This week’s winning comment comes from ‘Doug’ and relates to Wednesday’s interview with La Trobe Financial CEO, Greg O’Neill.
In the article, O’Neill argues that the charging of ‘risk fees’, without providing any correlated consumer benefit, is one of the biggest concerns he has regarding the specialist lending sector going forward.
O’Neill’s comments sparked some heated debate in the comment column – here’s what Doug had to say:
“The point about comparing Risk Fees to LMI is simply being misunderstood. I thought La Trobe are saying LMI protects the borrower indirectly in that the lender will not make a loss unless the LMI claim is voided, which is rare. Secondly as an old mortgage insurer I know that LMI providers only peruse[sic] generally less than 10% of all borrowers post mortgagee in possession proceedings for shortfall and therefore this results in the indirect benefit for the consumer. Perhaps what should be occurring is, if borrower refinance these risk fee loans within the first two years, then part of the risk fee should be refunded just like the mortgage insurance premiums are, if these risk fees do the same thing...that is, give high LVR loans out that otherwise would not be made. A valid debate to be had by industry.”
Thanks to everyone who contributed comments over the last seven days and keep an eye out next Friday to see if you're the author of Australian Broker's next top 'Comment of the Week'!