Case Study of Mr. and Mrs. Merimax – Accounting and Finance Assignment Help

Assignment Task

Task

Scenario.

You are a mortgage broker and your new clients, Mr and Mrs Merimax, aged 44 and 46, have asked you to assist them to obtain a loan for the purchase of a block of vacant land on which they intend to build a home. The land is in a quiet inner residential suburb, is 825m2 , including the driveway, has no special zoning, but it is a “battleaxe” block (see green Lot 2 in diagram below) so the driveway runs beside a friend’s established property (Lot 1) which already has a new house built. 

Your clients are not ‘first home buyers’ as they have purchased and sold a home before, but they are currently renting at $700 per week. They did not use a broker last time. They indicate that they want to buy the land now but will probably return to you for a construction loan within 24 months. They have not considered building costs or design ideas at this stage and are in no rush to build. Both doctors, they have a high combined income and have a 30?posit saved. The purchase price is $450,000 and they are very comfortable with this. 

QUESTION 1.

A. In respect to your compliance obligations, there are 3 documents a mortgage broker should have in the first client interview, two of which should be provided to the client.

a. List the 3 documents you would bring to meet with your clients.
b. Briefly outline each of these documents.

B. Choose and describe 3 loan products you would suggest to these clients. Include the following: 

a. How and why these product choices would suit this client’s requirements
b. What the short and long-term benefits of the product choices would be
c. The risks of the three suggested products (eg. different product features)
d. How you would assist the client with the preferred product option. You should use the internet for your research, for example:

C. Identify and define 5 key considerations of this client’s land purchase scenario, that a lender would review on receiving this loan application. [5 Marks]

QUESTION 2.

In January 2021 ASIC brought in the Regulatory Guide 273 Mortgage brokers: Best Interests Duty (RG 273) which aimed to assist in the application of the new Best Interests Duty (BID) for mortgage brokers. Best Interests Duty and the Conflict Priority Rule are two key aspects of the BID legislation. Please answer the following two questions. You can choose to use the land purchase scenario to support your answer to A and B, if preferred.

A. In at least 500 words, describe what these are and what “acting in a client’s best interests” means.

B. Include 5 actions you would undertake to ensure you meet these requirements whilst performing your mortgage broking duties in the land purchase scenario provided. 

QUESTION 3.

Developing and maintaining professional relationships is key to a broker’s ongoing success.

A. Aside from clients, name 3 types of professionals in the financial services industry with whom you could build a relationship or form a strategic alliance. Include at least one financial services professional and one potential third party referrer.

B. For each of these 3 professionals, write 2-3 sentences as to how the relationship or alliance might work including advantages. For example, an Accountant – meeting clients in accountant’s office to provide credit assistance further enhancing the accounting firm’s offering and paying a referral fee to the accountancy firm.

QUESTION 4.

The Banking Code of Practice sets out the standards of practice and service in the Australian banking industry for individual and small business customers. The Code provides safeguards and protections which are not set out in the law. It complements the law and, in some areas, sets higher standards than the law.

A. Drawing fromthe code includes an obligation for taking extra care with customers who are experiencing vulnerability.

a. Describe 5 examples of what “vulnerability” could mean in this context
b. What should a broker do if they identify a potential customer as “vulnerable”.

QUESTION 5.

Brokers must be able to prioritise and manage their work activities and hold themselves and their team members accountable. Assume you are now an established mortgage broker with two staff. Their roles are your choice. Refer to information found in the BSBPEF501 unit and answer the following questions: 

A. As a broker in a management role, how might you support others to develop their work goals, plans and activities? You may wish to focus on communication, feedback, training, CPD activities, etc.

B. List six ways or KPIs in which competency and performance may be measured

C. List five activities you could undertake to contribute to the professional development of yourself and your two staff.

D. List two tools you can use to track your and your staff’s progress to meet your annual CPD requirements.

E. Give two examples of ways to manage team health and wellbeing in the workplace.

QUESTION 6.

Imagine you are going to be showing a new staff member the process from lodgement of the loan application with the lender, through to and including the settlement of the new loan. You need to create some guidelines for all the steps in the process. The layout should be easy to follow so the new staff member has minimal difficulty in understanding it. You may wish to use the table provided in Unit FNSFMB511 as a starting point for ideas for creating these staff guidelines. Be sure to include all broker responsibilities, for example, ensuring credit contracts are signed, witnessed and dated.

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