By Jill Fraser for Lending Central

As of last week National Mortgage Broker (nMB) brokers have an exclusive nMB-branded loan to offer borrowers.

The suite of ‘‘nMB Direct” loans - variable, fixed and packaged - is the result of a marriage between the aggregator and The Rock Building Society.

The irony of nMB establishing a partnership with The Rock just weeks after Heritage Building Society withdrew from its lending panel, has not escaped nMB managing director Gerald Foley.

He chuckles wryly and refers to The Rock’s “progressive” approach versus Heritage’s defeatist approach (my expression not Foley’s!) as exemplified by its decision to retreat from the broker space and give a number of brokers the flick.
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By Jill Fraser for Lending Central

Reflecting on the process entailed in setting up Hemisphere Financial Solutions’ Associate Director Product and Marketing, Frank Knez says it is time that non-banks began rattling the cages of banks again.

“The non-bank sector needs to start making more noise and letting consumers know that we’re a viable alternative with compelling offerings,” Knez told Lending Central.

Knez says the market is currently offering similar opportunities to those that existed when non-banks first entered the mortgage space and Hemisphere Financial intends to capitalise on this.

The decline in total lending finance commitments in December does not alarm him. (Figures released by the Australian Bureau of Statistics last week show a 1.3 per cent fall in total new lending: In the final three months of 2009, housing finance fell 11.6 per cent.)
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By Jill Fraser for Lending Central

Fact: Fraud cases in Australia have doubled over the past six months.
Fact: The epidemic is set to increase.
Fact: Banks and other financial institutions account for one third of fraud cases prosecuted nationally.
Fact: Almost half of all Australian companies have been hit by at least one incident of fraud.
Fact: Four out of 10 Aussie businesses experienced at least one incident of fraud during downturn - close to double the global average.
Fact: 37 per cent of reported frauds cost more than $1 million - double the global average.
Fact: Organisations underestimate their future fraud risks.
Fact: Fraud prevention should be a central component of ongoing operational risk management.

Two powerful reports outlining the ballooning incidence of fraud were released this week revealing that corporate criminals have been taking full advantage of the economic downturn.

The most sobering fact is that those in the know say the increased number of frauds identified over the past 12-18 months is just the tip of the iceberg and that its occurrence is on the rise.
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By Jill Fraser for Lending Central

Wanted: Team players and self-starters who possess problem solving and networking attributes.

After emerging relatively unscathed from the mortgage fatigue that has beset the industry for the past couple of years Smartline is embarking on a period of expansion.

Referring to 2009 as the year when the industry suffered “death by a thousand cuts” Smartline Managing Director, Chris Acret told Lending Central that serious soul searching prior to the Global Financial Crisis helped Smartline survive.

He has no doubt that commission cuts will reshape the industry over the next few years and admits to being quite “underwhelmed” by the meekness of the proposed regulations.

Acret spoke to Lending Central about Smartline’s philosophy of nurturing franchisees and establishing a positive, non-competitive culture within the team whilst offering rare insight into his personal satisfaction and frustrations.
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By Jill Fraser for Lending Central

Mortgage House managing director Ken Sayer doesn’t discount a nation of renters, generation loans and the death of the great Aussie Dream as people get priced out of the property market.

Sayer foresees a “new order” determined by the cost and scarcity of funds and impending compliance charges.

“Interest rates will rise and the cost of funds to the borrower will increase as a result of the new order,” says Sayer.

“We may not see 13 percent again but we will get to 7 percent or 8 percent and this will automatically exclude a lot of consumers. The heat on property will retard, the explosive capital dance will disappear and it will become the norm to rent.

“Asian and old European nations have ‘generation loans’, which are never paid off and simply handed down to the next generation.”
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Despite the central bank’s respite on raising interest rates this month, borrowers can still expect two more rate rises in 2010, says an economist.

That’s the bad news.

The good news is the cash rate will hold steady at 4.25 per cent for the next 10 to 15 years, as Australia moves into a new era of more moderate inflation, says Herston Economics chief economist Clifford Bennett.

Mr Bennett said the Reserve Bank of Australia (RBA) would raise the cash rate only twice in 2010 as inflation would be kept in check by interest rates that - despite rises in late 2009 - were still at multi-decade lows.

He said competitive pressures would ensure companies would raise productivity rather than pass on price increases even when the economy moved to a stronger growth phase.
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By Jill Fraser for Lending Central

Another cash rise this week is almost a done deal following the latest inflation figures, and with a growing number of Australians using credit to make ends meet the indications are that many people are about to experience deep financial pain.

A survey conducted by the credit reference agency Dun & Bradstreet shows that four in ten Australians are using credit cards to pay bills and remain afloat.

Findings from Dun & Bradstreet’s Consumer Credit Expectations Survey, which focused on Australians’ expectations for savings, credit usage, spending and debt performance over the March 2010 quarter show that 43% of Australians expect they will need to use their credit card to pay for otherwise unaffordable expenses in the coming months and one in three are concerned about their expenditure over the Christmas period, indicating that some households continue to face financial difficulties despite the economic recovery.
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By Jill Fraser for Lending Central

Only a handful of interviews have been conducted with Stephen Porges since he took over the reigns at Aussie in August 2008.

“I normally leave those gigs to John,” he chuckles.

The former scientist told Lending Central that the stark differences between him and Executive Chairman, John Symond is what makes for successful collaboration.

LC: What underpins your effective relationship with John?

SP: Communication. Our skills are complementary. Besides being incredibly informed financially John is a wonderful reader of the population; whereas I am a very pragmatic, starter driven global financial person.

LC: When you say that John can read the population are you talking only financially?
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Westpac Banking Corporation has tightened its mortgage loan criteria and realigned its funding towards high-quality mortgage intermediaries, as subsidiary RAMS Home Loans prepares to quit the mortgage broker channel.

Westpac spokeswoman Jane Counsel confirmed the bank lowered its loan-to-valuation ratios (LVR) for new full-documentation mortgage customers on Wednesday from 92 per cent to 87 per cent including two per cent for lenders’ mortgage insurance.

The LVR for new low-documentation customers has been lowered by Westpac to 80 per cent including LMI, said Mortgage Choice spokeswoman Kristy Sheppard.

Mortgage Choice is the nation’s largest mortgage broker.

Westpac will also quit funding RAMS’ broker channel, which is scheduled to close on February 26 and was responsible for just under a third of Westpac’s broker-originated new mortgage growth in 2009.
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By Paul Lahiff for Lending Central

January is always a good month to get the crystal ball out and see what secrets it might reveal for the year ahead. The media are always keen to add to the list of predictions - it fills space when the news cycle quietens down !

The last few weeks have featured optimists, pessimists and fence sitters on the outlook for housing finance over the next twelve months. In this piece, I will outline the positive forces for growth as well as the restraining influences and end with an estimate of how I see things finishing up for the year.

The positives for growth or the “tailwinds” include:

• the strength of the Australian economy - despite predictions of Armageddon, the economy has come through the global financial crisis in good shape. A recent Financial Review survey of business economists forecast economic growth for calendar 2010 at a little over 3%, compared to 1% for 2009. Unemployment has come in today at 5.5%, a drop on the previous month and nowhere near the 8.5% level predicted twelve months ago, and inflation at this stage is behaving itself.

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By Lending Central’s US reporter Sam Garcia - www.mortgagedaily.com

Government-controlled Fannie Mae and Freddie Mac, the nation’s largest mortgage buyers, have announced plans to suspend foreclosure evictions during the holidays.

The move follows hot on the heels of a similar action by the New York-based bank, Citigroup Inc., in which the government also holds a substantial stake.

On 17 December two Citibank subsidiaries gave 4,000 homeowners an unparalleled Christmas/New Year gift: the security of knowing that they will be able to celebrate the holidays in their own homes. CitiFinancial Inc. North America and CitiMortgage Inc. announced that they have imposed a 30-day moratorium on foreclosures and evictions, effective 18 December through to 17 January.

Stressed homeowners with first mortgage loans owned by CitiMortgage or CityFinancial North America will not be subject to foreclosure sales or notifications during the specified 30 days.
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The value proposition of aggregation groups is on the rise considering the results of Choice Aggregation Services’ (Choice) 2009 member survey.

The recently conducted survey, which analysed the business habits, needs and opinions of Choice members, revealed that 79.2 per cent perceived Choice as a key partner in their business - up 64 per cent on 2008’s figures and 71 per cent on 2007’s.

Just 11.8 per cent said they didn’t perceive Choice as a partner while 9.0 per cent were unsure.

Of those brokers that viewed Choice as a key partner in their business, 62.1 per cent said the value they placed on the relationship was ‘high’ whereas 32.7 per cent said ‘medium’ and only 5.2 per cent said ‘low’.

Brendan O’Donnell, CEO of Choice, said the result affirmed that recent initiatives to increase member support were gaining traction.
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By Jill Fraser for Lending Central

The FBA’s national president, Peter White says the AIPB is acting in “a cowboy fashion” and that its correspondence style is “flawed and unprofessional”.

The AIPB’s Maria Rigoni retorts with “I cannot accept responsibility for Peter White’s interpretation of the English language”.

The argument is centred around the AIPB’s invitation to the FBAA, the MFAA and the ABA to participate in an open industry discussion about bank ethics, which the AIPB claims is adversely impacting finance brokers.

White told Lending Central that the FBAA will not participate in the public forum that the AIPB is proposing because it sits on very shaky legal ground.

The basis of White’s response is based on the fact that the AIPB letter did not name the FBAA members that it is accusing of engaging in practices that are “unfair and have no ethical, moral or best business practice basis”.
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By Jill Fraser for Lending Central

The annual Deloitte Australian Mortgage Report: 2010, subtitled Positioning for Opportunity, is a declaration of “renewed hope” carefully expressed in a tone of cautious optimism.

The stars of 2010, according to the report, will be the “other lenders”, as the Big Four relinquish their stranglehold on the industry.

Other lenders (including regionals and non-banks) have been at the mercy of securitisation markets and have had to fight a tough retail deposit war.

But this is about to change if, as forecast in the Deloitte report, the issuance of residential mortgage-backed securities (RMBS) continues to rise in 2010.

James Hickey, a banking partner with Deloitte Actuaries and Consultants, told Lending Central that optimism is based on “encouraging signs in the securitisation the market”.
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