Short Answer Question 1

How should a business manage the interaction between addressing credit risk and business objectives/strategies?

Short Answer Question 2

How should lenders deal with debtors in difficult circumstances?

Short Answer Question 3

What are typical circumstances that lead to a personal insolvency situation? 

Short Answer Question 4

How can a lender register security for a loan? 

Short Answer Question 5 

While you are engaged with the application and verification process for Alex and Christopher, Sally Smith begins to tell your clients more about the history of the land they wish to purchase. Five years ago, when Sally’s father Frank decided to retire, he sub-divided his property and sold the vast majority of it to his old primary school friend and neighbour, Jack Jones. Shortly thereafter, Jack’s son (Jim) sought to change the pastoral lease to a perpetual pastoral lease. At this point in time, Joe Atkinson commissioned a Connection Report from a renowned historian Professor Harold Mews and an expert anthropologist Dr Thackery Blume. Both experts supported Joe Atkinson’s interest in the lands and waters running through the properties owned by the Smith and Jones families.

After outlining the recent history of the property, Sally shows Alex and Christopher a copy of the Connection Report which details the cultural significance of the stream and the land abounding its banks. After a very short discussion, both the vendor and prospective purchasers agree that they are willing to surrender the land. Without delay, Sally calls Joe Atkinson to include him in these new developments. Joe advises that native title rights can be awarded through a ‘Consent determination’ by a court whenever there is agreement between the parties about native title rights and interests in relation to lands and waters. Joe also suggests that they enter into an Indigenous Land Use Agreement (ILUA) for the benefit of all concerned.

When Joe becomes aware that Sally, Alex and Christopher are overwhelmed by the technical details, he breaks the process down into simple concepts. He explains that an ILUA is a voluntary agreement between native title groups and others about the use and management of land and waters. An ILUA may be registered on the Register of Indigenous Land Use Agreements which is held by the National Native Title Tribunal. A registered ILUA binds all persons who hold native title to the terms of the agreement, whether they were parties to the agreement or not. In lay terms, it means that Joe will be able to guarantee that the land will not be sold or developed for any kind of economic gain. Instead, future generations will maintain the stream as a sacred ceremonial site.

Despite the overwhelming consensus between these four parties, the valuation process does not proceed as smoothly. Your prospective lender is unsettled by Joe Atkinson’s unregistered claim and by the termites that have infested the heritage-listed homestead. In short, the lender will only approve the loan if the negotiated changes are made to the title and if the purchase price is adjusted accordingly. Furthermore, the lender is only prepared to value the land given the structurally compromised state of the house. Upon hearing this, Alex is devastated. She calls Sally with the bad news. Sally responds with kindness and compassion by offering to sell the house and the two acres of uncontested property for $450,000. Alex rings you and begs you to do all you can to make sure she and Christopher can secure this once-in-a-lifetime deal.

Activities:

(a) Using specialist software (or a self-generated spreadsheet), determine whether your client’s have the capacity to repay the loan. Please include the document with your answer (note from markers: any form of budget planner or spreadsheet is acceptable).

(b) Identify and briefly explain 2 materials/documents, as well as, 2 personnel needed to implement your client’s loan.

(c) Explain how you would effectively deal with the personnel listed in part (b)