Settle Applications and Loan Arrangements

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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 industry

Unit Description
This 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 Outcomes
By 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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