help answering all questions please
George and Martha Smith You are a senior lender in your branch. A new employee who is learning to lend has approached you with his credit deal that you need to review. You are to note any errors and provide the trainee with the correct information. The customer scenario is listed below, use this to assist you in making adjustments and or corrections to the credit deal. (22 marks) George and Martha Smith are looking to consolidate their credit card debts as they seem to be out of control. George has been working for the last 5 years at Ikea as a store manager after graduating from his BBA at NAIT. George recently received a pay increase and had asked his employer to provide him with a salary letter to show his increase, this is included in the file. Martha works at Sherwood Ford as a sales representative for the last 3 years, she receives a base pay along with bonuses she says she grosses 120,000 annually. She mumbled that this year has not been very good as people aren't buying as many cars that is why she brought her Notice of Assessments from previous years to show you what she has made in the past. It is only a matter of time betore things turn around she saidl See their net worth statement for balances on credit cards and mortgage and loan payments. This is the information came from the credit bureau: - Equifax shows he has never missed a truck loan payment and confirms a rating of R1, Martha's BMW loan is showing R1. - Ratings on their credit cards from Sears, Visa are R2, they do however have a MasterCard with a A1 rating. - All credit cards are continuously at the maximum credit limits. - They have a joint unsecured line of credit at Scotiabank which they used to consolidate their debt once before, its current rating is listed at R1 but they are only able to make minimum payments. - There is a unsecured line of credit at RBC that they used for home renos last year they have only been making minimum payments as well. The Smiths are very concerned about their current situation and are feeling overwhelmed. Documentation provided: INCOME VERIFICATION: Notice of Assessment for Martha Smith Tax vear 2021 Notice of Assessment for Martha Smith for Tax year 2020 James Lykey Human Resources Manager Ikea 12354 St and 23 Ave Edmonton, Alberta T6G 2R3 Oct 10th 2022 To Whom This May Concern, This letter is to confirm that George Smith is an employee of the Ikea. George has been working in a full-time position since August 28th 2012. His annual salary is 85,000.00 per annum. If there are any questions or concerns, please feel free to call me at 780-492-3116. 1. If the lender made any errors to the networth statement please indicate here(3 marks): 2. The lender has performed the following Debt servicing calculations for the Smiths' request debt consolidation. BEFORE - TDS Caleulation TDS - AFTER - Calculation a) Knowing what you know about TDS and calculating income verification you must ensure the trainee calculated this correctly. If there are any errors please list and indicate how it should be properly reflected(2 marks): Words: 0 b) The trainee has calculated the new loan payment as(2 marks): P/Y=12C/Y=2IY=7%N=60FV=0PV=69275.00PMT=1368.46. Is this correct? If not correct indicate what the correct TDS is(2 marks): 3. Rating the 5C 's of Credit - correct the trainees response where needed. Explain to the trainee why these corrections are necessary or Important. a) Character - Satisfactory - Marginal - Unsatisfactory Character is satisfactory. They have established assets and their liabilities make sense given their current stage of life. They have a Wayne Gretzky hockey card that is signed and valued at $25000 they are working at bullding up a good asset base. (5 b) Capacity - Satisfactory - Marginal - Unsatisfactory Ratios are calculated and are in line and they have a positive net worth! (2 marks) c) Collateral - Note If you disagree with the collateral pledged explain why so the trainee can learn for next time. - Satisfactory - Marginal - Unsatisfactory Since we have a certificate of authenticity for the hockey card and a certificate for the diamond ring we could use those along with his Chevy truck. We could even take her BMW too. I would recommend considering their house for collateral as well. ( 3 marks) d) Credit - Satisfactory - Marginal - Unsatisfactory These are really nice people who have had some tough months here and there. Everybody makes a mistake, most of their credit is good. So this is satisfactory. (2 marks) Finally the credit decision. - Approve - Decline - Modified Principle =69275 Interest Rate =7% Term =60 months Payment =1368.46 Decision. Great customers of ours, they are in need of a refinance so that they can operate their monthly expenses better. Good jobs, great security, ok credit. I recommend for approval 4. Help the trainee write a proper credit submission. (2 marks) George and Martha Smith You are a senior lender in your branch. A new employee who is learning to lend has approached you with his credit deal that you need to review. You are to note any errors and provide the trainee with the correct information. The customer scenario is listed below, use this to assist you in making adjustments and or corrections to the credit deal. (22 marks) George and Martha Smith are looking to consolidate their credit card debts as they seem to be out of control. George has been working for the last 5 years at Ikea as a store manager after graduating from his BBA at NAIT. George recently received a pay increase and had asked his employer to provide him with a salary letter to show his increase, this is included in the file. Martha works at Sherwood Ford as a sales representative for the last 3 years, she receives a base pay along with bonuses she says she grosses 120,000 annually. She mumbled that this year has not been very good as people aren't buying as many cars that is why she brought her Notice of Assessments from previous years to show you what she has made in the past. It is only a matter of time betore things turn around she saidl See their net worth statement for balances on credit cards and mortgage and loan payments. This is the information came from the credit bureau: - Equifax shows he has never missed a truck loan payment and confirms a rating of R1, Martha's BMW loan is showing R1. - Ratings on their credit cards from Sears, Visa are R2, they do however have a MasterCard with a A1 rating. - All credit cards are continuously at the maximum credit limits. - They have a joint unsecured line of credit at Scotiabank which they used to consolidate their debt once before, its current rating is listed at R1 but they are only able to make minimum payments. - There is a unsecured line of credit at RBC that they used for home renos last year they have only been making minimum payments as well. The Smiths are very concerned about their current situation and are feeling overwhelmed. Documentation provided: INCOME VERIFICATION: Notice of Assessment for Martha Smith Tax vear 2021 Notice of Assessment for Martha Smith for Tax year 2020 James Lykey Human Resources Manager Ikea 12354 St and 23 Ave Edmonton, Alberta T6G 2R3 Oct 10th 2022 To Whom This May Concern, This letter is to confirm that George Smith is an employee of the Ikea. George has been working in a full-time position since August 28th 2012. His annual salary is 85,000.00 per annum. If there are any questions or concerns, please feel free to call me at 780-492-3116. 1. If the lender made any errors to the networth statement please indicate here(3 marks): 2. The lender has performed the following Debt servicing calculations for the Smiths' request debt consolidation. BEFORE - TDS Caleulation TDS - AFTER - Calculation a) Knowing what you know about TDS and calculating income verification you must ensure the trainee calculated this correctly. If there are any errors please list and indicate how it should be properly reflected(2 marks): Words: 0 b) The trainee has calculated the new loan payment as(2 marks): P/Y=12C/Y=2IY=7%N=60FV=0PV=69275.00PMT=1368.46. Is this correct? If not correct indicate what the correct TDS is(2 marks): 3. Rating the 5C 's of Credit - correct the trainees response where needed. Explain to the trainee why these corrections are necessary or Important. a) Character - Satisfactory - Marginal - Unsatisfactory Character is satisfactory. They have established assets and their liabilities make sense given their current stage of life. They have a Wayne Gretzky hockey card that is signed and valued at $25000 they are working at bullding up a good asset base. (5 b) Capacity - Satisfactory - Marginal - Unsatisfactory Ratios are calculated and are in line and they have a positive net worth! (2 marks) c) Collateral - Note If you disagree with the collateral pledged explain why so the trainee can learn for next time. - Satisfactory - Marginal - Unsatisfactory Since we have a certificate of authenticity for the hockey card and a certificate for the diamond ring we could use those along with his Chevy truck. We could even take her BMW too. I would recommend considering their house for collateral as well. ( 3 marks) d) Credit - Satisfactory - Marginal - Unsatisfactory These are really nice people who have had some tough months here and there. Everybody makes a mistake, most of their credit is good. So this is satisfactory. (2 marks) Finally the credit decision. - Approve - Decline - Modified Principle =69275 Interest Rate =7% Term =60 months Payment =1368.46 Decision. Great customers of ours, they are in need of a refinance so that they can operate their monthly expenses better. Good jobs, great security, ok credit. I recommend for approval 4. Help the trainee write a proper credit submission. (2 marks)
