Mortgage Broker Issues

Clients of mortgage brokers often run into issues, which they may or may not complain about to professional bodies. The mortgage broker sector has improved markedly since 2010 after the NZ government brought in new regulations requiring mortgage brokers to be fully qualified financial advisors, but in spite of brokers being part of a recognised dispute resolution scheme, many issues still arise.

Tina Park, mortgage broker
Tina Park, mortgage broker

Prior to 2010 the main problem clients were having with mortgage brokers were that often they were just simply incompetent or unscrupulous, and for example they would supply incorrect information about their clients to the banks or lenders in order to win a mortgage for their clients. Also they would feed business to independently wealthy investors who would charge a much higher interest rate, when the client could have gone straight to a bank and got good market rates. A lot of their clients were in serious difficulties once the general financial crisis occurred 2008, and a lot of these difficulties could be placed at the feet of their mortgage broker.

Nowadays almost all the Cowboys brokers have been well and truly weeded out of the system, but the clients are still running into problems. One common example is the clients finding that the brokers they talk to just can’t help them, and don’t even seem to want to try. The problem for them is it they are talking to the wrong brokers, because if they have called one of the largest mortgage broking firms they will not have realised that the firm would have pre-screened then and eliminated them as a potential client simply because their situation looks somewhat different or potentially difficult. If the clients went to an independent broker such as the ones at www.nzmortgagebrokers.net then it’s far more likely they would receive service, because independent brokers need all the business they can get.

There also occasionally appears to be a degree of racial bias in some mortgage brokers, who refuse to take on some clients simply because of their accent or because of the broker’s assumption about their nationality. In these cases the client just have to keep on trying different mortgage brokers, and Google search is a great tool for those.

All brokers are supposed to deliver independent and professional advice, but many brokers have their favourite banks and high -net-worth investors who they feed a lot of business to, obviously in return for a favorable commission or access to a new line of leads. The problem here is that the broker would be unable to persuade their client that they are getting the very best deal if they were to tell the full truth to the client. This is dishonest and risky behaviour by the mortgage broker, as they could be found out if the client where to visit another broker and explain their situation. To find out more about Rotorua mortgage brokers click here.

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Mortgage Broking as a Business

Any mortgage broker in New Zealand needs to be fully qualified and registered financial advisor, and this alone requires a high degree of financial and time commitment. Mortgage broking as a career cannot be taken lightly.

Karen Parker, mortgage broker at www.MortgageBrokers.org.nz

The mortgage broking business is somewhat unique in New Zealand, in that the broker does not charge the customer any fees, but is instead paid a substantial commission once the customer has uplifted the loan. While the payday may be substantial, the time between signing up the customer and getting paid can be many months some cases. And for the broker in New Zealand, on the average only 30% of new customers end up earning the broker any commission.

The broking business requires careful cashflow management as well as the other obvious skills of marketing, networking and financial advising. Find out more about mortgage brokers in Timaru. In some respects mortgage brokers are like the dairy farming sector, as farmers are always banking any unexpected or particularly good profits because they know that good times never last. The mortgage broker really needs to take the same approach.

Mortgage brokers obviously prefer to take clients from the very large cities with the very high house prices and high mortgages, as the commission payments can be double or even quadruple the payments that brokers will be getting in the smaller centres. However there is large competition for this business, and unless the broker is tied to a large mortgage broking firm with a very expensive marketing budget and successful SEO Internet advertising campaign, then they will not see much of this lucrative business. Of course the disadvantage for mortgage brokers working for the very large companies is that they have to take the work that is given to them, and often the work is fairly repetitive although lucrative.

The large mortgage broking firms generally find they have so much new business coming in through the door as a result of the Internet campaign that they can afford to put administrative staff at the front end to filter out all but the simplest customers. This is not truly ethical but it absolutely goes on, simply because there are so much money to be made by the very dominant large mortgage broking firms.

Smaller independent brokers need to have other sources of new business, but this always means that they need to provide good service at all times, because their good reputation has such a huge influence on their livelihood.

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