Assessing Credit Applications: Case Study on Tom Smith

FNSCRD401 - Assess credit applications (Release 1) (Case Study – Tom Smith) Case Study (Tom Smith) Scenario Instructions Page | 1 of6 © Real Estate Academy Australia RTO 32436 Version 1.1 - January 2022

FNSCRD401 - Assess credit applications (Release 1) (Case Study – Tom Smith) What you need to do: Answer the questions below by writing in the space provided. You are required to answer all questions correctly. If correct, you will see ‘Satisfactory’ or if incorrect you will see ‘Not Satisfactory’ in your grades section of your learner portal next to the assessment name. The assessor will provide feedback and a Record of Results in the assessment task once graded. You will be required to resubmit your work for any ‘Not Satisfactory’ assessment tasks. What you will need: Use the learner material provided in your online student portal as well as research materials such as books, internet, magazines, workplace documentation etc. to assist you in gaining the knowledge required to answer the questions. Remember that the assessment is completely self-paced and open book, so you are able to use whatever resources you have to answer the questions. What you need to submit: Your answers to these questions. How to Submit your Assessment: Upload your completed document into the “FNSCRD401 - Case Study (Tom Smith) assessment task [1]” in your learner portal. You can drag and drop the file into the window or use the add file icon in the top left of the submission window and select the file you wish to upload by using the browse/choose file option. Click on finish attempt to submit it for grading. Page | 2 of6 © Real Estate Academy Australia RTO 32436 Version 1.1 - January 2022

FNSCRD401 - Assess credit applications (Release 1) (Case Study – Tom Smith) You are a credit officer working for ABC Bank and have been assigned a credit application for the client Tom Smith received from REAA Finance & Mortgage Broking Team. Review the completed application form and the supporting documents provided in the learner portal and then answer the questions that follow. Page | 3 of6 © Real Estate Academy Australia RTO 32436 Version 1.1 - January 2022

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FNSCRD401 - Assess credit applications (Release 1) (Case Study – Tom Smith) Question 1 Verify the information and documentation provided by the mortgage broker. According to Westpac Supporting Documentation Checklist , is there any missing supporting documentation that you should require the mortgage broker to provide you with? There are two crucial details that are lacking: -a single credit card statement -3 month-old bank statements Question 2 Analyse the information provided, are you comfortable with the accuracy and sufficiency of evidence supplied to support the credit application? (Focus on the Identity Documents and the payslips and highlight what information you would focus on the ensure accuracy and sufficiency of this evidence). To ensure that the information is accurate and sufficient, my main focus will be on the applicant's name, address, ID number, date of birth, and employer's details, such as ABN and paystubs. According to my assessment, the proof offered to support my credit request is both precise and adequate. In order to verify the accuracy and sufficiency of the information, I will primarily concentrate on the applicant's name, address, ID number, date of birth, and employer's details, including an ABN and payslips. Question 3 Now that you have verified and analysed Tom’s application form and supporting documents, you are to rate the credit risk of this submission using the ABC Bank risk rating scale. For each of the four criteria (age, employment, security, and credit score) you are to determine the level of risk associated with the criteria. For Credit Rating ABC bank allows: ● 1 point for each "Low" ● 2 point for each "Moderate" ● 3 points for each "High" ● 4 points for each "Extreme" Complete the Risk Rating table for Smith according to ABC Bank policy and procedures below; Risk Rating Point (s) allocated: Age Low 1 Employment Low 1 Security Low 1 Credit Score Low 1 Page | 4 of6 © Real Estate Academy Australia RTO 32436 Version 1.1 - January 2022

FNSCRD401 - Assess credit applications (Release 1) (Case Study – Tom Smith) Page | 5 of6 © Real Estate Academy Australia RTO 32436 Version 1.1 - January 2022

FNSCRD401 - Assess credit applications (Release 1) (Case Study – Tom Smith) Question 4 According to the risk rating matrix below, are you in a position to provide a decision for this application? (If yes, what would it be, if not, what should you do?) The risk rating matrix above clearly shows that Tom's application is in the "low risk" category, indicating a low likelihood of acceptance. This is because it received a total of four points. For that reason, I chose to move forward with my application. The risk assessment matrix indicates that Tom's application is most likely to be accepted because it falls into the "low risk" category. When needed, I'll add more details to this application as I proceed. Question 5 What security to back up the home loan is ABC Bank likely to request to proceed with this application? The applicant's paid deposit or their car may serve as security. The house loan could use the applicant's paid deposit as collateral. The loan could reclaim the deposit as collateral if the applicant defaults. The applicant's car may also serve as collateral for the loan. If the applicant defaults on the loan, the lender may seize the vehicle. Page | 6 of6 © Real Estate Academy Australia RTO 32436 Version 1.1 - January 2022

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