The MFAA has hit back at suggestions that mortgage brokers have played a role in the rise of home loan arrears.
Released last week, the RBA’s 2008 Financial Stability Review blamed brokers and originators for a “decline in lending standards” that has led to a sharp rise in arrears, particularly in Sydney’s Western Sydney.
“Much of this non-traditional lending was enabled by the expansion of mortgage broking, and concerns remain about brokers’ remuneration structures.
“In a small number of instances some lenders engaged in predatory lending practices,” the report said.
But Phil Naylor, CEO of the MFAA has insisted mortgage brokers are not responsible for the increase in mortgage arrears.
“It is the responsibility of the lender to approve home loans recommended by a broker,” he said.
Mr Naylor stressed that while brokers need to assess an applicant’s ability to service a loan, and recommend a loan that is right for the borrower; ultimately, the lender decides whether or not to lend money.
“Any reports to the contrary surfacing as a result of the Reserve Bank of Australia’s Financial Stability Report released yesterday are inaccurate and misleading,” said Mr Naylor.
While Mr Naylor agreed that there is a fringe element, he said the MFAA is determined to rid the industry of "these unscrupulous operators".
“The very small minority of brokers and lenders who recommend loans inappropriate for a borrower’s needs are a blight on our whole industry," he said.
Do brokers face a media backlash if arrears rise further? Is the MFAA doing enough to back its members agains such criticism? COMMENT HERE
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