Lombard won't necessarily know of difficulties
Listed finance company Lombard Group's mortgage broking operations won't necessarily be aware if clients, gained through the businesses bought from Blue Chip last year, are in financial difficulty, says Lombard managing director Michael Reeves.
Friday, February 22nd 2008, 6:00AM
by Jenny Ruth
Nevertheless, he is aware that some clients have run into difficulty as a result of the Blue Chip group's collapse.Lombard bought mortgage brokers Tasman Mortgage Group from Blue Chip in May last year. Reeves says it also bought a sister company, Executive Mortgages, from Blue Chip at the same time and that between 60% and 70% of Executive's business was sourced from the Blue Chip group.
The price Lombard paid for the businesses wasn't disclosed although Reeves has previously said the price was dependent on an earn-out clause.
Tasman and Executive arrange mortgages for their clients sourced from wholesale finance providers such as AMS. Reeves says they use other funders but wouldn't name them.
"If somebody has come to Tasman and they've said, we want to get a mortgage because we want to buy a property, who they're buying the property from isn't really the issue to the lender," Reeves says.
Whether clients were given a rental guarantee that isn't being honoured or whether they haven't received rents due to them "has got nothing to do with the broker nor the lender," he says.
"The vast majority (of clients), from what I've seen in the last few days, are continuing to pay their mortgages. I must say, I certainly feel for anyone who's purchased an apartment on the strength of a rental guarantee that doesn't exist now."
While Tasman and Executive have arranged some no-doc or low-doc loans, Reeves says he can't say what percentage of total lending they account for.
Clients who do run into difficulties won't have any come-back against either Tasman or Executive, Reeves says.
"It was their information, they filled the forms out. It was all based on their representations and warranties. Every single one is well-documented."
In December, Lombard bought United Home Loans, including its $230 million mortgage book, from the Hanover Group for an undisclosed sum. Lombard said then that the purchase doubled the size of the home mortgage book managed by Lombard to "in excess of $500 million," excluding the loan book of its finance subsidiary, Lombard Finance & Investments.
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