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ISCOVER
The MFAA has rushed to the defence of the broker industry after a critical column was published in The Australian last weekend.
Here is the full statement from MFAA chief executive Siobhan Hayden, which comes after The Adviser reported yesterday that the newspaper had linked the broker model to the subprime crisis.
"We are addressing this directly with the journalist and editor of The Australian. This is, at best, a piece of careless journalism seeking sensationalism apparently based on an inability to calculate what is a relatively small payment for introducing a customer to a lender. Mr Main suggests that a broker is paid a $12,000 upfront commission on a $200,000 mortgage when this is more likely to be about $1,200 with a trailing commission of about $25 per month, assuming that a normal commission would have been paid.
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"The only blurring is the writer’s failure to report the facts correctly.
“There is a very tenuous link between the recent broker ‘scandal’ and the subprime mortgage crisis of 2007. To compare the pre-GFC US non-recourse, NINJA loan arrangements with the highly-regulated Australian lending environment since the inception of the National Consumer Credit Protection Act (NCCP) is drawing a long bow indeed.
“Despite the recent allegations made against the two Victorian mortgage brokers, the incidence of loan fraud in Australia is extremely low and default rates are anecdotally also at an all-time low.
“If a lender notes fraudulent documents attached to more than one loan application from a broker, they are likely to: refuse future loan submissions; report the matter to ASIC; and advise the broker’s industry association.
“The vast majority of brokers aren’t willing to jeopardise their current and future business to get a borrower over the line for a relatively small remuneration.
“Mortgage brokers and the community at large have a right to expect a better standard of reporting and opinion that is factual and responsible. This article is the ‘golden thread between journalism and the public’, and is neither.”
