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MFAA Prosper : Mortgage and Finance Brief 05
MFA A has established an industry working group with a view to agreeing to a uniform approach as to what additional enquiries are needed by mortgage brokers to satisfy their new responsible lending obligations. Since 1 July, all brokers have been required to assess whether a loan is unsuitable. The MFA A sets a higher standard, and requires members to assess whether the loan is appropriate. “Some brokers have been confused because the loan assessment requirements set by banks have not changed,” said Phil Naylor, CEO of MFA A . “This is because banks and some other lenders are not subject to the responsible lending requirements until 1 January 2011. “This had led some brokers to assume that there is no need to change procedures. This is not correct. All brokers must now conduct a loan pre-assessment, whether or not this is required by the lender.” Brokers who do not conduct an assessment are breaching the law and may be subject to significant fines or loss of licence or withdrawal of representative status. The MFA A encourages lenders to avoid adding a large number of questions to pre- NCCP application forms because it is likely to cause significant inefficiencies and cost. Specific questions also run the risk of not addressing key issues. The industry working group has developed open ended questions to more effectively assist the assessment. As a result the MFAA Example Loan Assessment Form has been updated. The questions which are in addition to pre- NCCP application forms are highlighted in yellow. Aggregators and lenders may have special additional requirements, but it is hoped that these additional questions will form a common base. To obtain a copy of MFAA’s Example Loan Assessment Form, visit w ww.mfaa.com.au, click on the ‘Member Centre’ and then ‘Legal & Compliance Resources’. A big responsibility Three months after the introduction of responsible lending obligations for mortgage brokers, the industry is still working out the sorts of questions that consumers should be asked. The role of brokers Aside from the legal requirement, are there other reasons why brokers should find out more about their client’s financial circumstances? “I have been surprised at the number of brokers I have spoken to who still believe their role is limited to facilitating a transaction for the client,” said MFAA President Joe Sirianni, from Smartline, at a recent lunch with industry leaders. “We need to value our role as professionals more highly. If we are to do our job properly, we need to see ourselves as providers of a service that is not available anywhere else. “We fill a gap between financial advisers and lenders. We can provide ‘mums and dads’ with advice on paying off their mortgage. How can we provide a good service unless we take the time to fully understand their financial circumstances?” Mr Sirianni said he expected the responsible lending requirements to improve the standards of service offered by mortgage brokers over time. “Ultimately, this will help to improve our reputation in the general community,” he said. “Currently, about 40% of mortgages come through brokers. As we improve our professionalism, I expect this figure to grow even higher.” “How can we provide a good service unless we take the time to fully understand their financial circum- stances?” Joe Sirianni, MFAA President 16 | Mor tgage & Finance brief News
Mortgage and Finance Brief 06