common client complaints?Short Answer Question 3
You as part of a team have been requested by So Sweet to produce a Credit Guide. Your role is to emulate the credit guide up to and including the panel of lenders available at: https://www.totalchoicehomeloans.com.au/credit-guide/

You must use your own address and phone number as the office address and number and your date of birth as the Australian Credit Licence Number i.e. ddmmyy.

Include a footer to show where the document is stored electronically. The document should be named so that the content and author are easily identifiable.

Short Answer Question 4
(a) Briefly explain the most common types of frauds perpetrated in the mortgage industry?

(b) If a client perpetuates fraud, will the mortgage broker be liable?

Short Answer Question 5
One afternoon, Millicent asks if you would help with a client. She introduces you to Bob Butler who is one of Ying's clients and then leaves. You invite Bob to sit down and ask him how you can help. Bob, who is 80 years old, launches into a tirade. You are able to move past his emotion and begin to determine whether there are genuine causes for what appears to be a pressing complaint. Firstly, according to Bob, Ying has failed to return his phone calls for the past two weeks. This means that Bob has been experiencing great difficulty in obtaining a refund of the brokerage fee. Bob wants a refund because Ying failed to explain the terms and conditions of the prospective loan and because she refused to answer his questions. According to Bob, when his ‘solicitor friend' read the fine print, the loan was of an ‘interest only' nature. Bob claims he specified that he was not interested in this kind of loan. He later found out that the other product Ying had recommended was out of date. Ying also refused to comment on the impact of an easement that appeared on the title of the property. As an aside, Bob notes an administrative error in the invoice which he considers to be irrelevant because, in his words, he has "no interest in paying an incorrect invoice for an incorrect product rendered through inadequate service by an incompetent and inept broker".

When Bob finishes venting, you explain that Ying was in a car accident and has been on sick leave for two and a half weeks. You immediately apologise for the firm's oversight and failure to divert her phone calls, adding that you forwarded an email to Ying only this morning so that you can guarantee her ‘out of office' reply is active. Bob, however, is old school and uses Australia Post or fax rather than email. Believing you are making excuses for your colleague, Bob snaps back that he is "not interested in empty placations but rather workable solutions". He stops, breathes and asks point blank, "Why am I always the mug that has to deal with idiots? What are you going to do to fix this mess?" Thankfully, at that moment, Bob's mobile rings. He looks at the caller ID and tells you it is an important call, you offer to return in five minutes to continue the discussion.

You go straight to your office and access the ‘Credit Policies and Processes Manual' which are available on the portal. You read the ‘Code of Conduct' to determine what is expected of both you and Ying as financial advisers. You also search the document for two key words; ‘dispute' and ‘complaint'. The computer does not return any hits for either word. Given the time limit, you resign yourself to having to remember basic dispute resolution protocols from last week's in-house training session. You analyse the situation as you know it and prepare yourself to continue dealing with the complaint.
 
(a)
i. Make a list of bullet points to summarise your understanding of Bob's complaint and to remind you of the issues you need to discuss.

ii. What are the procedural requirements you and Ying need to follow under the code of conduct that are relevant to this case?

iii. What are the key issues and how are you going to address them? Consider Ying's actions, Bob's expectations, Bob's and Ying's rights, basic dispute resolution procedures, and opportunities you can develop to enhance the quality of service your firm provides.

iv. Put yourself in Bob's shoes. How are you going to empathise with him?

v. Which follow-up questions will you ask Bob?

vi. How will you explain the relevant dispute resolution schemes, services and governing statutes in plain English?

(b) When you return to the conference room, Bob demands you give him Ying's contact number because his complaint is with her and not with you.
i. What is your response?

ii. Which details of Bob's complaint would you be willing to share with Ying upon her return to the office and why?

(c) Write an email to Millicent to document how you handled this matter (take a screen shot of the email to fulfil this aspect ensuring you include the email address it is being sent from). Also identify ways that you believe the office's processes and standards can be improved as a result of the issues Bob raised.

(d) How did you monitor Bob's level of satisfaction during your conversation? What signs did you look for to determine whether Bob left a satisfied customer?

Chapter 4

Short Answer Question 1
You had recommended a variable interest rate product with an offset account to your client and they emailed you and said they did not want to take up the product as it was too expensive. A cheaper product exists but you believe it doesn't meet their needs as it does not have the features they need. Write an email in response (referred to a sales response) designed to overcome their reluctance. Ensure you sign off with your name and provide your mobile phone so they can contact you.

Short Answer Question 2
(a) Which software applications would you use to calculate a client's financial position?

(b) All brokers are required to pass the So Sweet credit guide to their clients. Devise an item on an audit program to prove she does it.

(c) So Sweet requires all new brokers to email a summary of their efforts each week to their mentor. Devise an internal monitoring program to ensure they do it.

(d) Keeping up with new regulations is vital. Devise a mechanism to ensure the currency of regulatory literature is distributed in a timely fashion in accordance with organisational policy.

(e) How would you ensure operational procedure is updated to reflect changes to regulation and legislation, including the identification of implications for product and services?

(f) Research and calculate the cost of implementing triple bottom line principles in an office with no eco policies.

(g) Via email ask if any staff would like to undertake the triple bottom line implementation process as a business opportunity.

Short Answer Question 3
Under the laws of agency, when can a finance broker act as a limited agent of a credit provider?

Short Answer Question 4
(a) Prospectingis a continuous process of gathering the names of potential buyers who are likely to be interested in purchasing the broker's product. Select one business or professional contact e.g. brokers, business associates and associations and one person from your personal network e.g. friends and family and detail how you will contact them by using a technique from the list below or other technique:
• advertisements
• databases
• direct mail
• internal company referral systems
• networking groups and events
• referrals
• telemarketing.

(b) You have contacted a person and have spoken to them using one of the techniques above. How would you develop and cultivate the relationship, in order to market to them and benefit the organisation, in an agreed upon timeframe?

(c) How would you cooperate with other professionals and third parties to expand and enhance the reputation of the organisation and to identify new and improved business practices?

(d) Once you get a referral how would you follow them up to secure the new business relationship?

(e) What (i) media (ii) marketing and (iii) public relations tools would you use for your business?

(f) The text states that sales "Techniques involve looking at things from the point of view of the prospective client and understanding buyer motives". Identify three potential buyer's motives and discuss how you would tailor your approach to each.

Short Answer Question 5
Pleased with the way you handled his complaint, Bob recommends you to his 45 year old son, Basil. Basil Butler is a management consultant who is living and working with his wife Daisy in Manhattan. Basil sends you an email, explaining that his 41 year old wife is expecting triplets in six months' time. They plan to return to Melbourne next month and take up residence in their old warehouse apartment in Fitzroy. They need urgent help because their neighbour is planning to sell her adjoining apartment, which they wish to secure. Daisy loves her old place and dreams of extending their living space by acquiring and renovating the neighbour's apartment. She envisions demolishing part of the shared wall to join the two apartments into one large, liveable space for a family of five.

Basil's firm is relocating him to the Collins Street office. Daisy, however, is a contractor who has successfully completed a series of projects for Basil's firm. She has been self-employed for 10 years and does not intend to work for the next five years. Basil earns $200,000 p.a. and Daisy earns $130,000. They owe $280,000 on the Fitzroy apartment, but they own a beach house in Portsea outright. The beach house is valued at $650,000. With a penchant for luxury cars, they also have $60,000 to repay on their BMW and $10,000 on the vintage MG. They have put the majority of Daisy's earnings into her superannuation fund, which has now accrued $400,000. Basil is unsure how much is in his superannuation fund. Sadly, they invested the bulk of Basil's earnings in a share portfolio which crashed with the global financial crisis. The portfolio dividends only paid $5,000 last financial year. Together, they have $127,000 in a savings account and $50,000 invested in a long-term deposit. The reserve price on the neighbour's property is $510,000, however, she is prepared to sell it for $495,500 if she does not need to engage a real estate agent and if they will commit to a 30 day settlement. She has given Basil and Daisy the option of a private sale and two weeks in which to make her an offer. As she is divorcing, she is not prepared to extend the time to allow Basil and Daisy to secure finance in Melbourne in person.

Basil and Daisy are too busy packing up their Manhattan loft to search for finance options. They want you to find a suitable loan with attractive terms and arrange all the necessary paperwork. Timing is their utmost concern.

(a) Respond to Basil's email by taking the following steps:
i. Analyse Basil and Daisy's financial position based on the extent of their disclosures. Use a financial calculator or relevant software systems to help calculate their personal and financial situation.

ii. Outline the relevant processes for proper execution of loan documentation and determine whether you will be able to implement the necessary actions within the neighbour's timeframe. Also note whether there is any need for specialist advice or involvement from other main sectors of the financial services industry in this case.

iii. Describe how you will submit the documentation to the appropriate lender in an appropriate manner to protect client confidentiality.

iv. Research products and additional industry information, then apply your industry knowledge to the current situation. Synthesise this information into a clear and concise format (e.g. short report or proposal) so that Basil and Daisy can make an informed decision.

v. Write an email to Basil and Daisy to establish and confirm their priorities:
• Establishing their risk tolerance and determining their investment goals and expectations.
• Ask for any additional information you require to complete your analysis in accordance with your firm's credit policy.
• Provide Basil and Daisy with an overview of the three best products you believe are most suited to their needs. Be sure to discuss the strengths, weaknesses, benefits and risks, fees and charges attached to each product.

(b) Write a confirmation email to Basil outlining the following:
• Basic requirements of the loan, including the amount, term and interest rate.
• Disclose whether you have a strategic and commercial relationship to the recommended product.
• Outline which documents you have attached as per compliance requirements.
• Describe the appropriate timing of events in the loan approval process. Check your writing for accuracy and readability.

(c)
i. Download and complete the loan documentation (this is found in your IIT elearning platform supporting documents) Basil and Daisy require in a way that accurately reflects their financial situation, personal information and complies with lender requirements and guidelines.

ii. Copy and paste the "Loan Application" into sheet 2. Name sheet 1 Loan application" and sheet 2 Client records. Create a client record in an appropriate format which will be accessible to other appropriate advisers. You won't need all of the loan application you copied so cut the redundant details out and don't forget to change the heading from "Loan Application" to the "Client Record". Hint: in chapter 5 short answer question 5d you are required to copy and paste the client record you just created and update it with the case study details in chapter 5. You might find it efficient to do this while you are dealing with this question.

iii. Describe how you are going to prevent fraud and verify Basil's and Daisy's identity/signature and their other undertakings when you are not able to meet them person.

Chapter 5

Short Answer Question 1
First Home Owner Grants and Stamp Duty concessions are State and Territory Based and are subject to constant change. For the State or Territory you live in confirm that the details in the book are consistent with the most current First Home Owner Grants and Stamp Duty exemptions quoting the website address and date you accessed it. If the details have changed document the changes.

Short Answer Question 2
Explain to your client what a 100% loan is?

Short Answer Question 3
Briefly explain split and blended loans.

Short Answer Question 4
(a) Briefly explain a line of credit loan.

(b) What is an interest only loan?

Short Answer Question 5

You begin work at your new place of employment. One of your key responsibilities is to process applications for credit. Your new manager, Robson Mischkulnig, is aware of your background as a mortgage broker and wants to draw upon your existing knowledge base. As such, he asks you to bring in the last credit application you managed to help train you into your new role.

Equipped with Basil and Daisy's application, you begin one week of induction. You are given a copy of the ‘Sample Credit Policies and Procedures Manual', and told these are the guidelines that inform you day to day decision making. Supplementing the manual are other protocols and laws such as the National Credit Act. You are told that in this office, decisions to reject or accept an application are formed on the basis of two criteria; credit policy and the total credit assessment which you should conduct. Any decisions to advance funds or extend credit that fall outside your approval or limits of authority must be referred to relevant approving personnel. In your case, this is Robson. You are expected to prepare and forward your recommendations to accept or reject applications to Robson promptly and in accordance with the organisation's procedures. Of course, any required security must also be attached. Your trainer emphasises another key responsibility for those providing credit and credit reporting services. That is to keep the records system up to date. This means recording and monitoring file and record movements as well as maintaining the records according to legislative requirements and organisational policies and procedures.

Having worked through the essentials, your trainer throws you in the deep end and asks you to follow the procedures and process the sample credit application you brought with you. To test whether you are competent, you are given the following questions to complete.

(a) Under what circumstances would you be expected to refer your decision to Robson?

(b) Provide financial and legal reasons including the security used to justify your decision and present them in a format that Robson can use to review your decision.

(c) Refer to the So Sweet client record prepared in Chapter 4 short answer 5cii. Copy and paste the client record and call it "Updated Client record" and update the client database with Basil and Daisy's details from a to c above. Highlight the changes.

(d) Outline the steps you would take to monitor file and record movements.

Attachment:- Assingment.zip