Triple hit for contributory mortgages

The Securities Commission has stomped on another contributory mortgage, this time one promoted by The Mortgage Financier Limited which was raising money for a car park building in Parliament Street.

The commission has ordered The Mortgage Financier to stop acting with this development and has appointed Crichton Horne & Associates Mortgage Brokers to act in its place.

Also, it has banned all the Parliament Street advertisements.

The commission says more than 1000 people had invested in the mortgage which was lending money to the developer of a multi-storey carkpark building in central Auckland.

The commission says it acted as the valuation of the contributory mortgage "was likely to deceive, mislead or confuse investors" and it did not comply with the regulations.

Contributions were paid to the developer before the full amount of the mortgage had been raised, when insufficient funds had been raised to complete the project and when the broker knew, or ought to have known, the valuation report was false or misleading.

Former directors of the business, Roger Moses and Gary Stevens were acquitted on charges relating to Reeves Moses' operations last year. However, the Crown is appealing that case.

As reported earlier Wellington-based Lombard Group has closed down its contributory mortgage business and replaced it with a mortgage backed unit trust.

It said the regulations governing contributory mortgages were not tight enough.

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