Please help I only got 1 hour for this

Consumer Credit Case (50 MARKS) Brian and Marie Peterson 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. Brian and Marie Peterson are looking to consolidate their credit card debts as they seem to be out of control. Brian has been working for the last 5 years at Ikea as a store manager after graduating from his BBA at NAIT. Brian 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. Marie works at City 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 before things tum around she said! 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, Marie's BMW loan is showing R1. Ratings on their credit cards from Sears, Visa are R2, they do however have a MasterCard with a R1 rating. . Both husband and wife like the finer things in life as noted in their assets listed on the net worth statements. 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 Petersons are very concerned about their current situation and are feeling overwhelmed The Petersons are very concerned about their current situation and are feeling overwhelmed. Documentation provided: INCOME VERIFICATION: Notice of Assessment for Maria Peterson Tax year 2019 Line Description Amount 150 Total Income Deductions from total income. 119,575 16,785 236 INet Income.. Deductions from net income. 102790 15500 87290 3472 260 Taxable income.... |350 Total federal non-refundable tax credits 6150 Total Alberta non-refundable tax credits 420 Net Federal Tax 4120 10.00 421 CPP contributions. 14,207.50 435 Total payable. 4,207.50 437 Total Income Tax Deducted... 16,325.75 13,175.62 .DR DR Total credits. (Total payable minus Total credits). [Penalties. Arrears interest.. Balance Due from this assessment. Balance due... 1031.88 10.00 10.00 482 DR .DR DR ||0.00 Page Break Notice of Assessment for Maria Peterson for Tax year 2020 Line Description Amount 121,472 17,625 103,847 11500 Total Income.. 150 Deductions from total income. Net Income 236 Deductions from net income. 260 Taxable income... |350 Total federal non-refundable tax credits. 6150 Total Alberta non-refundable tax credits. 92347 4472 3768 420 Net Federal Tax.. 10.00 1421 CPP contributions. 14,207.50 435 Total payable... |4,207.50 437 Total Income Tax Deducted. 17,325.75 14,175.62 DR 31.88 DR 10.00 ||482 Total credits (Total payable minus Total credits). Penalties Arrears interest. Balance Due from this assessment. Balance due. .DR 10.00 DR DR 10.00 31.88 James Lykey Human Resources Manager McDonalds Restaurants of Canada 12354 St and 23 Ave Edmonton, Alberta TOG 2R3 James Lykey Human Resources Manager McDonalds Restaurants of Canada 12354 St and 23 Ave Edmonton, Alberta TOG 2R3 Nov 25 2021 To Whom This May Concern, This letter is to confirm that Brian Peterson is an employee of the McDonalds Restaurants of Canada. Brian 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. Thank you, James Lykey ****** ********* Networth statement completed by lender: Assets Balances Liabilities House |365000 Mortgage Balances Payments |348182.28 2057.90 2017 GMAC Heavy Duty 55000 Truck loan 30340.58 744.25 15000 BMW car loan 35,675.32 717.12 BMW 2013 Joint Savings 15000 Sears 9500 475* Visa 8000 400* Wayne Gretzky Hockey card-signed 25000 Diamond solitaire ring with appraisal 30000 certificate Mastercard 15500 775* Scotialine 15000 450* RBC Unsecured line 21275 638.25* Total Assets 490000 Total Liabilities 404022.86 INET WORTH 85977.14 tudiosten debt to be sannolidated 1. If the lender made any errors to the networth statement please indicate here: (4 MARKS) a III. = = = = Equation Editor A- A- IX BI U S x x Styles Font Size Words: 0 2. The lender has performed the following Debt servicing calculations for the Petersons' request debt consolidation. BEFORE - TDS Calculation Calculating TDS Ratio Monthly Housing Costs (including taxes & heating) 2057.90+250+150 2457.90 ALL Other Applicable Consumer Debt (744.25+717.12+475+400+775+450+638.25) 4199.62 Anticipated New Loan Payment (omit for the BEFORE) DIVIDED BY Gross Monthly Income(120,000/12)+ 85000/12) 17083.33 TDS RATIO = 38.97% TDS-AFTER- Calculation Calculating TDS Ratio Monthly Housing Costs (including taxes & heating) ||2457.90 ALL Other Applicable Consumer Debt 1461.37 (744.25+717.12) Anticipated New Loan Payment 1368.48 DIVIDED BY Gross Monthly Income 17083.33 TDS RATIO 30.95% 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:(1 MARK) Q Equation Editor A. A IX BI U S xx x? Styles Font Size Words: 0 b) The trainee has calculated the new loan payment as: P/Y=12 C/Y=2 1/Y=7% N=60 FV=0 PV=69275.00 PMT= 1368.46. Is this correct? If not correct indicate what the correct TDS is: (1 MARK) Equation Editor E E 33 A A IX BI U S x, ** Styles Font Size Words: 0 c) Explain to the lender why is calculating debt servicing ratios are critical:(3 MARKS) OX A. AIX BI U S xx x Styles Font Size Equation . 3. Rating the 5 C'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 building up a good asset base. (5 MARKS) X EEEE 1 2 Equation A. AIX BI U S x, xa Styles Font Size Words: 0 b) Capacity Satisfactory Marginal . Unsatisfactory Ratios are calculated and are in line and they have a positive net worth! (2 MARKS) OX Equation DI A- ALBIUS X, X c) Capital Satisfactory . Marginal . Unsatisfactory Good Job stability for Brian. Maria said that the dealership has been quiet lately but she will make more money next year for sure. (2 MARKS) X ELEE A. A IX BI U S xx x? Equation Editor Styles Font Size Words: 0 . d) 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. (2 MARKS) X E ESE DI Equation Editor A. A IX BI U S x Styles - Font size - e) 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) = = A A IX BIUS X, X 22 Equation Editor Styles Font Size Words: 0 Finally the credit decision. . Approve . Decline . Modified Principle =69275 Interest Rate = 7% Term =60 months Payment=1368.46 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.(10 MARKS) % | = = Equation A A IX BI U S xx? Styles Font Size Words: 0 Consumer Credit Case (50 MARKS) Brian and Marie Peterson 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. Brian and Marie Peterson are looking to consolidate their credit card debts as they seem to be out of control. Brian has been working for the last 5 years at Ikea as a store manager after graduating from his BBA at NAIT. Brian 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. Marie works at City 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 before things tum around she said! 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, Marie's BMW loan is showing R1. Ratings on their credit cards from Sears, Visa are R2, they do however have a MasterCard with a R1 rating. . Both husband and wife like the finer things in life as noted in their assets listed on the net worth statements. 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 Petersons are very concerned about their current situation and are feeling overwhelmed The Petersons are very concerned about their current situation and are feeling overwhelmed. Documentation provided: INCOME VERIFICATION: Notice of Assessment for Maria Peterson Tax year 2019 Line Description Amount 150 Total Income Deductions from total income. 119,575 16,785 236 INet Income.. Deductions from net income. 102790 15500 87290 3472 260 Taxable income.... |350 Total federal non-refundable tax credits 6150 Total Alberta non-refundable tax credits 420 Net Federal Tax 4120 10.00 421 CPP contributions. 14,207.50 435 Total payable. 4,207.50 437 Total Income Tax Deducted... 16,325.75 13,175.62 .DR DR Total credits. (Total payable minus Total credits). [Penalties. Arrears interest.. Balance Due from this assessment. Balance due... 1031.88 10.00 10.00 482 DR .DR DR ||0.00 Page Break Notice of Assessment for Maria Peterson for Tax year 2020 Line Description Amount 121,472 17,625 103,847 11500 Total Income.. 150 Deductions from total income. Net Income 236 Deductions from net income. 260 Taxable income... |350 Total federal non-refundable tax credits. 6150 Total Alberta non-refundable tax credits. 92347 4472 3768 420 Net Federal Tax.. 10.00 1421 CPP contributions. 14,207.50 435 Total payable... |4,207.50 437 Total Income Tax Deducted. 17,325.75 14,175.62 DR 31.88 DR 10.00 ||482 Total credits (Total payable minus Total credits). Penalties Arrears interest. Balance Due from this assessment. Balance due. .DR 10.00 DR DR 10.00 31.88 James Lykey Human Resources Manager McDonalds Restaurants of Canada 12354 St and 23 Ave Edmonton, Alberta TOG 2R3 James Lykey Human Resources Manager McDonalds Restaurants of Canada 12354 St and 23 Ave Edmonton, Alberta TOG 2R3 Nov 25 2021 To Whom This May Concern, This letter is to confirm that Brian Peterson is an employee of the McDonalds Restaurants of Canada. Brian 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. Thank you, James Lykey ****** ********* Networth statement completed by lender: Assets Balances Liabilities House |365000 Mortgage Balances Payments |348182.28 2057.90 2017 GMAC Heavy Duty 55000 Truck loan 30340.58 744.25 15000 BMW car loan 35,675.32 717.12 BMW 2013 Joint Savings 15000 Sears 9500 475* Visa 8000 400* Wayne Gretzky Hockey card-signed 25000 Diamond solitaire ring with appraisal 30000 certificate Mastercard 15500 775* Scotialine 15000 450* RBC Unsecured line 21275 638.25* Total Assets 490000 Total Liabilities 404022.86 INET WORTH 85977.14 tudiosten debt to be sannolidated 1. If the lender made any errors to the networth statement please indicate here: (4 MARKS) a III. = = = = Equation Editor A- A- IX BI U S x x Styles Font Size Words: 0 2. The lender has performed the following Debt servicing calculations for the Petersons' request debt consolidation. BEFORE - TDS Calculation Calculating TDS Ratio Monthly Housing Costs (including taxes & heating) 2057.90+250+150 2457.90 ALL Other Applicable Consumer Debt (744.25+717.12+475+400+775+450+638.25) 4199.62 Anticipated New Loan Payment (omit for the BEFORE) DIVIDED BY Gross Monthly Income(120,000/12)+ 85000/12) 17083.33 TDS RATIO = 38.97% TDS-AFTER- Calculation Calculating TDS Ratio Monthly Housing Costs (including taxes & heating) ||2457.90 ALL Other Applicable Consumer Debt 1461.37 (744.25+717.12) Anticipated New Loan Payment 1368.48 DIVIDED BY Gross Monthly Income 17083.33 TDS RATIO 30.95% 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:(1 MARK) Q Equation Editor A. A IX BI U S xx x? Styles Font Size Words: 0 b) The trainee has calculated the new loan payment as: P/Y=12 C/Y=2 1/Y=7% N=60 FV=0 PV=69275.00 PMT= 1368.46. Is this correct? If not correct indicate what the correct TDS is: (1 MARK) Equation Editor E E 33 A A IX BI U S x, ** Styles Font Size Words: 0 c) Explain to the lender why is calculating debt servicing ratios are critical:(3 MARKS) OX A. AIX BI U S xx x Styles Font Size Equation . 3. Rating the 5 C'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 building up a good asset base. (5 MARKS) X EEEE 1 2 Equation A. AIX BI U S x, xa Styles Font Size Words: 0 b) Capacity Satisfactory Marginal . Unsatisfactory Ratios are calculated and are in line and they have a positive net worth! (2 MARKS) OX Equation DI A- ALBIUS X, X c) Capital Satisfactory . Marginal . Unsatisfactory Good Job stability for Brian. Maria said that the dealership has been quiet lately but she will make more money next year for sure. (2 MARKS) X ELEE A. A IX BI U S xx x? Equation Editor Styles Font Size Words: 0 . d) 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. (2 MARKS) X E ESE DI Equation Editor A. A IX BI U S x Styles - Font size - e) 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) = = A A IX BIUS X, X 22 Equation Editor Styles Font Size Words: 0 Finally the credit decision. . Approve . Decline . Modified Principle =69275 Interest Rate = 7% Term =60 months Payment=1368.46 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.(10 MARKS) % | = = Equation A A IX BI U S xx? Styles Font Size Words: 0