FNSFMB501 Settle Applications and Loan Arrangements in the Finance and Mortgage Broking Industry Assessment 2

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FNSFMB501 Settle applications and loan arrangements in the finance and mortgage broking industry
Unit Description This unit describes the skills and knowledge required to settle applications and loan arrangements for debt finance and undertake final arrangements to secure and complete the lending transaction for a client applying for a mortgage or related finance.
 
Learning Outcomes By the end of this unit, students will be able to:

  • Prepare for settlement
  • Register securities
  • Arrange for disbursement of funds

 

FNS50315-FNSFMB501 Assessment 2 Answers to Questions

Assessment information

You are a practicing settlement agent and are involved in a number of residential mortgage settlements each week.

Instructions to complete this assessment

In order to complete this assessment, you are required to complete the following sections consecutively. Details and specific instructions are provided within each section and on the form/templates provided.

Supporting documents

To find the relevant supporting documents, please refer to the Assessment Resources folder, located within the FNSFMB501 Settle applications and loan arrangements in the finance and mortgage broking industry section of your course. (Note: Not all units have assessment resources.)

Section 1 – Review the Settlement Agent Scenarios Requirements

Step 1: Download and review the Settlement Agent Scenarios, located in the Assessment Resources folder.

Section 2 – Prepare Advice for Clients Requirements

Respond to the scenarios in step 1 and, if necessary, refer to the Conveyancing Policy and Procedure Manual (Assessment Resources folder) when developing your responses:
Re. Scenario 1: As Robbie’s settlement agent: what advice would you communicate to Robbie and how will you assist your client with his settlement problem?

 

Read Scenario 2, then provide your client with advice about whether a vendor’s pest inspection report should be relied upon at the time of loan settlement.

 

Read Scenario 3, then advise your client Jane what her legal position is regarding the required devices.

 

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LO 2: UNDERSTAND THE CONTROL OF PERFORMANCE MANAGEMENT AND INTERNAL CONTROL ENVIRONMENT FOR RISK CONTROL

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[FRM] Financial Risk Manager Assignment Questions with Answers

 
LO 2
In many smaller, unincorporated businesses such as sole traders and unlimited partnerships, the responsibility for internal controls often lies with the owners themselves. In most cases, the owners are fully engaged in the business itself, and if employees are engaged, it is usually within the capability of the owners to remain fully aware of transactions and the overall state of the business.
As organizations grow, the need for internal controls increases, as the degree of specialization increases and it becomes impossible to remain fully aware of what is going on in every part of the business.
In a limited company, the board of directors is responsible for ensuring that appropriate internal controls are in place. Their accountability is to the shareholders, as the directors act as their agents. In turn, the directors may consider it prudent to establish a dedicated internal control function. The point at which this decision is taken will depend on the extent to which the benefits of function will outweigh the costs.
The directors must pay due attention to the control environment. If internal controls are to be effective, it is necessary to create an appropriate culture and embed a commitment to robust controls throughout the organization.
 
Question 2: Answer the following questions.
a] In reference to the above given opinion, explain in your chosen organization,  what are/could be the various factors that impact responsibility centers to clearly bring out the type of responsibility each of these centers have. Also analyze the performance measures established as controls which you believe would be appropriate to monitor and evaluate the performance of each of these responsibility centers.
b] Describe the business of your chosen organization.  Briefly explain the various types of    internal controls mechanism put in place to control the operational risks in your organization.
c] Explain the role and importance of Audits in your chosen organization. Also mention the different type of Audits that exist while describing the role of Internal Audit department towards assessing adequacy of accounting systems.
[Total-20 marks]
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LO 3: UNDERSTAND THE FINANCIAL STATEMENT AND DECISION ANALYSIS, INCLUDING RISK MANAGEMENT

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FRM Assignment Questions and Answers

What’s keeping UAE businesses awake at night?

The Middle East encompasses a broad range of economic, financial, political and social risks on a regional and country-specific basis. ICAEW’s Economic Insight: Middle East is a quarterly economic forecast specifically for the finance profession, which has shared the following outlook as at Q4 2016:-

  • Risks to an already-weak oil price. Even in a more positive scenario, oil prices will not return close to the $100 per barrel (pb) averaged in 2010–2014. Our baseline forecast remains below $60pb until 2019.
  • Rising tax burden. Businesses are concerned about potential tax increases and spending cuts to shore up government finances. This could prompt lower demand, administrative burdens for businesses (a particular blow to small and medium-sized enterprises), or loss of retained earnings for future investment. Moves to boost employment of national born workers could also place a strain on business.
  • Exchange rate risk. •. While pressure on exchange rate pegs has eased, businesses remain worried about the potential impact on costs if a move to more flexible exchange rates seems likely.
  • These worries are keenest where set government budgets mean large deficits. Oman, Bahrain and Saudi are most exposed with fiscal ‘breakeven’ oil prices $30–$50pb above current levels.

“A full implementation of President-elect Trump’s policy proposals would lower oil prices by $10pb by 2020.”
Question 3:
Evaluate the above given information in terms of impact underpinning organizations in UAE requiring to  embrace for a long term effort by the government to close fiscal deficits and raise increased revenues from the non-oil economy. This could also place many pressures on businesses, particularly w.r.t higher labour costs, weaker consumer demand, and the loss of retained earnings for future investment strategies & better liquidity practices.
[15 marks]
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LO 5: UNDERSTAND THE CONTROL AND MANAGEMENT OF OPERATIONAL AND FINANCIAL RISK IN A BUSINESS

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Financial Risk Manager [FRM] Assignment Answers

Question 5: Answer the following questions.
a] In your chosen organization, explain what are the different types of businesses and financial risks faced by it in the conduct of normal business operations and the decisions involved in it?
b] What is meant by internal risk environment in an organization? Analyze the given situation below and provide your opinion as to what led to the failure of the said institution.

Case Study 1: Washington Mutual

  • 2004 :Embarked upon a lending strategy to pursue higher profits by emphasizing high risk loans
  • 2006 :High risk loans began incurring high rates of delinquency and default,
  • 2007 :Mortgage backed securities began incurring ratings downgrades and began incurring losses due to a portfolio that contained poor quality and questionable customers. (Source: Wall Street and the Financial Crisis: Anatomy of a financial collapse began incurring losses due to a portfolio that contained poor quality and fraudulent loans and securities. Its stock price dropped as shareholders lost confidence and depositors began withdrawing funds, eventually causing a liquidity crisis at the bank)
  • 2008: Seized by its regulator, the Office of Thrift Supervision (OTS) Placed in receivership with the Federal Deposit Insurance Corporation (FDIC) Sold to JPMorgan Chase for $1.9 billion.

Case Study 2 – Barings Bank

On February 26, 1995, Barings Bank (Barings) – the United Kingdom’s (UK) oldest and one of its most reputed banks – declared it was bankrupt. The bank with a total net worth of $900 mn had suffered losses in excess of $1 bn.
These losses were result of the gross mismanagement of the bank’s derivatives trading operations by Nicholas William Leeson (Leeson), the General Manager of Barings Future in Singapore (BFS).
BFS had been established to look after the bank’s Singapore International Monetary Exchange (SIMEX) trading operations. Leeson’s job was to make arbitrage profits by taking the advantage of price differences of similar contracts on the SIMEX (Singapore) and Osaka stock exchanges.      In spite of not having the authority, he traded in options and maintained un-hedged   position.   He acted beyond the scope of his job and was able to conceal his   unauthorized derivatives trading activities.
Due to the senior management’s carelessness and lack of knowledge of derivatives trading, the bank landed up in a major financial mess.
When Barings finally went into receivership on February 27, 1995, it had an outstanding notional futures position on Japanese equities and bonds of US$ 27 bn (US$ 7 bn on Nikkei 225 equity contracts and US$ 20 bn on Japanese government bond (JGB) and Euro yen contracts).
Analysts said that the situation demanded that banks the world over must tighten their internal control procedures.
c] Based on the above case study explain in your opinion the risk management instruments that could have been applied for avoiding a financial risk situation.
 [Total-30 marks]
 

 
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