Introduction

The mortgage industry is depended on client satisfaction and this is guided through the assistance of the brokers. Numerous legislation guides the mortgage schemes so that clients feel safe to invest in the mortgage sectors.

Module 2

The mortgage industry must be competent to identify the risks associated with the sector. Evaluation of this risk will help to generate an effective risk management plan (Lewellen and Williams, 2019). Brokers use different financial instruments to analyze the risk associated with the permission of loans to the clients. Risk management plan acts in favor of the mortgage industry as it helps to recognize the threats before its advancements.

The clients must be made comfortable so that they can share their preferences of a loan with the brokers. The broking options are presented in front of the client including the advantages and disadvantages of investing in a loan. Fees, commissions and charges must be explained to the clients so that they get a clear view about the objectives of the business.

Sometimes the clients encounter problems in presenting the loan application. The assistance to this issue is made by the mortgage brokers so that the clients can experience hassle-free loan permission. The brokers guide the clients in every step of loan approval staring from explaining the regulations set by the organization till the final submission of the documents (Agarwal et al., 2019).

The brokers set the loan application of the clients effectively by providing them systemic progress towards loan accomplishment. Credit guide, privacy consent, client needs, etc. are maintained by the brokers so that loan application is successful. After loan application, the brokers contact the aggregator who is responsible to estimate the credit score for the loan. After this evaluation, the loan is granted to the client.

Finance professional’s uses a term Deal flow like venture capitalists, private equity and angel investors to refer to the rate at which they accept business suggestion offers. The term deal flow is not only use as a measure of rate but it easily transfer to the stream of opportunities as a combined whole. In a fund or a group’s deal flow has many sources (Hisano and Omron Corp, 2018). The most important resource is companies or entrepreneurs in which the fund has invested earlier. Some funds or groups accept the business plans which are an unreferred submission from an organization with no earlier relationship with the funding company. This type of unreferred plans are regularly much less interested to accept financial support.

Deal flow on the Internet is recently undergoing a fundamental transformation due to the job acts passage in the United States (Mayer et al., 2018). Earlier, the deals which are equity based and funds will be capable to marketed to the customers through equity crowdfunding. This is normally called as general solicitation. Normal solicitation of these equity deals will increase the deal flow on the internet. Tax file numbers should not be included in a client file.

According to Dichev, Cameron and Nikolopoulos, (2018) For maintaining the enough deal flow, venture capitalists and angles spend more time of their for doing the development of business, growing their profiles by providing speeches, networking with other people, writing blogs who also work with the companies which are in early stage.

Financial advice is basically a declaration of advice or a view which is indented to influence someone to whom it is made corporation act 2001. If someone gives recommendation in customer credit products like a home loan, they either require an Australian Credit Licence (ACL) or be a Credit Representative of an ACL holder.

Financial product or not, someone requires an Australian Financial Services Licence (AFS) or be an authorised representative of an AFS holder in the time of advising financial products.

It is highly imperative of the mortgage industry to be competent for the identification of the risks involved with the sector. For the mitigation of the risks in an effective way, Risk Management process needs to be incorporated. The Loan Approval Process will be a highly proficient risk management process. It is crucial for the Mortgage Broker to provide assistance to the clients for selecting a suitable loan product as well as for exercising care in understanding the capacity of the client for the repayment of the loan seek by them (Ferreira et al., 2019).

From the Loan Application Form, key information for the identification as well as management of risk will be obtained. It includes:

Business/ Personal Details
Income as well as Expenditure
Assets as well as Liabilities
Funds for Completion
Declaration for Product Stability
Type as well as purpose of Loan
Security Details

With the help of Four C’s of Credit, which is a highly reliable method it is possible to determine the risk profile, which is related to the proposal.

Character, which the credit history as well as the job stability of the clients reveal

Capacity, which the Income as well as the Expenditure of the Clients determine

Capital, which the Assets as well as the Liabilities of the client calculate

Collateral, which Secured Property provide assistance for determination

Both quantitative as well as qualitative analysis of the risk profile of the clients are included in the risk assessment method. The capacity of the client is verified by collecting the exact information during the client interview (Pereira et al., 2019). Most lenders need copies of two pay slips, which are recent for individual clients who are the tax payers of the PAYG. It is highly imperative to verify the collected information from the clients. The basic ratios need to be calculated for verifying the information.

Conclusion

From the study, it can be inferred that mortgage brokers help the clients in loan application procedure so that the loan is granted within time. Additionally, the brokers provide a comfort zone to the clients so that they feel safe to carry out the transaction procedure. Although certain risks like data theft, ignorance of repayment, etc. persist within the industry, brokers guide the clients efficiently so that they experience hassle-free transactions.

References

Agarwal, S., Deng, Y. and Wang, Y., 2019. Mortgage Brokers and the Effectiveness of Regulatory Oversights. Available at SSRN 3368063.

de Silva, A.J., Boymal, J., Potts, J. and Thomas, S., 2015. Does innovation in residential mortgage products explain rising house prices? No.

Donkor-Hyiaman, K.A. and Ghartey, K.N.O., 2017. Legal origins and mortgage finance contradictions. International Journal of Housing Markets and Analysis, 10(1), pp.156-179.

Ellis, L. and Littrell, C., 2017. Financial Stability in a Low Interest Rate Environment: An Australian Case Study. Monetary Policy and Financial Stability in a World of Low Interest Rates. Reserve Bank of Australia, Sydney.

Fang, J., 2019, July. Research on Limiting Factors and Their Countermeasures and Suggestions of Rural Property Mortgage Financing. In 2nd International Conference on Education Science and Social Development (ESSD 2019). Atlantis Press.

Ferreira, F.A., Meidutė-Kavaliauskienė, I., Zavadskas, E.K., Jalali, M.S. and Catarino, S.M., 2019. A judgment-based risk assessment framework for consumer loans. International Journal of Information Technology & Decision Making, 18(01), pp.7-33.

Halvitigala, D., Wilkinson, S.J. and Antoniades, H., 2017. Meeting Changing Industry Expectations from Australian Property Valuation Graduates. Australasian Universities Building Education Association.

Larson, D., Larson III, D., Shahar, E., Turner, B. and Judy, J., Modex Inc, 2017. Presenting matches of loan officer information and loan service providers on a graphical user interface. U.S. Patent Application 15/339,785.

Lewellen, S. and Williams, E., 2019. Mortgage Brokers, Technology, and Credit Supply: Evidence from MERS.

Nehf, J.P., 2017. Consumer credit regulation and international financial markets: Lessons from the mortgage meltdown. In Consumer Law and Socioeconomic Development (pp. 147-157). Springer, Cham.

Pereira, V.I., Ferreira, F.A. and Chang, H.C., 2019. A constructivist multiple criteria framework for mortgage risk analysis. INFOR: Information Systems and Operational Research, 57(3), pp.361-378.

Ryan, T., 2017. A Reverse Mortgage over the Family Home as a Panacea for Ageing Societies? Comparative Lessons from Japan. International Journal of Law, Policy and the Family, 31(2), pp.207-229.

Smith, J., 2016. Engaging effectively with external dispute resolution in financial services. Precedent (Sydney, NSW), (134), p.39.

Steil, J.P., Albright, L., Rugh, J.S. and Massey, D.S., 2018. The social structure of mortgage discrimination. Housing studies, 33(5), pp.759-776.

Vieira, J., Lee, K.S., Pingali, M., Cornell, M., Shetty, S., Falah, S. and Sambhar, A., JP Morgan Chase Bank, 2018. Systems and methods for enhanced organizational transparency using a credit chain. U.S. Patent Application 15/234,263.

Hisano, A., Omron Corp, 2018. Data flow control order generating apparatus and sensor managing apparatus. U.S. Patent Application 10/121,382.

Mayer, N., Ilg, E., Fischer, P., Hazirbas, C., Cremers, D., Dosovitskiy, A. and Brox, T., 2018. What makes good synthetic training data for learning disparity and optical flow estimation?. International Journal of Computer Vision, 126(9), pp.942-960.

Dichev, K., Cameron, K. and Nikolopoulos, D., 2018. Energy-efficient localised rollback after failures via data flow analysis. arXiv preprint arXiv:1806.01611.

Schapper, P. R., Malta, J. N. V., & Gilbert, D. L. (2017). Analytical framework for the management and reform of public procurement. In International handbook of public procurement (pp. 119-136). Routledge.

Deane, F., & Hamman, E. (2017). Principles to improve agricultural practices impacting on water quality: An analysis of regulatory designs from Australia and New Zealand.