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Rewrites upset investors

Investors are accusing Harmoney of “double-dipping” on fees and churning business to maximise its returns from borrowers and investors.

Tuesday, December 15th 2015, 6:00AM

by Susan Edmunds

They are concerned at its new practice of proactively targeting borrowers who meet their repayments for three months, offering them bigger loans.

While borrowers pay fees on the new, rewritten bigger loans, investors are also hit with a double-whammy on fees.

The platform takes 1.25% on all payments made to investors, including interest and principals.

When borrowers take the loan top-up or rewrite option, it voids the original loan. That is counted as completely repaid to the investor and a 1.25% cut is taken.

Then when the larger loan is written, the investor pays 1.25% on those repayments too.

Investors say about 25% of their loans are being rewritten.

They have voiced their concerns on online forums.

One said: “I'm pretty disgusted that a rewrite repays me my principal with the service fee removed. That simply shouldn't happen, and I'll be speaking to them about it.”

Another wrote: “I had noticed the increasing number of rewrites showing up in the marketplace and also the increasing number of early repayments. I suspected this was what was happening but could not be sure.

“It seems Harmoney has structured this to maximize the service fees that they can charge and are effectively double-dipping. Why (other than increasing service fees charged) is a top-up to a loan done as a full repayment and a new loan and not as a top-up (or additional loan)?

“Many of the rewrites I’m seeing on the markets have a repayment history of as little as three months. Strike this a few times and your now paying a service fee of 5% per annum instead of the 0.25%-0.42% per annum a three to five-year would have resulted in.”

The FMA is looking into the fees to determine whether they have been adequately disclosed.

Harmoney did not respond to requests for comment for this story.

Tags: Harmoney

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AIA 4.55 2.55 2.95 3.29
ANZ 4.44 ▲3.15 ▲3.55 ▼3.75
ANZ Blueprint to Build 1.68 - - -
ANZ Special - ▲2.55 ▲2.95 ▼3.15
ASB Back My Build 1.79 - - -
ASB Bank 4.45 2.55 2.95 3.29
Basecorp Finance 5.49 - - -
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BNZ - Classic - 2.55 2.95 3.25
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.55 3.15 3.22 3.85
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 1.95 1.85 2.35 2.45
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 ▲2.29 ▲2.69 ▲2.99
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.75 3.34 3.34 4.14
Kiwibank - Offset 3.75 - - -
Kiwibank Special 3.75 2.49 2.49 3.29
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 ▲2.89 ▲3.29 ▲3.49
SBS Bank Special - ▲2.39 ▲2.79 ▲2.99
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The Co-operative Bank - First Home Special - 2.29 - -
The Co-operative Bank - Owner Occ 4.40 2.49 2.89 3.19
The Co-operative Bank - Standard 4.40 2.99 3.39 3.69
TSB Bank 5.34 3.30 3.69 4.04
TSB Special 4.54 2.50 2.89 3.24
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.59 3.15 3.49 3.89
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.89 3.29
Median 4.54 2.78 2.99 3.29

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