Non-banks quash alt-doc exodus predictions

by Mackenzie McCarty11 May 2012

Resimac and Pepper have said proposed NCCP enhancements are unlikely to deter brokers from non-conforming lending, despite predictions of this outcome from Gadens Lawyers' Jon Devnovan.

This week, Australian Broker reported that Denovan said proposed NCCP enhancements which put more liability onto a broker for unfair or dishonest conduct would push brokers further away from the already underserviced area of non-conforming and specialist lending.

However Resimac's Allan Savins said he expected that impact of any amendment to legislation would be minimal in terms of risk and new business potential in specialist lending.

"As long as brokers take the time to make reasonable enquiries as to the borrowers needs and financial position and act with honesty and integrity, then there is no reason for brokers to be concerned about offering prime or specialist loans," Savins said.

Pepper's David Holmes said he believes the legislation provides brokers with opportunities.

"The amendment to the legislation doesn’t change the requirement that the broker needs to be satisfied that he hasn’t put a borrower in an unsuitable loan," Holmes said.

"If a broker follows the NCCP responsible lending guidelines, then there is no reason why they shouldn’t write alternative documentation and non-conforming loans today."

Savins said that any additional change to regulation naturally creates more uncertainty, due to the magnitude of change that the market has been faced with over the last few years.

But he said the view held by many brokers that NCCP makes servicing specialist lending borrowers impossible is incorrect.

"NCCP was not designed to create a narrow based solution for all and prejudice those borrowers that have a legitimate financing need but for a particular circumstance," Savins said.

"I would say that those brokers who turn the opportunity away to write a specialist lending loans are losing out on a potential client for life and incremental business from a market segment that potentially represents 5% of the mortgage market," he said.

Related stories:

Brokers to shoulder more liability from NCCP amendments

'Bloody ridiculous' NCCP amendments released



  • by Michael Watson 14/05/2012 2:47:42 PM

    The most important factor to consider is that the market will continue to exist for these products regardless of legislative changes.

    Lenders have adapted and from what I have seen we all structure our upfront forms and requirements in a way which best protects all parties to the transaction (including borrowers).

    Brokers do not need to back away from this segment. If they do, they’re just leaving a bigger slice of the pie for others.