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Mortgage advisers have been blind-sided by Resimac's decision to essentially pull out of New Zealand. From July 1 it will no longer be accepting new business.

TMMOnline has attempted, unsuccessfully, to get more details from the company. In our story today we talk to Resimac's biggest and most loyal adviser Jeff Royle. He is not happy. [READ ON]

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Mike Pero accusations fly

The final step in the sale of Mike Pero Mortgages has started, accompanied by a war of words between joint venture partners NZF and Liberty Financial and revelations of a disputed shareholder loan.

Thursday, May 16th 2013, 6:00AM 1 Comment

by Susan Edmunds

NZF has called a meeting of shareholders to decide whether or not it should sell its 50% stake Mike Pero Mortgages Holdings (MPMH) to its joint venture partner Liberty Financial.

NZF’s board decided in August last year, to sell its stake to Liberty as the relationship between the two parties had become untenable.

A year earlier Liberty had alleged that NZF was in default of the joint venture agreement as it “had ceased or threatened to cease to carry on all or substantially all of its business or operations.”

When asked about this Liberty executive director Peter Rollason said the joint venture was formed in 2006 and it was on the basis both parties would contribute operationally and financially.

“It became clear after a series of business divestments… that NZF had ceased all, or substantially all, of its business operations and was no longer able to contribute operationally or invest in MPMH as intended by the joint venture.”

However, NZF denies this and says in its notice of meeting that it is an investment company and “has not ceased or threatened to cease carrying on business as an investment company.”

Following a breakdown in relationships, court battles and the receivership of NZF Money, Liberty and NZF agreed last September that Liberty would buy out NZF’s 50% stake in MPMH under terms of the joint venture.

But the deal was put into doubt when both parties disagreed on MPMH’s value.

They agreed to an independent valuation being done. That was completed by Simmons Corporate Finance and it put the value of NZF’s stake at $2.8 million, well below the $7.6 million value NZF carried it at in its books.

NZF has challenged the Simmons valuation and commissioned its own report to explain the differences.

That report from Deloitte gave four reasons for the differences. The biggest contributor to the gap in valuations was the worth of Mike Pero Real Estate. Other factors include the fact different valuation methods were used, a difference in the assumed level of earnings and differing earnings multiples.

While NZF is disputing the independent valuation conducted under the JV agreement it appears to be stuck with it as is it considered “conclusive”.

“This means the parties are bound by the value determined by Simmons Financial and the company (NZF) must sell its sale interest to Liberty in accordance at the value set,” NZF says in it notice of meeting.

The meeting notice also reveals there is a disputed shareholder loan of $306,000 due from MPMH to NZF to cover expenses incurred in establishing MPMH. It also claims that Liberty’s conduct will erode the value of MPMH.
Rollason said this loan has been questioned by both MPMH and Liberty and was an impediment to the completion of the MPMH accounts.

“The independent valuation refers to the loan but does not attempt to independently verify it.  Despite repeated requests from MPMH and Liberty to provide relevant documentation, no such documentation has been made available by NZF. The notice incorrectly implies that only Liberty disputes the loan whereas MPMH itself also disputes the loan after obtaining independent legal advice. Furthermore, NZF’s own auditors have been unable to locate or identify any loan documentation.”

Liberty offered to make an ex gratia payment of $279,853 which is the amount sought by NZF less establishment costs incurred by Liberty on the same basis as alleged by NZF, Rollason said.

“NZF has chosen not to disclose this in its notice and prefers to encumber MPMH with a loan that cannot be independently verified.”

In its notice of meeting NZF directors make no recommendation to shareholders whether to sell to Liberty or not.

However the motion requires a 75% majority and the company is tightly held by directors.

They say if the resolution is passed they will transfer their shares to Liberty at $2.76 million however they question whether Liberty will repay the shareholder loan.NZF directors consider there is a settlement risk and that as Liberty is a private company “it is unknown whether it has the means to settle or not.”

If the resolution is not passed “Liberty is likely to continue its litigious approach and conduct itself in a manner that erodes the value of the MPMH business.”

“Consequently the (NZF) will remain in a dysfunctional joint venture relationship and will hold an asset that is likely to continue to decrease in value.”

“Assuming that Liberty will continue its High Court proceedings, further litigation costs would be incurred by (NZF).”

« RBNZ introducing macroprudential tools 'soon'Kiwibank switches home loan specials to two year term »

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Comments from our readers

On 16 May 2013 at 4:56 pm Amused said:
Just how many new franchisees are Mike Pero Mortgages signing up nowadays? Surely it can’t be that many given that the aggregator model available now through Allied Kiwi and TNP is so much more attractive in terms of remuneration, IT support and perhaps most importantly been able to have a business that you can ultimately sell!

Perhaps it’s more a case then of how many existing Mike Pero franchisees would like to break away but are tied down with their current franchise agreements…

The franchise model as far as mortgage broking is concerned has not worked for years but this is no great revelation. Having previously had a mortgage broking franchise and now operating under the aggregation model instead I could not fathom why you’d want to ever buy into the concept.

Franchises may well work in the fast food industry where clients queue up gladly for an established brand been sold to them. However in the mortgage industry the good brokers themselves are the "brand”.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.09 6.95
SBS Bank Special - 7.14 6.49 6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

Last updated: 20 June 2024 10:39am

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