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Diploma of Finance and Mortgage Broking Managemen

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Diploma of Finance and Mortgage Broking Managemen

This paper revolves around Diploma of Finance and Mortgage Broking Management, you are required to complete the following scenario and submit on the due date specified in your Training Plans. You must achieve satisfactory ratings on all tasks. Your Assessment Task must be submitted in print – out form.

 

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FNS50311 – Diploma of Finance and Mortgage Broking Management
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© ZIE. Version 1.0 May 15 Next Review Jan 16 TIOD # 22048 CRICOS # 02908F P a g e 1 o f 9
FNS50311 – DIPLOMA OF FINANCE AND MORTGAGE BROKING MANAGEMENT
STUDENT ASSESSMENT 2
FNS50311 – Diploma of Finance and Mortgage Broking Management
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© ZIE. Version 1.0 May 15 Next Review Jan 16 TIOD # 22048 CRICOS # 02908F P a g e 2 o f 9
Instruction to Students
This Learner Guide / Student Assessment for FNS50311 – Diploma of Finance and Mortgage Broking Management contain details of your assessment task 2 and the guidelines for you to be able to complete.
Purpose of Assessment
To evaluate the candidate’s ability to demonstrate the knowledge and skill of mortgage or finance broking services and to allow you to demonstrate that you can complete the major steps required in broking or writing a moderately complex loan for a customer – through identification, development and implementation of loan options while assessing and managing risks.
Successfully completion of all assessments will contribute to the attainment of the Qualification of FNS50311 – Diploma of Finance and Mortgage Broking Management
Competency/Submission Details
For you to achieve competency in this task, you are required to complete the following scenario and submit on the due date specified in your Training Plans. You must achieve satisfactory ratings on all tasks. Your Assessment Task must be submitted in print – out form.
At submission of your Assessment Task, you are to fill up the Assessment Cover Sheet and ensure that it is completely and accurately filled up. The Trainer / Assessor or Zarah Institute of Education (ZIE) representative will provide you with submission receipt to evidence that you have handed over your Assessment Task.
Upon completion of the Assessment, the Trainer/Assessor will mark the Assessment Tasks and accomplish a Assessment Summary Sheet to record the result and feedback. Your Trainer/ Assessor will discuss these with you and thereafter you will be asked to sign the declaration to evidence the feedback session.
FNS50311 – Diploma of Finance and Mortgage Broking Management
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© ZIE. Version 1.0 May 15 Next Review Jan 16 TIOD # 22048 CRICOS # 02908F P a g e 3 o f 9
Re-assessment
If the result of your Assessment is “Not yet Competent (NYC)”, you will be given an opportunity for re-assessment. You will only work on the component/s of the Task/s that were marked “Not satisfactory”. The re-assessment must be completed within one (1) the study period. Please note that ZIE will provide two (2) chances for re-assessment at no cost.
Should you not able to achieve competency with all of these opportunities, you are required to repeat the assessment at your own cost which will also impact on your extension of study period.
Reasonable Adjustments:
If you have special needs or disabilities, reasonable adjustment will be organised in accordance with the Special Needs / Disabilities Policy and Procedure of ZIE.
This may include but not limited to:
· visual difficulty, we can assist by making adjustments such as larger print of documents and assessment tools and forms
· physical disabilities, assessment may be broken down into shorter/longer lengths of time, where applicable
· sick or have medical condition, due date extension may be provided
Skills Required
The required skills for you to demonstrate competency in this unit are:
· communication skills to questioning, listening and clarifying clients’ requirements
· technology skills to use software associated with financial record keeping.
Knowledge Required
The required knowledge for you to demonstrate competency in this assessment are: · preparing a formal loan submission · analysing standard client information and data that would be included in a typical submission for a loan and determining levels of credit risk · calculating interest/loan repayments · checking the accuracy of calculations · collecting data to be included in a submission to a lender · comparing products and services in order to offer clients different options
FNS50311 – Diploma of Finance and Mortgage Broking Management
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© ZIE. Version 1.0 May 15 Next Review Jan 16 TIOD # 22048 CRICOS # 02908F P a g e 4 o f 9
· identifying and resolving areas of client resistance · using problem solving tools and techniques
Resources:
1. ZIE self-developed student assessment
2. Access to appropriate documentation and resources at ZIE
3. Powerpoint Presentation provided ZIE
For additional/general resources, please refer to the Training & Assessment Resource list which can be accessed from the website and /or student handbook.
FNS50311 – Diploma of Finance and Mortgage Broking Management
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© ZIE. Version 1.0 May 15 Next Review Jan 16 TIOD # 22048 CRICOS # 02908F P a g e 5 o f 9
AMT 2
Task
Assume you are a mortgage broker a part of a mortgage brokerage company. Consider the scenario given below and using the information contained in the scenario, prepare a formal loan submission using the following headings. Use subheadings where appropriate to ensure your submission will be easily read and understood by the lender.
Scenario
Robin Brown has been a real estate agent for over 20 years and jointly with his wife Ally own 6 shops at 55 Park Road, Belmont. Mr and Mrs Brown own the shopping centre under the Brown Family Trust. The property was valued 2 years ago at $1,450,000 and has a current ABZ Bank Mortgage of $625,000. Five of the shops are rented out for $96,000. The sixth shop is occupied by Mr Brown’s real estate business, Brown’s Real Estate Pty Ltd, which pays annual rental of $42,000 to the family trust. For tax purposes Brown’s Real Estate pays rent which is $20,000 in excess of the fair market rental value of the shop it occupies.
Brown’s Real Estate Pty Ltd was formed at the beginning of the last financial year to take over the real estate agency business, which was previously conducted by a partnership between Mr Brown and Billy Watson. Brown’s Real Estate Pty Ltd took over the business when Mr Watson retired.
Mr and Mrs Brown now wish to acquire 3,000m2 of land near their existing shopping centre and hold it for 1 – 2 years pending rezoning. The purchase price is $600,000. The land was previously used as a State Government Health and Dental Centre, but the building was demolished when it became obsolete. The land is currently zoned ‘Special Purpose’, but the local council earmarked the land for future ‘Commercial’ use in it recently released Town Planning Scheme. The land is located at 423 Belmont Road, Belmont and has a two street frontage with considerable passing traffic.
The Browns have contracted to purchase the property in their capacity as trustees of their family trust and settlement is due with 60 days. They wish to raise 100% of the purchase price plus $25,000 for stamp duty, financing and conveyancing costs. They are willing to offer both the land and their existing shopping centre as security for the proposed loan. They will contribute a further $20,000 over the next 1‐2 years to cover the costs associated with re‐zoning of the property and obtaining approval to develop another shopping centre.
FNS50311 – Diploma of Finance and Mortgage Broking Management
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Unfortunately ABZ Bank policy does not allow them to lend against land zoned ‘Special Purpose’ and cannot assist with the purchase. The Browns have appointed you to approach an alternative lender to refinance their ABZ Bank Loan and obtain the additional funds required.
Assume an interest rate of 7% for a commercial loan, 9% for an overdraft.
Client’s Information:
Robin Brown – DOB 29/07 1965 DL # 2945758
Ally Brown – DOB 15/06 1967 DL # 2786454
Married with three adult children (one working in the real estate business) Address: 12 Currumbin Close, Carindale QLD 4152
Accountant – Ainslie and Partners Telephone ‐ 07 3349 9999
Work History:
Robin has been a real estate agent for 22 years in the Brisbane South East area, he specialises in commercial and industrial property (rent roll comprises 75% commercial and industrial properties). His salary last financial year was $78,000. In the previous financial year he drew $55,000 from the partnership with Billy Watson.
Ally has worked as the property manager since Browns Real Estate Pty Ltd took over the agency after the partnership. Her salary last financial year was $43,000. She did not work in the previous financial year.
Financial Information:
Last Financial year Brown’s Real Estate Pty Ltd recorded the following financial results: Gross Revenue $346,000
Net Profit $ 72,000
Depreciation $ 14,000
Directors Superannuation $ 11,000
In the previous financial year the partnership of Robin Brown and Billy Watson trading as Brown’s Real Estate recorded the following financial results:
Gross Revenue
$422,000
Net Profit
$ 84,000
Depreciation
$ 16,000
Directors Superannuation
$ 11,000
FNS50311 – Diploma of Finance and Mortgage Broking Management
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© ZIE. Version 1.0 May 15 Next Review Jan 16 TIOD # 22048 CRICOS # 02908F P a g e 7 o f 9
The Browns Family Trust purchased the shopping centre at Park Road Belmont 18 months ago and its financial statements for the past financial year are as follows:
Gross Rental Income
$138,000
Loan Interest
$ 52,000
Management Fees
$ 11,000 (paid to Brown’s RE Pty Ltd)
Net Profit
$ 50,000
Depreciation
$ 25,000
Financial Position-Robin and Ally Brown
ASSETS
House at 12 Currumbin Close Carindale QLD
$560,000
Share Portfolio (Blues Chip Listed Shares)
$345,000
Motor Vehicles
$ 60,000
Furniture
$ 85,000
Cash at Bank
$ 45,000
LIABILITIES
Home Loan with ABZ Bank
$190,000
ABZ Bank Credit Card (Limit $20,000)
$ 10,000
Financial Position of Brown’s Real Estate Pty Ltd
ASSETS
Business Goodwill
$250,000
Plant & Equipment
$ 35,000
Debtors
$ 30,000
LIABILITIES: ABZ Bank Overdraft (limit $40,000 secured by residence) $ 25,000
Property being purchased:
FNS50311 – Diploma of Finance and Mortgage Broking Management
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Vacant Land
423 Belmont Road, Belmont QLD 4171
Lot 84 on RP 9564
Zoning “Special Purpose” Area 3000m2
Existing Property:
Shopping Centre
55 Park Road, Belmont QLD 4171
Lot 43 on RP 9542
Zoning “Commercial”
Area 1850m2
Tenancies:
Tenant
Rent
Term
Rent Review
J & R Blend
T/A Blend News
$22,000 pa net
3 + 3 years
Annually by CPI
Copelin Accounting Pty
Ltd
$18,000 pa net
1+ 1 +1 years
Annually by CPI
R Spragos
T/A Roger’s Deli
$28,000 pa net
5 + 5 years
Annually by CPI
Vu Nguyen
T/A Care Pharmacy
$20,000 pa net
3 + 3 years
Annually by CPI
M Goodson
T/A Good Alterations
$8,000 pa net
3 + 3 years
Annually by CPI
Brown’s Real Estate Pty
Ltd
$42,000 pa net
3 + 3 years
Annually by CPI
The client file should contain the standard client information and data that would be included in a typical submission for a loan of this complexity. Your client submission should include as a minimum the following headings:
1. Borrower’s Details
2. Background
3. Loan Purpose
4. Facility Details
5. Funds Position
6. Servicing Capacity
7. Security
8. Risk Assessment and Management
FNS50311 – Diploma of Finance and Mortgage Broking Management
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© ZIE. Version 1.0 May 15 Next Review Jan 16 TIOD # 22048 CRICOS # 02908F P a g e 9 o f 9
9. Recommendations
10. Attachments
Please note that, Attachments which would normally be included in a submission to a lender and need only be listed for the purpose of this assignment. You will not need to create “dummy” supporting documents.

FNS50311 – Diploma of Finance and Mortgage Broking Management
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© ZIE. Version 1.0 May 15 Next Review Jan 16 TIOD # 22048 CRICOS # 02908F P a g e 1 o f 9
FNS50311 – DIPLOMA OF FINANCE AND MORTGAGE BROKING MANAGEMENT
STUDENT ASSESSMENT 3
FNS50311 – Diploma of Finance and Mortgage Broking Management
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© ZIE. Version 1.0 May 15 Next Review Jan 16 TIOD # 22048 CRICOS # 02908F P a g e 2 o f 9
Instruction to Students
This Learner Guide / Student Assessment for FNS50311 – Diploma of Finance and Mortgage Broking Management contain details of your assessment task 3 and the guidelines for you to be able to complete.
Purpose of Assessment
To evaluate the candidate’s ability to demonstrate the knowledge and skill of mortgage or finance broking services and to allow you to demonstrate that you can complete the major steps required in broking or writing a moderately complex loan for a customer – through identification, development and implementation of loan options while assessing and managing risks.
Successfully completion of all assessments will contribute to the attainment of the Qualification of FNS50311 – Diploma of Finance and Mortgage Broking Management
Competency/Submission Details
For you to achieve competency in this task, you are required to complete the following scenario and submit on the due date specified in your Training Plans. You must achieve satisfactory ratings on all tasks. Your Assessment Task must be submitted in print – out form.
At submission of your Assessment Task, you are to fill up the Assessment Cover Sheet and ensure that it is completely and accurately filled up. The Trainer / Assessor or Zarah Institute of Education (ZIE) representative will provide you with submission receipt to evidence that you have handed over your Assessment Task.
Upon completion of the Assessment, the Trainer/Assessor will mark the Assessment Tasks and accomplish a Assessment Summary Sheet to record the result and feedback. Your Trainer/ Assessor will discuss these with you and thereafter you will be asked to sign the declaration to evidence the feedback session.
FNS50311 – Diploma of Finance and Mortgage Broking Management
Warning – Uncontrolled when printed!
© ZIE. Version 1.0 May 15 Next Review Jan 16 TIOD # 22048 CRICOS # 02908F P a g e 3 o f 9
Re-assessment
If the result of your Assessment is “Not yet Competent (NYC)”, you will be given an opportunity for re-assessment. You will only work on the component/s of the Task/s that were marked “Not satisfactory”. The re-assessment must be completed within one (1) the study period. Please note that ZIE will provide two (2) chances for re-assessment at no cost.
Should you not able to achieve competency with all of these opportunities, you are required to repeat the assessment at your own cost which will also impact on your extension of study period.
Reasonable Adjustments:
If you have special needs or disabilities, reasonable adjustment will be organised in accordance with the Special Needs / Disabilities Policy and Procedure of ZIE.
This may include but not limited to:
· visual difficulty, we can assist by making adjustments such as larger print of documents and assessment tools and forms
· physical disabilities, assessment may be broken down into shorter/longer lengths of time, where applicable
· sick or have medical condition, due date extension may be provided
Skills Required
The required skills for you to demonstrate competency in this unit are:
· communication skills to questioning, listening and clarifying clients’ requirements
· technology skills to use software associated with financial record keeping.
Knowledge Required
The required knowledge for you to demonstrate competency in this assessment are: · preparing a formal loan submission · analysing standard client information and data that would be included in a typical submission for a loan and determining levels of credit risk · calculating interest/loan repayments
FNS50311 – Diploma of Finance and Mortgage Broking Management
Warning – Uncontrolled when printed!
© ZIE. Version 1.0 May 15 Next Review Jan 16 TIOD # 22048 CRICOS # 02908F P a g e 4 o f 9
· checking the accuracy of calculations · collecting data to be included in a submission to a lender · comparing products and services in order to offer clients different options · identifying and resolving areas of client resistance · using problem solving tools and techniques
Resources:
1. ZIE self-developed student assessment
2. Access to appropriate documentation and resources at ZIE
3. Powerpoint Presentation provided ZIE
For additional/general resources, please refer to the Training & Assessment Resource list which can be accessed from the website and /or student handbook.
FNS50311 – Diploma of Finance and Mortgage Broking Management
Warning – Uncontrolled when printed!
© ZIE. Version 1.0 May 15 Next Review Jan 16 TIOD # 22048 CRICOS # 02908F P a g e 5 o f 9
AMT 3
Task
In this assessment task you have to prepare two submissions:
A. Submission One – this is for the client so that they have the facts on all their obligations and fees and the structure of the loan.
B. Submission Two – this is for the lender ‐ a loan application to the lender in order to gain pre‐approval.
SUBMISSION ONE – THE CLIENT
1. Prepare a list of questions that you would need to ask your clients about the proposed transaction, that is, prepare your needs analysis.
2. Calculate the required servicing for the new debt.
3. In a suitable format, document the process that is required for your clients to obtain appropriate finance for their equipment and set up the loan.
4. Outline the process and the risks (potential and real) of which your clients should be aware.
What your report should include:
1. The parties to the loan
2. The best physical set up with the lender – are they using their own property as security for the business debt?
3. The framework and contents of the letter of credit requirements
4. A list of the lenders that are able to lend
5. The client responsibilities, so the clients fully understand the loan
6. An outline as to the process and what the client needs to arrange
7. The documentation needed to commence the borrowing
8. The name in which the client will sign the contract to purchase
9. A summary of all fees and charges – including those for setup and those of the lender.
SUBMISSION TWO – THE LENDER
Prepare a loan submission to the lender for pre‐approval.
Your submission should include as a minimum the following headings:
FNS50311 – Diploma of Finance and Mortgage Broking Management
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1. Borrower’s Details
2. Background
3. Loan Purpose
4. Facility Details
5. Funds Position
6. Servicing Capacity
7. Security
8. Risk Assessment and Management
9. Recommendations
10. Attachments
Other areas to include and/or consider:
§ your obligations under the NCCP (if any)
§ maximum loan terms
§ any ATO consideration to be made
§ restrictions on overseas purchase, if any
§ your general advice restrictions.
Attachments which would normally be included in a submission to a lender need only be listed for the purpose of this assignment. You will not need to create “dummy” supporting documents.
EVIDENCE REQUIREMENTS
In order to be deemed competent, you will need to evidence the ability to:
· Develop detailed broking options designed to maximise the client’s outcomes and reach client objectives which incorporate elements from research and which address complex needs and issues
· Identify and describe key assumptions upon which the plan is based
· Provide a detailed analysis of research strategies and findings
· Test and make appropriate checks on a proposed plan for its integrity and compliance
· Assess the impacts of taxation, social security, economic and other government policies on client investment and financial requirements
· Interpret and comply with industry regulations and codes of practice
· Identify the roles of associated financial advisers and work effectively with them
· Assess broking options, financial markets and investment characteristics
· Use appropriate sales and marketing methodologies and provide justification and research evidence
· Gain client feedback on and/or agreement to the plan
FNS50311 – Diploma of Finance and Mortgage Broking Management
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· Prepare materials and personnel to effectively implement complex loan structures
· Establish appropriate audit trails and effectively document records and data.
Scenario
You have met one of your clients and he has referred you to another commercial client. They are joint company owners Mike Wilson and Eric Jones and they run a successful and growing transport company. They have a diverse client base spread over many industry sectors which are a conscious management strategy to ensure that they do not have significant business risk to a specific market segment or client. All contracts are written with 30 day payment terms. Background industry checks as well as credit history checks are completed on all new business prospects to ensure that there are no adverse issues that may impact on future trading arrangements. Whilst they have only been trading for 34 months they have a solid business plan with actual results to date exceeding projected sales and profit estimates included in their plan.
The business was established with unsecured (apart from Personal Guarantees) Seed Capital of $500k from a private investor based on a guaranteed return of $45k pa, and an overall term of 5 years which also requires a principal reduction of $100k pa. The loan can be repaid at any time without penalty.
Mike and Eric ’s Requirements:
To accommodate new contracts in hand and planned future expansion, the applicants require establishment of an Equipment Finance Limit of $500k to purchase Trucks and Dog Trailers. A new company, Walker Transport Pty Ltd, has been established to purchase equipment which will be internally hired to Walker Holdings Pty Ltd ATF. The Walker Discretionary Trust (the trading entity). Hire charges will equate to finance payments. The trust holds all shares in Walker Transport Pty Ltd.
Mike and Eric are directors of both companies. As part of this expansion the company has leased a second depot at a cost of $6000pm and will also retain the existing depot. They currently have 5 employees and where needed are using sub‐contract operators to fill shortfall in their delivery capacity. Purchase of new additional trucks and trailers will provide additional capacity and flexibility and reduce reliance on sub‐contractors who can be unreliable.
Whilst a limit is being sought, purchases will only proceed where additional work has been contracted or older equipment is being replaced. Applicants are happy to provide half yearly management accounts as an approval covenant to give a lender comfort that projected sales and profits are in line with budgets. Applicants are keen to reduce debt as quickly as possible and have therefore decided to finance all new equipment over a 48 month term, without a balloon/residual and will commit a refund of GST Input Credits as additional repayments built into the contracted loan structure.
FNS50311 – Diploma of Finance and Mortgage Broking Management
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Initial Fact Find:
Mike and Eric have both been in the transport industry for many years each being Financial Controllers for major transport companies. Mike has an MBA and Eric a marketing degree. These combined skills compliment each other and assist in the effective management of the business. Mike is married and has no dependents. His wife is a school teacher and she will be retiring at the end of the year.
Eric is single and is presently completing a HR degree as they feel that as the business grows these skills will be required. Eric and Mike have provided the last two year’s financial accounts for the trading business, as well as interim accounts for the current financial year.
(Note: You need to calculate the required servicing for the new debt and surplus required for lender comfort.)
Financial accounts:
§ Year 1‐ Sales $700k Net Profit $240000
§ Year 2‐ Sales $812k Net Profit $358000
§ Current year interim indication‐ Sales 1.125m Net Profit $506000 (10 months) (no depreciation included)
§ Operating Costs include – Depreciation $86000, Interest $52000, Sub‐ contractors $71000, Directors Superannuation $60000
§ Wages to partner one $100,000 (Paid as Fully Franked Dividend)
§ Wages to partner two $100,000 (Paid as Fully Franked Dividend)
§ Payment to private investor (flat fee) $45,000‐ Expensed in P&L as Finance Cost
          § Existing Equipment Finance (Chattel Mortgages) repayments of $5000pm
Applicant Information:
· Mike Wilson net income $100,000 (Paid as fully franked dividend) owner occupied property $850,000, debt $250,000, assume 7.2% P&I, credit card limit $25,000, debt $15,000, assume 3%, contents $100,000, superannuation $550,000, motor vehicle $40,000, nil debt.
· Eric Jones net income $100,000 (paid as Fully Franked Dividend), owner occupied property $500,000, debt $350,000, assume 7.2% P&I, credit card limit $10,000, debt $3,000, assume 3%, contents $85,000, superannuation $150,000, motor vehicle $25,000, debt $15,000, assume five year debt at 9%.
· Cash in business account $25,000.
Key Balance Sheet Items:
FNS50311 – Diploma of Finance and Mortgage Broking Management
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© ZIE. Version 1.0 May 15 Next Review Jan 16 TIOD # 22048 CRICOS # 02908F P a g e 9 o f 9
Cash
$25,000
Debtors
$220,000
Creditors
$100,000
Notes:
They currently meet all creditor payments at 30‐day terms.
Debtor collection has been solid with active management of debtors and pre‐
contract investigation of new clients.
They have just signed a delivery contract with Organic Flower Growers who supply to Coles Supermarkets state‐wide. To accommodate this work their initial purchase will be a refrigerated Pantec truck at a cost of $145000. Projected net profit from this contract is $60k pa
Note: [In this assignment your submission can be either 1. Consolidation of all income and debt in assessing servicing capacity OR 2. Separate residential and commercial calculations.]

 


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