Long Overdue: Regulation Of Finance & Mortgage Brokers
by Tim O’Dwyer M.A., LL.BQueensland Solicitor & Consumer Advocate
watchdog@argonautlegal.com.au
It has been almost two years since the release of the Ministerial Council of Consumer Affairs’ Discussion Paper detailing options for a national regulatory scheme for finance and mortgage brokers.
On Monday this week ABC Radio’s The World Today programme reported on what it described as “the miserable and sad end of the property boom in some Australian cities.”Easy money and climbing interest rates had combined to deliver unprecedented rates of mortgage foreclosures, amid stories of locked-out homeowners and thousands of others hovering on the brink of losing their dream. One Western Sydney real estate agent spoke of loans being pushed: “You've got your no docs, your low docs…if you've got bad credit, don't worry, come and see us, all those things.
And we're seeing quite a few where the people just shouldn't have been borrowing the amount of money that they've borrowed.”
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Peter Mericka B.A., LL.B of Lawyers Real Estate at 6:19 AM
8 Comments:
This wont help those already threatened. What happened in the rural scene in the 90's when banks were foreclosing was development of a code of practice. Banks had to give reasonable notice of foreclosure and give time for negotiations. Lifeline was heavily involved.
Cheers
Forgot to mention that the ABC also revealed how in the past few months banks and other lenders had begun instructing real estate agents to bury the problem of defaulting borrowers, and hide the fact the vast majority of auctions in some areas were now mortgagee sales. In response the head of the Australian Banking Association said he was not aware of any policy by banks to conceal mortgagee auctions. Bank loan defaults remained at a record low, and that was non-bank lenders who were to blame for the problems emerging in the property market. He maintained that banks had “very high lending standards” in place, and properly assessed the capacity of customers to repay their loans. It made commercial sense, he explained, for banks to lend money properly.
Timely, Tim, timely...or is it too damn late?
The Yanks are in debt up to their back teeth to the Chinese as we, here in Australia are too.
This localised mortgage ratbaggery is only an extension of the global insanity, fostered in the USA initially, where one must have something, anything, everything, right now - and bugger the financial and social consequences.
I'm no doomsayer, but we here in the "west" are fast approaching the time when that old old axiom will slot in - "the Piper must be paid".
This old bloke doesn't owe a single cent to a soul and, every morning when I get up out of my cot, I feed my chooks, check my vegetable garden, have a gander at the dam and its water content, and thank the Almighty that, if the arse falls out of the world, me and mine won't go hungry as so many did, circa 1932.
These people are just the tip of the iceburg. The money finally had to be provided by a financial institution. It all ties back to monetary policy, offshore borrowing and risk management products made availble so finacial institutions can continue to expand their asset portfolios.
It is a big subject; but, the front men are just that
Me again.
Since this article appeared on The Blog, I have had contact from the Queensland Fair Trading Minister's office advising that Minister Keech in fact told the Ministerial; Council that, because "progress towards a national approach was taking too long", Queensland would bring in its own scheme to regulate finance brokers. The Sunshine State was not prepared to wait another couple of years for the national approach (which it still supported), and so would enact its legislation complementary to that.
It has come to my attention that CHOICE MAGAZINE has published on the internet an excellent and helpful article entitled Mortgage Brokers Investigated: http://www.choice.com.au/viewArticle.aspx?id=104205&catId=100405&tid=100008&p=1&title=Mortgage+brokers+investigated+(archived)
Well, nearly a year later and there's still a lot of talk but little tangeable change.
Higher regulations of mortgage brokers leads to improved business practises across the board, which leads to greater public confidence which ultimately leads to more business for mortgage brokers.
It's unfortunate how long everything takes to become reality; most especially when those who would be affected are on the whole, fully supportive of much greater regulation within the industry.
Whilst both lenders and mortgage brokers have to take responsibility, most of the bad press seems to be aimed at mortgage brokers. Whilst there will always be mortgage brokers out there who do not have the clients best will at heart, it is the lenders who set the criteria for who is eligible for any given home loan product.
Either way a greater level of regulation will be good for everyone.
Melbourne Mortgage
Brokers
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