1.

The National Consumer Credit Protection Act, National Credit Code, Competition
and Consumer Act 2010, which was developed to safeguard borrowers and
guarantee ethical and professional standards in the finance industry, must be
followed by all members. Members must not charge a client a non-refundable cost
for a Loan application if the Member knows or suspects that the Credit will be
denied, except if the Member has offered a service to determine the Customer's
initial eligibility. The Customer has agreed to such a cost in written form before such
a preliminary assessment is formed.
 
The following are the main features of the finance and mortgage broking code of practice:
act comprehensively following the management of finance applications, broker to earn and
reveal commissions and benefits, uphold appropriate training standards, organize finance
for customers, acknowledge customer applications in a timely and thorough manner.

MFAA Code of Practice probhibits members from charging non-refundable fees for credit
applications. it is because if the Member knows or suspects that there is little or no chance of the
application being approved, unless the Member has completed a preliminary assessment of
eligibility of the Customer and the Customer agrees to such a fee in writing before such a
preliminary assessment is completed. Key features of relevant current legislation and codes of
practice relating to finance and mortgage broking: a. promote and establish professional
standards between Customers and Members and between Members in the mortgage and finance
industry b. promote commitment by Members to compliance with laws and regulations and the
spirit of those laws and regulations c. promote the maintenance of the high public standing of
MFAA membership d. promote ethical and fair business practices.

2. ANSWER
This is a very long and complex processes. Therefore there is need for a broker to ease all
these long procedures. This process ranges from the time a mortgage broker submits an
application on behalf of the client, collecting of supporting documents, have client's
employment details checked and finally having the lender to approve loan.
Therefore it is necessary for mortgage broker or lender representatives who has been
appointed by the client to prepare the documentation accurately and completely especially if
he/she knows the requirements of the lender. Mortgage brokers the client but not the
lender. Therefore, the mortgage broker will put client's interest and financial needs first and
look for a loan which will suit the customers desire.
These brokers take long-term view and navigate through all lender fees, terms and
conditions to make sure that the client is not paying more than e/she should pay. After the
lender representatives and mortgage broker strike an agreement and meet the client most
suitable loans, they proceeds to recording and filling documents.
 
Step-by-Step explanation
Explanation
The mortgage brokers are very important as we have seen. Through their good
engagement, clients are able to get easy and better loan deal since these brokers are
people who have the capabilities of finding the best loan deal. In addition, brokers save their
client if length work and provide better access to these loan institutions.
References
Berndt, Antje, Burton Hollifield, and Patrik Sandås. The role of mortgage brokers in the
subprime crisis. No. w16175. National Bureau of Economic Research, 2010.
Keys, Benjamin J., et al. "Financial regulation and securitization: Evidence from subprime
loans." Journal of Monetary Economics 56.5 (2009): 700-720.

It is important for a broker to choose the appropriate form for a home loan applicant as it will
give brokers to determine which loan is suitable for the customer and by knowing their financial
conditions broker can choose appropriate form which can result in loan settlement. So its
important for a broker to choose the appropriate form. Different types of relevant lender forms:
Application forms – typically asks for client details, the type of loan applied, purpose of the loan
(investment or owner occupied), the client’s financial history, etc. In addition to completing the
application form, the lender may ask the applicant to provide original or certified copies of
documents to support the application such as personal ID, evidence of income, purchased
property, and evidence of assets/liabilities. Sometimes additional application forms apply where
different borrowers and/or guarantors with different security properties are required.

First Home Owner Grant (FHOG) forms will also be required. The FHOG Scheme is funded by
the Federal Government and administered by the states, for example in NSW the Office of State
Revenue (OSR). The scheme assists eligible first homeowners to purchase or build their first
home by offering a grant. The grant applies to residential dwellings only. Government grants and
assistance forms – in addition the FHOG scheme, there are many other available schemes from
state and federal governments to encourage entry into the housing market each with its own
requirements and restrictions.

3. Standard Hme Loan information required:

a. Salary
A current bank statement showing the last 2 salary payments and the employer’s name
(internet banking transaction listings not acceptable); or 2 of your last 3 payslips (the
latest payslip must not be more than 1 month old); or A letter from your employer (on a
company letterhead) detailing your name, length of employment and income details and
either 1 payslip or a bank statement showing 1 salary payment (not more than 1 month
old); Casual workers only: your group certificate or your ATO notice of assessment for
the last financial year
b. Rental income
A current bank statement showing direct credits identifiable as rental income; or A
current lease agreement; or A letter from the real estate agent managing the property
which provides details of the property, the property owner, length of time the
property has been leased and the current and/or proposed rental income
c. Shares A shareholding certificate or current dividend statement/notice
d. Government Income (e.g. Centrelink and/or Veterans’ Affairs) A current Centrelink
statement; or A current bank statement showing direct credits identifiable as the
government allowance
e. Superannuation – if you receive income from your Superannuation Fund A current
superannuation fund statement; or A current bank statement showing the regular
 income from the superannuation investment; or A letter from your NAB Group
financial planner confirming your income (if applicable)
f. Self employed/ Trust income
Your accountant’s details (name, accounting firm and phone number) The last 2
years Financial Statements
g. What you own
Savings that are not kept in a NAB account, shares, property or other assets Details
of balances or values Are you contributing any of these assets towards your purchase?
Documentary evidence of these assets e.g. bank account statement

Information required to support a loan application:

Identification – evidence of ID including primary and secondary such as passport,
drivers licence and Medicare card or utility bill.
Bank statements – to check the client’s financial history and the client’s financial
health in general.
Debt commitments – existing or previous loans with other financial institutions such
as credit card debt, student loan, etc.
Copies of tax forms – applies to those who are employed or self-employed.
Centrelink payments – if applicable, a letter from Centrelink (or Department of Social
Security, or equivalent) detailing current entitlements.
Documentation regarding special needs – legal papers for example birth certificates
or health-insurance cards, financial directives such as powers of attorney, living wills,
and health care proxies.
Written documentation from: Solicitors/conveyancers – e.g. preparing transfer
documents to be filed at the Land Titles Office and registering the transfer of
ownership of the property.
Friends or family who are assisting with the payment of the loan – e.g. letter of
guarantee.
Banks – e.g. written notice of new credit limit on credit card. Financial advisers – a
mortgage broker can assist client in obtaining a sound financial plan from a financial
adviser.

4. Steps between a conditional approval from a home loan lender to final loan settlement:
1. Borrower can start looking up for the buying the interested property.
2. Borrower can sign the contract of home based on conditional approval
3. Signed contract sent to the broker and broker send the contract to the lender.
4. Lender verify the documents and provide unconditional approval.
5. After unconditional approval, apply for grant if eligible.
6. Appoint the conveyancer to deal with all other formalities and fees and once
everything is completed your loan settlement is done. The MB is to communicate with
the lender and let the client know what the decision is and what the lender requirements
are. The MB will also arrange for a valuation on the property (step 3). → Again, the MB
will inform the client when the home loan is fully approved and advise on what the next
 steps are. The client will exchange contracts for the property (step 4). → Some mortgage
brokers offer financial advice help through a financial adviser to help the client manage
their debt more efficiently (step 5). → Once the loan documents arrive, the MB will
inform the client and arrange a meeting with a solicitor to review the documents. The MB
will send the lender’s offer letter to the client. The MB will advise and arrange for the
client should mortgage insurance be needed (step 6). The MB will make sure loan
documents are complete and signed properly (step 6). → Once the client’s solicitor has
reviewed the Contract of Sale, the client and the seller each will sign a copy, also known
as Exchange of Contracts. The solicitor will contact the lender during this time to arrange
a settlement date. And the MB will inform the client of the settlement date, stamp duty
and registration costs will be charged, a home loan statement and letter with information
to help the client manage the loan will be sent to the client and the client’s title deeds and
mortgages will be registered at the Land Titles Office (step 7). Key stages and features of
loan settlement processes: 1. Conditional approval 2. Unconditional approval 3. Loan
Processing 4. Loan approved 5. Loan settlement

Conditional Approval
Before you start your property search, it's worth getting conditional approval for a home
loan. It's a letter from your lender that indicates how much they're likely to let you borrow.
It's based on a few things, like a review of your financial details, goals, and requirements.
The info will also have been assessed and validated by us.
You might've also heard the term 'pre-approval - also known as an approval in principle, a
pre-approval letter will also give you an indication of what you might be able to borrow. The
difference is that the info you've given us isn't assessed and validated.
 
Keep in mind that conditional approval is a level up from pre-approval - this letter is what
you'd take with you to an auction.
 
How it works:
A Home Lending Specialist or broker can help you through the process.
Things to have ready:
 Your ID - see what you'll need
 An idea of your expenses, assets, and liabilities
 Evidence of your income, like payslips, tax returns, or bank statements. See a
detailed list of what you might need.
With conditional approval, you'll have a clear idea of what you could realistically afford and
can start looking for your property with peace of mind. It also puts you in a strong position
when you make an offer on a house or purchase a property at auction, as it shows the seller
and real estate agent that you're a serious buyer.
Once you've found your property, you can move to the next step.
 
Applying for the loan
You need to get in touch with a Home Lending Specialist or broker and provide a copy of
the signed contract of sale. From there, they'll organize the rest of your application and let
you know if any documents are missing. They'll also help you select a suitable home loan
product that's right for you.
 
Signing the docs
Once your home loan has been unconditionally approved, the bank will send your contract
documents to you and you'll need to read, sign and return them. The bank will then verify
the contract documents and settlement will be booked.
 
STAGES OF HOME LOAN SETTLEMENT PROCESS
 
STEP 1: INFORMATION GATHERING AND PREPARATION
The key to a smooth approval process is preparation - it is important to give some prior
thought to your individual circumstances, such as:
 Your finances and commitments
 How much you have saved for a deposit
 Loan features that appeal to you. e.g. flexibility, access
 Your current and future lifestyle requirements, e.g. do you plan to change jobs in the
future, take a holiday, etc.
STEP 2: MEET WITH A BLUEPRINT WEALTH MORTGAGE FINANCE BROKER
Using a mortgage broker may be a smart way to go. Here is some further reading that
explains why a mortgage broker may be right for you
A Mortgage Finance Broker will meet with you to discuss your home or investment loan
requirements and objectives, including:
 The purpose for the loan
 Loan types, features, costs, and risks
 Your ability to make loan repayments. We will review a range of factors including
income, expenses, and liabilities as well as any foreseeable changes to your
financial circumstances
 Your future needs
 The information and documentation you will need to provide
STEP 3: APPLICATION
This is where you (together with your Blueprint Wealth Mortgage Finance Broker) will
complete, sign and date the home loan application form and submit all of the necessary
supporting documents for approval.
 
STEP 4: APPROVALS
Once the application and supporting documents have been submitted, the bank will verify
the information provided. They will also confirm any conditions on the loan, and, if
necessary, undertake a valuation on the property. Your Blueprint Wealth Mortgage Finance
Broker will advise of any additional information required - such as from your settlement
agent or other financial institutions.
When the loan is formally approved, your Blueprint Wealth Mortgage Finance Broker will
contact you.
 
STEP 5: DOCUMENTATION
 This is when the home loan contract is issued. At this stage, we will review the home loan
documentation together with you in detail before you sign.
 
STEP 6: SETTLEMENT
Once the requirements of the loan approval have been met, the loan funds will become
available to you. We will work with you to make the necessary arrangements for settlement.
 
5. An Amortisation schedule is a complete table of periodic loan payments, showing the
amount of principal and the amount of interest that comprise each payment until the loan
is paid off at the end of its term. An amortisation schedule is a table that shows each
periodic loan payment that is owed, typically monthly, and how much of the payment is
designated for the interest versus the principal. Amortisation tables can help a lender keep
a track of what they owe and when, as well as forecast the outstanding balance or interest
at any point in the cycle. Changes would occur to this schedule if home loan interest rates
changed: If interest rate increase, the amortisation schedule will change and increase and
if interest rate decrease, then the amortisation schedule will decrease. Term and interest
rate – term of a loan is the length of time until a loan is due whereas interest rate can be
either fixed or variable e.g. a 25-year home loan with fixed interest rate of 4.05% means
that the borrower will need to repay the loan in 25 years by making a fixed monthly
payment. Loan documentation is complete, accurate, and readable – it is in both the
mortgage broker and the client’s interests to provide complete, accurate and readable
documentation as this will determine the speed and likelihood of loan approval.
AMounts: broker needs to find out how many debt commitments the client has and the
total amounts of debt. This will impact the client’s borrowing capacity i.e. if the client
has a credit card with $15k credit limit, the lender will reduce the loan amount by this
amount. Remember it is not the balance that matters but the credit limit. The loan
amortisation (amortization)  schedule is a table that shows monthly loan repayments
from the beginning, when the loan amount is zero, through the end, when the loan
balance is zero. It's also known as Loan details or Loan schedule. An amortization
schedule shows how much of your monthly mortgage payment goes toward interest
and how much goes toward principal over the course of the loan's life. During the
first few years of your loan, the majority of your money is spent on interest.
 
The interest rate has a direct relationship with this. If the interest rate goes up, the loan
payback amount in the schedule table goes up, and if the interest rate goes down, the
repayments go down.

 
6. Banks require independent property valuations prior to approving home loans to make
sure they’re not lending more than the value of the property. Loan Management Process:
The Loan Management application controls the process of approving a loan, from the
first request to the final approval. it includes New Loan request - verification - credit
history check - meeting - approve/refuse loan Instruct an valuer to inspect your property
to determine its market value. The valuer will determine the market value of your
property. Value is generally done by: general location and council zoning overall size and
number of rooms vehicle access to the property building structure and condition. A
valuation report is prepared by the valuer and should contain: a date of valuation and a
date of inspection areas, a description of any improvements – such as a house, pool or
other structures an accurate floor plan a specific list of inclusions an outline of permitted
 land use under the current relevant planning instrument and/or local government codes a
description of the class of land valued and the current or potential use of the land together
with its location the rental value of the property details of any people, companies or
businesses that occupy the property. Before the lender offers you unconditional
approval they may send an independent professional to value the property. Lenders
do this because they use your property as security for the loan.  Sometimes the
value may estimate the market value of the property is lower than the purchase
price.
Step-by-Step explanation
BANK VALUE IS NOT THE SAME AS MARKET VALUE
They want to make sure that if they need to sell the property in order to recover a bad
debt, they will get the loan amount back. In order to get an unbiased and accurate
representation of their security, they get an independent value to make the appraisal.

7. Some lender requirements and guidelines for home loan applications 1. Relevant and
necessary documentation attached to the application – e.g. some lenders may ask for
certified or original copies such as birth certificates, completed application of First Home
Owner Grant if applicable, etc. 2. Appropriate format – loan application form can be
done online or in-written, most letters are required to be typed, some lenders accept
electronic statements that are not certified. 3. Appropriate language and legal terms – it is
important that a mortgage broker or lender’s representative use standard English and
appropriate legal terms so to avoid misunderstanding. 4. Appropriate signatures from
legal authorities – e.g. during loan document signing where presence of notary public is
required to attest the identity of the signer based on satisfactory evidence provided and to
witness the signatures of the borrowers on the loan documents. 5. Clear and concise
documentation – an important aspect when preparing loan documentation is to provide
clear and concise documentation as this will affect the lender’s approval.

Answer Australian banks and lenders mortgage insurers have specific lending
criteria that they use to assess home loan applications . This documentation needs
to reflect the client 's financial and personal situation and complies with lender
requirements and guidelines , including but not limited to : → Relevant and
necessary documentation attached to the application - e.g. some lenders may ask
for certified or original copies such as birth certificates , completed application of
First Home Owner Grant if applicable , etc . → Appropriate format - loan application
form can be done online or in- written , most letters are required to be typed , some
lenders accept electronic statements that are not certified . → Appropriate language
and legal terms - it is important that a mortgage broker or lender 's representative
use standard English and appropriate legal terms so to avoid misunderstanding . →
Appropriate signatures from legal authorities - e.g. during loan document signing
where presence of notary public is required to attest the identity of the signer based
on satisfactory evidence provided and to witness the signatures of the borrowers on
 the loan documents . → Clear and concise documentation - an important aspect
when preparing loan documentation is to provide clear and concise documentation
as this will affect the lender 's approval .

8. Tangible security (such as houses, cars, or boats) or Intangible security (such as

copyrights or patents) A mortgage can be legal or equitable. Under a legal mortgage,
legal ownership of the property is transferred to the lender. An equitable mortgage is
usually created where either a transaction does not meet the formal requirements of a
legal mortgage but is recognised in equity (for example, a mortgage over property which
the mortgagor does not yet own – a legal mortgage can only be created over property
which exists at the time); or where the mortgage concerns property only recognised in
equity (for example, an interest in a trust fund – a legal mortgage cannot be taken over
property which is only recognised in equity). Legal mortgage: This is the most secure and
comprehensive form of security interest. As we have seen, it transfers ownership to the
bank (the mortgagee) and so prevents the borrower (the mortgagor) from dealing with the
mortgaged asset whilst it is subject to the mortgage. A legal mortgage transfers
ownership of the asset to the mortgagee so it cannot be sold to a third party without the
mortgage being released and ownership being transferred back to the mortgagor.

Types of security  for home loan lenders

 Guarantors-the guarantor signs a contract, effectively offering up their home - or a
big sum of money - as sufficient security for the deposit.
 other properties of assets of the same value-Here any security that has the same
amount or value to what you want may stand up as a security for you.
 The property itself-The property itself will be the "security" for the loan, provided the
property is considered suitable security
various types of securities  required by lenders
 loaning shares of stock
 commodities
 derivative contracts or other securities to other investors or firms