Legal Implications Of Broker Processing Own Loan Transaction, Key Legislations, And Impact Of Interest Rates On Mortgage Broking

Legal term for a broker processing own loan transaction

Interest rates is one of the key aspects that have an impact on the mortgage broking. The rate of interest varies with respect to the economic scenario and it has an impact on the level of mortgage broking. The four ways in which the rate of interest has an impact on the mortgage business are as follows:

1. The level of borrowing become more expensive: The rise in the rate of interest leads to payment of additional interest amount as the interest is linked directly with the borrowers. This influences the borrowers to undertake more borrowings in order to meet the requirement that they desire.
2. Trouble for bonds and stocks: The rise in the rate of interest has an impact on the rise in the prices of the stocks and bonds and therefore the demand for the stocks can have an impact thereby having an impact on the level of mortgage broking.
3. Cash Flow: The mortgage business look to function with a limited cash flow and therefore when there is a rise in the rate of interest leads to the requirement of additional cash that is required to repay any amount can be scarce. Furthermore, short term mortgage investment in order to cover the cash flow gaps can be difficult.
4. Business Planning: The rise in the rate of interest can have an impact on the ability of the owners to expand the business. The mortgage business that have loans and which have fluctuating rate of interest have the issue of repayment of the loan.      

In the mortgage business, Joe is a new broker who has the idea of purchasing an investment property with this brother and Joe wants to process the loan transaction by himself from the beginning to the end. In this respect the broker has to disclose himself to be the licensing agent and Joe becomes the customer and thereby act as a buyer and simultaneously can act as broker for any other buyer or seller.

It is better to have another broker in the office to look into this loan as Joe in this respect is a customer and therefore a biasness can be existent for Joe when it comes to the processing of the loan. The existence of another broker is helpful in giving out appropriate processing method and in that manner all the documentation will be appropriate with the help of which the transaction process can be completed in an effective manner.

If Joe undertakes the loan process himself, then the he has to behave as a customer as the property is for his himself. The steps involve:

• Decide the amount that the broker can afford: This process explains the amount of money one can invest and thereafter would be able to pay off the loan that they would be taking place.
• Undertake a pre-qualification: The pre-qualification requires the the client to disclose the residence history, manner of employment, assets etc in order to construct the credit score. The completion of the review of the information, a pre- qualification letter is provided.
• Apply for the loan: The loan that is required needs to be specified with the help of which the mortgage business can be initiated and thereby the loan can applied in an effective manner and the documentation process can be completed.
• Funding of the loan: The loan process would be initiated after evaluation and assessment of the loan processing documentation and after effective scrutiny if the documents are appropriate then the loan would be funded.

• The two documents that could be used by Joe in order to assist him involves:
• Use of mobile phone in order to record all the conversations that have been undertaken among the customer and the broker.
• Use the internet facility thereby accessing the company website and providing the providing the product brochure to the customer so that the customer can have knowledge about the product that would be appropriate for them.
• The use of mobile phone and internet are the most significant methods with the help of which Joe can mitigate the problem of not taking the product brochure and forgetting the pen thereby not being able to note down the requirements of the customer. The use of mobile would involve noting down all the requirements of the customers so that the broker can go through them and note down the all the requirements while noting the application for the loan together. As Joe has forgot to take the product brochure, he can make use of internet and access the website of the company from which the product brochures can be attained which can be displayed to the customer so that the customer can have knowledge about the product that is suitable for him.
• Joe has the responsibility to assess, analyse and scrutinise the documents, data and the reports that would be essential for the organizational and customer requirements. Managing the information is significant to the role of the broker as the broker has the function of assessing the documents that have been submitted by the client. These information needs to be recorded and kept as a record which can be looked down upon when necessary. The documents needs to be managed in order to undertake the process of decision making. These are the reason information management is essential for the broker so that they can construct the application plan and thereby take the investment application process ahead.

• The two key legislations that are applicable to the situation has been faced by Joe are:
• Criminal Code Act 1995
• Australian Security Intelligence Organization Act 1979                      
• There is no legal obligation that this information has to be included in the loan application as the application of loan is not dependent on the criminal record but depends on the credit score of the client. Therefore, these information may not be listed in the loan application form if the credit score of the client is appropriate.
• With respect to the cash deposit, Joe will be needing the income statement of the client and the documents that are relevant to understanding the mode of income. Documents regarding the income and the source of the cash deposit is even understood with the help of which Joe would have relevant evidence about the cash deposit. 

The steps and the measures that have been taken in order to resolve the issues that is existent for Sally and Maria are as follows:

• Initially recognise what the actual reason of the problem is that is having an impact on the behaviour of Sally and Maria. It is essential to sit with both Sally and Maria individually and understand what the actual problem is in order to start the process of mitigating the problem.
• The next step involves the coming up with precise steps and idea in order to solve the problem.  One has to look into the aspects put forth by Sally and Maria and then come up with an idea that can satisfy both Sally and Maria.
• It is important to focus on the issue and not the problem and thereby understand the issues that are having an impact on the performance of the employees. The perspective of Sally and Maria has to be looked down upon and come with the idea with the help of which the issues can be resolved.
• One can even involve the human resource department as this department focuses on looking after the issues and grievances of the employees and so human resource can involve themselves in the problem.
• The solution that has been constructed needs to be assessed in order to discover the success of the solution and thereby understand to what extent this solution can be used in the future course of time.

This question tries to answer the issues that have been identified in the earlier question. It is discovered that the cause of the conflict has been that Sally feels that Maria does less amount of work than what she does. In order to mitigate the issues a suitable action involves providing a clear and precise deadline for the completion of the work to Sally so that she can complete the work in accordance to the priority and even provide her with extra responsibilities and the duties with the help of which she can enhance her performance and tasks.

The other plan of action involves asking Sally to provide frequent feedback of the tasks that have been performed and this aids the management in understanding the speed and the time that has been taken in order to complete the work. Sally may even be asked to work in a team so that her work improves and she gains a sense of confidence and responsibility to complete her tasks on time and in a precise manner. These actions can be helpful in improving the job performance of Sally and thereby mitigating the issue that has been highlighted by Maria.

This question tries to identify the priority of the tasks that are performed by the mortgage broker and the whether these tasks would be performed individually or in a team. The priority is tabled from 1 to 5 in accordance to the highest priority to the least.  

References

Hamilton, I., Huebner, G. and Griffiths, R., 2016. Valuing energy performance in home purchasing: an analysis of mortgage lending for sustainable buildings. Procedia Engineering, 145, pp.319-326.

Krainer, J. and Laderman, E., 2014. Mortgage loan securitization and relative loan performance. Journal of Financial Services Research, 45(1), pp.39-66.