NSFMB501 Settle Applications and Loan Arrangements in the Finance and Mortgage Broking Industry Assessment 1 FNSFMB501 Settle applications and loan arrangements in the finance and mortgage broking industryUnit DescriptionThis unit describes the skills and knowledge required to settle applications and loan arrangements for debt finance and undertake final arrangements to secure and complete the lending transaction for a client applying for a mortgage or related finance. Learning OutcomesBy the end of this unit, students will be able to: Prepare for settlementRegister securitiesArrange for disbursement of funds FNS50315 Diploma of Finance and Mortgage Broking Management Assessment 1 Questions Activity 1 Some overseas borrowers are being offered the opportunity to obtain a second mortgage and purchase an Australian property, without necessarily having a deposit. For example, the second- largest insurance company in China offers loans to Chinese investors for Australian residential property. The Chinese borrowers use the second mortgage as a deposit for an off the plan apartment, with the expectation that a senior loan will later be obtained from an Australian bank to pay the final 70% when the apartment is completed. Explain why this is a potential financial risk for all involved. (Explain different pre-settlement conditions required by lenders, including gaining consent of prior mortgagee, if second mortgage security is being taken). Activity 1 Answer Activity 2 Describe some ways in which potential borrowers fail to provide correct pre-settlement evidence required by mortgage lenders. (Describe different pre-settlement evidence required by lenders). Activity 2 Answer Activity 3 What is the primary benefit of Lenders Mortgage Insurance (LMI) to a home loan applicant? (Explain different pre-settlement undertakings by the borrower, required by lenders: sale and settlement of other property; repayment of other debts; provision of evidence of insurance). Activity 3 Answer Activity 4 Explain some of the benefits and drawbacks of a family guarantee. (Explain different documentation required by lender: credit check authority signed; guarantees; loan contract; periodical payment authority; signed application form). Activity 4 Answer Activity 5 Explain the role of a conveyancer for a property vendor. (Explain the role of various parties involved in the settlement process). Activity 5 Answer Activity 6 Identify some common issues that can cause property settlement delays and ‘crashes’. (Describe settlement issues that can occur). Activity 6 Answer Activity 7 Reverse mortgages now fall under the National Credit Act, which includes a statutory ‘negative equity protection’ on all new reverse mortgage contracts (introduced September 2012). What are the risks of reverse mortgages which make them subject to this form of legislation? (Describe key features of current industry codes of practice, legislation and statutory requirements including: National Credit Code; privacy legislation; credit legislation). Activity 7 Answer Activity 8 Explain the rights of a mortgagee and mortgagor when a property is mortgaged under the Torrens title regime. (Outline the steps in the process of registering security documentation).
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