MFAA hunts for alleged unethical broker

by Phil McCarroll02 Sep 2016
The Mortgage & Finance Association of Australia (MFAA) has instigated a search to uncover the name of a mortgage broker accused of unethical conduct in a News Ltd report yesterday.

According to the article in News Ltd outlets yesterday, an elderly Western Australian couple claim their income level was inflated by both their mortgage broker and bank during their purchase of an investment property in Queensland in 2011.

Michael and Kaye Downer told News Ltd that while purchasing a house and land package in the Queensland town of Zilzie their mortgage broker inflated Michael’s earnings after they had signed their mortgage application. The Downers also claim their income was further inflated during the internal mortgage assessment carried out by their bank.

According to the News Ltd report, the Downers received a letter from their bank advising them that its valuer believed the land in Zilzie was worth $24,000 less than the asking price of $189,000.

However, the Downers claim they did not see the inflated income figures until 2014 and also claim they were not advised the valuer believed the finished Zilzie house would only be worth $400,000, which is $89,000 less than what their bank lent them.

“If we had seen that low valuation number we would not have gone ahead,” Kaye told News Ltd.

The Downer’s mortgage broker is not named in the News Ltd article, however the MFAA has requested News Ltd provide them with identification.

“The MFAA has a clear policy that any report of a member allegedly acting in an unethical manner is fully investigated if evidence supports an allegation of misconduct,” MFAA head of marketing said Stephen Hale said.

“The MFAA does not tolerate any matter that places a consumer at risk and where the MFAA Tribunal finds wrongdoing, it has in the past expelled members or suspended membership and in these serious cases, it reports the matter to ASIC.”

Hale said if an MFAA investigation revealed any wrongdoing all findings would be publicised.

According to the News Ltd report, the Downers are on a hardship repayment scheme, but will have to resume full repayments this month or their bank will start the recovery process.

The Downer’s bank claims the couple are able to meet the full repayments but are unwilling to do so.

If the Downers were to sell the Zilzie property they would be $150,000 short of what is owed, meaning they would be required to sell their Perth home.
 

COMMENTS

  • by DW 2/09/2016 8:51:49 AM

    There is so much wrong with this. No doubt this started with a property spruiker, and compounded by unethical actions by the broker and bank.

  • by MT 2/09/2016 10:18:45 AM

    The bank and broker probably did act unethically, but we also need remember they were asked to provide finance and not advice on the quality of the investment, the borrowers also need to make there own checks and research on the quality of the investment and stop trying to blame some one when their investment goes bad. If the customer needs advice on property or any other investment they should seek the appropriate professional to give the advice, but most people don't want to pay for advise.

  • by CP 2/09/2016 11:37:49 AM

    I understand what MT is saying here but I think it's missing the point for the article. In no way did the bank or broker have the best interest of the clients in mind. Common sense and understanding is not financial advice and neither is evident in this case. I wonder why Labor want a royal commission.....