No tears at demise of high-risk mortgages
The contributory mortgage business is all but dead in New Zealand.
Monday, August 23rd 2004, 5:35AM
by The Landlord
Philip Matthews, chief executive of the Financial Planners and Insurance Advisers Association, says: "I'm not sure I have a problem with them disappearing, to be perfectly honest. They were something virtually anybody could set up and that is just asking for trouble."Matthews says many contributory mortgages were riskier than they appeared and Securities Commission investigations have shown that, too often, rules were "stretched".
But where once the high-risk products were common, now few advisers would offer them, says New Plymouth-based financial adviser Peter Hensley.
Legal problems with contributory mortgages surfaced in 2001 as the Securities Commission adopted a get-tough stance. As a result, professional indemnity insurers became loath to provide insurance to financial advisers selling them.
The mortgages themselves are still being written but are to be found on the books of the rising tide of finance companies, instead of being offered individually to investors.
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