Greater disclosure required

Brian Berry, the new chairman of the Mortgage Brokers Association (MBA), is calling for greater information sharing within the industry both to combat fraud and to provide a more accurate picture of the state of the industry.

"Whether it’s a lender, broker, valuer or solicitor, who has a hint that someone is doing something they shouldn’t be, we would like to share information within the industry," Berry says.

"There’s a lack of wanting to share information – there are obvious Privacy Act issues, but everybody in the industry has been a bit protective of their own patch," he says.

Major mortgage fraud is becoming more sophisticated and unethical brokers can’t easily operate in isolation from other property-related professions.

While unethical "fringe" operators face greater obstacles due to lenders having tightened their broker accreditation and lending processes, more can be done to eliminate fraud.

"Now we have a reasonable momentum behind the association and good support from the lenders. We’re starting to work in unison, although there’s still a way to go. I’m hoping to make major advances in the next six months," Berry says.

In particular, "we’re still frustrated by the unwillingness of lenders to make a final stand and only deal with MBA members."

MBA members must have mortgage broking as their principal activity, offer a full range of products, be approved by at least six major financial institutions and hold at least $1 million in professional indemnity insurance as well as having to complete the MBA’s accreditation program.

The MBA represents more than 450 brokers who account for about 80% of specialist brokers.

By and large, the fraudsters aren't MBA members, Berry says.

Mortgage brokers probably arrange more than 25% of mortgages in New Zealand, but Berry wants more accurate information.

"We’ve been making assumptions about the size of the industry but we don’t really know."

The MBA is talking to Massey University’s Department of Finance, Banking and Property, a genuinely independent third party, about doing a survey on the industry.

In the New Zealand market now there are 10 or 12 aggregators, groups of mortgage brokers who pool the loans they originate to give them greater clout with the banks, who account for 80% or 85% of the volume in the broking industry.

"If we know what those groups are doing and what the lenders are doing, we can work out what the market is doing," Berry says

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