Reverse Mortgage Accreditation Test

Transcription

1 Reverse Mortgage Accreditation Test Name: Aggregator: Date: Result: (Heartland to complete) IMPORTANT NOTICE This information has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, any individual should, before acting on this information, consider the appropriateness of the information having regard to their individual objectives, financial situation and needs and, if necessary, seek appropriate professional, financial and taxation advice. Australian Seniors Finance PTY LTD // Seniors Finance PTY LTD Level 9, 63 Exhibition Street, Melbourne // PO Box 18134, Collins Street East, Vic 8003 Tel // Fax // Seniors Finance PTY LTD // Australian Credit Licence No // ACN Seniors Finance PTY LTD // Australian Credit Licence No // ACN

2 Bill and Sue are a married couple aged 78 and 75. They are in receipt of the Age Pension, their only income. They own a home in suburban Sydney valued at $820,000 and they are considering an equity release loan. Q 1. They state they need some immediate funds to carry out renovations to their home and update their car and would like to discuss options for accessing regular cash to top up their aged pension payments. Which options available to them via the Heartland Reverse Mortgage appears most suitable to their stated needs. (Response tick one) A) Lump sum with the knowledge they can reapply anytime when they need access to more funds. B) A Cash Reserve Facility from which they can draw as their needs arise. C) A combination of Lump Sum and Cash Reserve. D) A combination of Lump Sum and Regular Payment. Q 2. Based on your discussions, Bill and Sue consider a combination loan, with a $55,000 lump sum and then $8,000 per quarter for 5 years best suits their needs and objectives. What is the maximum available loan to them? (Response tick one) A) $182,000 B) $156,000 C) $246,000 D) $162,500 Q 3. What is the total combination loan they are applying for? (Response tick one) A) $55, 000 B) $315,000 C) $215,000 D) $63,000 Heartland Seniors Finance 2

3 Q 4. True or False. The Centrelink treatment of Bill and Sue s Reverse Mortgage may depend on what they do with the money received. They should contact Centrelink to discuss any impact taking a Reverse Mortgage may have on their pension or other Government entitlements. (Response tick one) True. False. Q 5. Which of the following is/are fact: (Response tick one) A) If they take the money as a lump sum and spend it on an asset that is assessable by Centrelink (such as a car) the value of that asset would count towards the pension assets test. They should contact Centrelink to discuss any impact taking a Reverse Mortgage may have on their pension or other Government entitlements. B) If the money is spent on a non-assessable asset (such as home improvements or a holiday), then the amount would not be assessed under the income or assets test. They should contact Centrelink to discuss any impact taking a Reverse Mortgage may have on their pension or other Government entitlements. C) If the money is taken as a regular income stream to spend on living expenses or non-assessable assets, then it would also not affect the pension. They should contact Centrelink to discuss any impact taking a Reverse Mortgage may have on their pension or other Government entitlements. D) All of the above. Q 6. Before discussing whether a reverse mortgage is suitable for Bill and Sue, you must give them equity projections that relate to the value of the dwelling and to their indebtedness, over time, should they enter into a contract for a reverse mortgage. What is the purpose of these projections? (Response tick one) A) Like most Australians, Bill and Sue regard residential property values as a magic pudding. These projections will confirm that belief for them. B) Providing them with a projection will guarantee them a minimum amount of equity remains in the home regardless of how long they live. C) Discussions with the clients about the projections may form part of your consideration of whether they fully understand the loan, and whether it is likely to meet their requirements and objectives over time. D) The projections will help them decide what car they buy. Heartland Seniors Finance 3

4 Gerard and Lorraine are 78 and 60, respectively. They have two homes their main residence, worth $800,000, and their holiday home, worth $500,000. Gerard is the sole owner of the holiday home. They want to borrow $50,000 to carry out essential repairs and maintenance to the holiday home. Q 7. Looking at their age, do Gerard and Lorraine qualify for a Heartland Reverse Mortgage? (Response tick all correct responses) A) Gerard and Lorraine qualify for a loan secured by the main residence. B) They do not qualify, both applicants must be aged over 65. C) Lorraine qualifies as exceptions can be made for age. D) Gerard and Lorraine qualify for a loan against the holiday home, with Gerard being the sole owner. Zac Smith is 70, a widower, and owns a town house in Mosman NSW he estimates is worth $1,200,000. He wishes the loan is to be set up with an upfront payment of $70,000 to update his ageing Mercedes Benz and establish an income stream of $20,000 annually for 10 years to supplement his aged pension. Q 8. What is the maximum available loan Heartland could offer Mr Smith? (Response tick one) A) $270,000 B) $500,000 C) $170,000 D) $300,000 Heartland Seniors Finance 4

5 As part of the due diligence Mr Smith discloses that his townhouse is his only significant asset. Having lost his wife some eight years ago, he allows his niece, Sarah, to live there rent free in exchange for her doing some of the cooking and hosework. Sarah is 27yo and is completing post graduate studies. Q9. If this information is relevant which of the following are true. (Response tick one) A) Sarah can join in the loan as a Nominated Borrower which will enable her to remain in the home as long as she wishes even if Mr Smith were to pass away or move to aged care. B) Sarah will be required to execute an other occupier form as part of the loan documentation process. This confirms that other occupiers are not extended the rights and benefits of a Nominated Borrower and would have to make alternate living arrangements within 12 months of a trigger event requiring the loan to be repaid. C) Sarah s living arrangements are just while she finishes her university studies over the next year or so and therefore are not relevant to the application. D) Zac can leave Sarah the house in his will and therefore she can take over the reverse mortgage debt when the time comes. Mabel Staple is 89 years old and in very good health considering. She is finding her large house and garden a bit much these days but remains keen to stay in her beloved home as long as she can. Mabel, and her daughter, believe that for Mabel to safely stay at home she will need to carry out some significant renovations to the main bathroom and have someone come in to look after the garden, help her with her shopping and housework each week. Mabel is not able to meet the additional weekly cost from her age pension and she and her daughter believe an equity release loan is ideal. Q10. What Heartland Reverse Mortgage option(s) may suit Mabel? (Response tick one) A) Aged Care Option. B) Lifetime Loan Lump Sum. C) Lifetime Loan Cash Reserve. D) Lifetime Loan combination Lump Sum and Regular Payment. Heartland Seniors Finance 5

6 Mable s neighbour and friend Bertha is not so lucky. She is 87 but in now in poor health. She has recently been assessed as requiring residential aged care and the family agree it is timely to move her to a facility where she can be appropriately cared for. They were all a bit shocked to learn that Bertha would need to pay a Refundable Accommodation Deposit of $450,000 along with a raft of daily care and means tested care fees to secure a place in their preferred aged care facility. They have since learnt from the website that equity release could be an option for Bertha to fund the RAD rather than sell the home. Q11. Why might they consider funding the bond via a loan rather than sell the house? (Response tick one) A) They are aware that the value of the former home will be treated concessionally for calculation of the means tested care fees. B) The home remains exempt from the pension assets test for 2 years. C) They would simply like more time to consider all options and not be rushed into a fire sale of the home. D) All of the above. Berthas daughter has an enduring power of attorney enabling her to act on Berthas behalf. Q12. Can she use the POA to apply for finance to assist fund Bertha s care costs if Bertha is no longer able? (Response tick one) Yes. No. Q13. The Aged Care Option is similar to the standard Reverse Mortgage but has a key difference which makes it suitable for people looking to fund their entry into aged care. Which is the key difference? (Response tick one) A) There is a built in five year waiver of the requirement for borrowers to reside in the home. B) The commission structure for introducers is lower for this option. C) The borrower must be able to execute the mortgage documents in person. D) Borrowers may not rent out their former home, with only extended family members permitted to reside in the property. Heartland Seniors Finance 6

7 Bertha s older sister, Francine, is also in poor health. She is 89 and the decision to move to appropriate aged care has been made. Francine currently lives in a retirement village but still owns her large former family home in a Melbourne suburb, valued at roughly $2m. She has enquired whether this property would be an acceptable security for a Heartland Reverse Mortgage for the purpose of meeting Francine s aged care costs estimated at $550,000. The suburban property is occupied by her grandson and his young family who pay a below market rent on the understanding that the grandson maintain the property and pay all outgoings. Q14. Is this property an acceptable security? (Response tick one) Yes. No. Q15. If the property was acceptable which of the following statements is true? (Response tick all correct responses) A) The term will be 5 years, with repayment due 5 years after settlement or, if earlier, 12 months after the death of the last Nominated Borrower. B) The borrowers may be able to achieve a lower means tested fee for their aged care by borrowing against a non-owner occupied home as the loan will be offset against the value of the property and the rental income will not be included as income. C) Heartland will apply a 10% discount to the standard LVR for this type of loan. D) All of the above. Meg is 77 and is an existing Reverse Mortgage client having borrowed $80,000 against her home in Brisbane three years ago. She would now like to move closer to her son and his family who live on the Gold Coast. She has found a very suitable townhouse right on the beach at Broadbeach which has an asking price of $680,000. Meg s loan has increased to $97,753. Heartland valued the existing security property at $670,000 at the time the loan was taken out but Meg thinks she might get $730,000 if she sold in the current market. Q16. Meg would like to transfer her loan to the new property. Is this possible? (Response tick one) A) No. Heartland Reverse Mortgages are portable but beach side properties cannot be considered until the effect of global warming on tides and rising sea levels is better understood. B) No. The Reverse Mortgage is not portable under any circumstances. C) Yes. Subject to the new property meeting Heartland s criteria and portability terms and conditions being met, including simultaneous settlement. Heartland Seniors Finance 7

8 Yusef is 85 years old and has a property valued at $750,000. He has applied for a Heartland Reverse Mortgage to renovate his property, take a long trip back to the old country and assist with his grandchildren s education costs. Yusef wishes to protect 20% of the property value for his beneficiaries. Q17. Can Yusef do this? (Response tick one) Yes. No. Q18. If he chooses the 20% Equity Protection Option what is the maximum amount Heartland could lend Yusef? (Response tick one) A) $150,000 B) $300,000 C) $250,000 D) $240,000 Q19. What are the other equity protection options Yusef could have chosen? (Response tick all appropriate) A) 10% B) 30% C) 25% D) 50% Anne and Bill enquire about a Heartland Reverse Mortgage on their lifestyle property of 8 hectares in Lara just outside Geelong Vic. Q20. Is this property likely to be acceptable to Heartland? (Response tick one) A) No. The property is within an accepted postcode but is unlikely to fit ASF s criteria as it is rural and not a standard residential property. B) No. Although the location is fine the property is too large. C) Yes. Subject to there being fewer than 8 animals on the property. D) Yes. Heartland will lend against lifestyle properties up to 10 hectares located in accepted postcodes. Heartland Seniors Finance 8

9 Sally is looking to apply for a Heartland Reverse Mortgage on her home, but she is concerned that she could not pay back the interest and that the interest rate is higher than a traditional home loan. Q21. Which 3 key features shown should be conveyed to Sally when discussing interest rates and repayments? (Response tick three) A) There are no scheduled repayments the loan is repaid when the borrower dies or moves out of the property. B) As long as her loan is at the variable interest rate, she can make optional payments off of her loan (of any amount) whenever she chooses. C) The interest rate, whilst not guaranteed, is aimed to be no higher than 1.5% above the standard bank variable home loan rates. D) Heartland offers an Equity Protection Option. William and Raelene are living in a unit in The Range Retirement Village and are seeking a Lifetime Loan. Q22. What advice can you give these clients? (Response tick one) A) Retirement villages are acceptable security with Heartland. B) Each application secured on the basis of a Retirement Village unit is considered on its individual merits. C) Retirement Village units cannot be considered by Heartland. D) Retirement Village units are not considered conventional buildings. Mary (62 years old) and John (79 years old) own their own home and meet all the requirements to take out the Heartland Reverse Mortgage loan. Q23. John is the only person on the title, should Mary be listed as an applicant as well? (Response tick one) A) Yes, as she is listed on the mortgage documents. B) Yes, because they are a couple and both live in the home, the loan must be taken out jointly. C) No, because she is under 65 years old. D) No, because both Nominated Borrowers must be aged 65 or over to be eligible. Heartland Seniors Finance 9

10 Heartland accepts that our target clients are sensitive and at times vulnerable. Q24. True or False. Under our Privacy Policy you are authorised by Heartland to use client information to monitor, maintain and use their personal, private and financial information. Additionally, you can give the information to another person, agency, body or company without the consent of the client. (Response tick one) A) True. B) False. As well as the standard National Consumer Credit Protection Act (NCCP) requirements, there are those that are specific to Reverse Mortgages added as part of the 2010 Phase 2 of the NCCP. Q25. Additional responsible lending obligations for this type of mortgage include (Response tick all that apply) A) An assessment of whether or not a reverse mortgage is unsuitable by making reasonable enquiries about the borrowers potential future needs including the possibile need for aged care accomodation expenses and whether the consumer intends to leave equity in their home to their estate. B) Providing consumers/potential borrowers with a reverse mortgage information statement which provides key information to inform consumers about the features of a reverse mortgage and the risks commonly associated with them. C) Providing consumers/potential borrowers with projections of the quity in their home under a reverse mortgage using an equity projection calculator from ASIC's MoneySmart website. The projections relate to the value of the dwelling that may become reverse mortgaged and the consumers indebtedness over time if they were to enter into a reverse mortgage. D) All of the above. Heartland Seniors Finance 10