Mortgage Business ran a story this morning about a column by Andrew Main – which appeared in The Australian over the weekend – in which the senior business reporter drew parallels between the US subprime mortgage crises and mortgage brokers.
“We are addressing this directly with the journalist and editor of The Australian,” MFAA chief executive Siobhan Hayden told Mortgage Business.
“This is, at best, a piece of careless journalism seeking sensationalism apparently based on an inability to calculate what is a relatively small payment for introducing a customer to a lender,” Ms Hayden said.
“Mr Main suggests that a broker is paid a $12,000 upfront commission on a $200,000 mortgage when this is more likely to be about $1,200 with a trailing commission of about $25 per month, assuming that a normal commission would have been paid,” she said.
“The only blurring is the writer’s failure to report the facts correctly.”
Ms Hayden said there is a very tenuous link between the recent broker ‘scandal’ and the subprime mortgage crisis of 2007.
“To compare the pre-GFC US non-recourse, NINJA loan arrangements with the highly-regulated Australian lending environment since the inception of the National Consumer Credit Protection Act (NCCP) is drawing a long bow indeed,” she said.
“Despite the recent allegations made against the two Victorian mortgage brokers, the incidence of loan fraud in Australia is extremely low and default rates are anecdotally also at an all-time low.”
If a lender notes fraudulent documents attached to more than one loan application from a broker, they are likely to refuse future loan submissions; report the matter to ASIC; and advise the broker’s industry association, Ms Hayden explained.
“The vast majority of brokers aren’t willing to jeopardise their current and future business to get a borrower over the line for a relatively small remuneration,” she said.
“Mortgage brokers and the community at large have a right to expect a better standard of reporting and opinion that is factual and responsible.”