By Greg Ninness
Mortgage Express has severed ties with many of its local Chinese mortgage brokers and called in the Financial Markets Authority (FMA) over concerns about their conduct and compliance issues.
Mortgage Express is the mortgage broking arm of Harcourts, the country's largest real estate agency. Late last year Mortgage Express became concerned about compliance issues surrounding mortgage applications made through several of its brokers associated with a company called Brilliant Finance Ltd.
Brilliant Finance was formed in July 2015 and operated as a mortgage brokerage on Auckland's North Shore, catering to the Chinese community.
Industry sources say the company has been extremely successful and was likely to have arranged hundreds of millions of dollars of mortgages for its clients last year.
Brilliant Finance was so successful that ANZ named it the bank's Mortgage Adviser Emerging Business of the Year for 2016, and Brilliant Finance signed up to join the Mortgage Express network, with its brokers operating under the Mortgage Express banner.
However the relationship did not last long.
Just before Christmas Mortgage Express chief executive Sarah Johnstone called in the FMA over concerns around compliance issues with some mortgage applications submitted by some of Brilliant Finance's brokers.
Both the FMA and Mortgage Express are giving away very little detail of what was involved.
"Brilliant Finance was brought to our attention by Mortgage Express at the end of December 2016," an FMA spokesman said in a statement when contacted by interest.co.nz.
"Mortgage Express raised concerns about potential conduct issues with Brilliant Finance and we have been engaging with Mortgage Express about compliance matters arising from this," the FMA spokesman added.
"The matter is now in the hands of the FMA," Mortgage Express said when it was contacted for comment.
ANZ was also reluctant to comment when asked about the company it lauded as the "Mortgage Adviser Emerging Business of the Year for 2016," saying, "We don't comment on our arrangements with contractors," when asked about it's relationship with Brilliant Finance.
However industry sources have suggested one of the likely areas of concern for Mortgage Express and the FMA could be around the standard of documentation provided by mortgage applicants that were reliant on overseas income to meet their mortgage commitments.
This became a major problem for many property buyers last year, especially those from China, after Australian regulators clamped down on mortgage lending where the borrower's main income was from overseas. There was also a clamp down by authorities in China on the amount of money people could take out of that country.
That led to the big four Australian-owned banks operating in this country - ANZ, ASB, BNZ and Westpac - severely restricting mortgage lending to borrowers that were heavily reliant on overseas income, something that has been a significant contributor to the relatively low number of residential property sales that occurred in the Auckland market this summer.
Since the FMA became involved there has been a dramatic reduction in the number of Chinese speaking mortgage advisers at Mortgage Express.
A month ago the company's website said it had 23 Chinese speaking mortgage advisers but that has since been reduced to 11 and Mortgage Express has expunged all references to Brilliant Finance from its website.
Brilliant Finance did not return calls.
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