About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   depositrates.co.nz  |   landlords.co.nz
Last Article Uploaded: Thursday, October 2nd, 8:39PM
rss
Latest Headlines

Contributory mortgages under spotlight

The Securities Commission is becoming very concerned about contributory mortgages and the way they are being promoted to investors.

Wednesday, November 28th 2001, 3:13PM

by Philip Macalister

The Securities Commission is becoming very concerned about contributory mortgages and the way they are being promoted to investors.

Commission chairman Jane Diplock says currently there are 21 schemes registered with the Registrar of Companies and more than $195 million has been invested in this area.

She says complaints have been made to the commission about nine of the 21 schemes.

"We firmly believe there is some good, quite sensible and appropriate contributory mortgage schemes," she says. "But it just concerns us when you see the number of them which are coming before us for one reason or another where it appears there may be some problem with them."

The complaints have come from the public, other people, or from the Registrar of Companies.

She says the main issues appear to be:

  • Advertisements maybe confusing or misleading.
  • Management of accounts are not up to standard and mortgages maybe difficult to audit
  • Priority of mortgage isn't well explained.

The commission is concerned that contributory mortgages, and their risks, may not be well explained to investors.

Under contributory mortgages the investors’ money is pooled and lent to the borrower or developer, usually at high rates of interest.

Often, the developer or borrower cannot get finance from banks or other traditional lending institutions and is therefore prepared to pay the higher rates of interest charged by contributory mortgage brokers.

"Some of these projects are marginal at best," she says.

"In some cases the rights of the small investor may be subordinated to the rights of prime lenders such as a bank or other financial institution, which has first claim on the property if the borrower defaults."

"There is probably a place in the market for high risk investments, as long as people who enter into them understand what they are entering into," she says.

"(Investors need) to understand where they are sitting on the risk curve."

While the commission is "quite concerned" about contributory mortgages it has no plans to ban them outright.

"There are some well-managed schemes," she says.

In Australia, contributory mortgages are covered by the Managed Investments Act which is more stringent that contributory mortgage regulations in New Zealand.

Vote in our New poll!


Should contributory mortgages be banned?
VOTE HERE

You can read Philip's blog here: http://www.goodreturns.co.nz/blog/

« News Round UpSovereign takes regulation bull by the horns »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • Naylor: Time to rename advisers
    “Chartered Financial Planner (CFP/AFA), Chartered Life Insurance Adviser(CLU/AFA), Chartered General Insurance Adviser (FNZIIF/AFA)...”
    10 hours ago by macca
  • The perfect performance fee: Part One
    “Informative article but I think the best performance fee is no performance fee. What’s more part of the reason exchange...”
    14 hours ago by Brent Sheather
  • Naylor: Time to rename advisers
    “Here's a thought - maybe the public actually gets better quality advice dealing with people who specialise and stick to their...”
    14 hours ago by Broker
  • The perfect performance fee: Part One
    “These performance fees are a beautiful thing. Encourages managers to take on more risk with the clients money and is rewarded...”
    18 hours ago by John Milner
  • Naylor: Time to rename advisers
    “I agree that it is time to start looking at how the labels and designations work, as in my experience, the public have no...”
    1 day ago by Carey Church
Subscribe Now

Weekly Wrap

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AMP Home Loans 7.24 5.79 6.39 6.65
AMP Home Loans $200k+ 7.14 5.69 6.29 6.55
AMP Home Loans LVR <80% - - 5.85 6.29
ANZ 6.74 6.15 6.49 6.49
ANZ LVR > 90 6.74 6.65 6.99 6.99
ANZ Special - 5.75 5.99 -
ASB Bank 6.75 6.09 6.40 6.65
ASB Bank Special - - 5.99 6.19
BankDirect 6.75 6.09 6.99 6.65
BankDirect Special - - 5.99 6.19
BNZ - Classic - - 5.99 6.19
Lender Flt 1yr 2yr 3yr
BNZ - GlobalPlus 6.74 5.99 6.39 6.59
BNZ - Mortgage One 7.15 - - -
BNZ - Rapid Repay 6.74 - - -
BNZ - Std, FlyBuys 6.74 5.99 6.39 6.59
BNZ - TotalMoney 6.74 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.45 5.90 6.50 -
Credit Union North 6.45 - - -
Credit Union South 5.75 - - -
eMortgage 6.04 6.15 6.69 7.19
Finance Direct 6.10 6.45 6.69 7.10
Lender Flt 1yr 2yr 3yr
First Credit Union 6.45 - - -
General Finance 5.95 6.25 6.50 7.10
HBS Bank 6.15 5.85 5.99 6.19
HBS Special - - - 5.89
Heartland 6.70 7.00 7.25 7.85
Heretaunga Building Society 6.70 6.00 6.50 -
Housing NZ Corp 6.74 5.99 6.39 6.59
HSBC Premier 6.84 5.95 5.95 6.39
HSBC Premier LVR > 80% - 5.75 5.75 5.75
HSBC Special - - - -
ICBC 6.75 5.99 6.39 -
Lender Flt 1yr 2yr 3yr
Kiwibank 6.65 5.79 6.39 6.65
Kiwibank - Capped 5.65 6.50 - -
Kiwibank - Offset 6.55 - - -
Kiwibank LVR > 80% - - 5.89 6.19
Liberty - - - -
Napier Building Society 5.80 6.00 6.70 -
Nelson Building Society 6.95 6.15 6.60 -
NZ Home Loans 6.85 6.09 6.40 6.65
Perpetual Trust 7.70 - - -
Resimac 6.59 6.35 6.58 6.77
SBS Bank 6.15 5.85 5.99 6.19
Lender Flt 1yr 2yr 3yr
SBS Bank Special - - - 5.89
Silver Fern 5.95 6.10 6.55 7.05
Sovereign 6.85 6.09 6.40 6.65
Sovereign Special - - - 6.19
The Co-operative Bank 6.70 5.95 5.99 6.19
TSB Bank 6.74 5.95 6.19 6.30
TSB Special - - 5.79 -
Wairarapa Building Society 6.20 5.75 5.95 -
Westpac 6.59 6.09 6.39 6.65
Westpac - Capped rates - 6.74 6.99 -
Westpac - Offset 6.59 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - - 5.99 6.19
Median 6.70 6.00 6.39 6.57

Last updated: 23 September 2014 9:10am

News Quiz

What is back in the market for the first time since 2010 thanks to RESIMAC?

Securitisation

reverse mortgages

Chinese currency

a sense of security

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by PHP Developer and eyelovedesign.com