Interest rates down .5%

[Wukkie]

Hi Garthu

Whe you say that you are looking for new Mo's what happened to the model that your company adpoted to do their own, with a sub agreement.

But all that a side, the Mo's and the Banks have made the problem worse for them selves. I feel that they shoudl make the MO's agents for the banks, and then at least some level of liabilty will pass onto them.

Garthu, when you say a breach of code of conduct, is that on teh Agents side of the MO's side. If I remember the estate agenst act correctly there is only a clause that says your can't force the client to where he gets his loan from, but nothing about receiving addtional comm. Plus the banks have been doing it for years, even before the real birth of the Mo's

[Wukkie]

Switching IS THE ESSENCE of the MO business, how can you make the banks compete without the threat of losing business.

I have never had an issue with a client paying for my services and in actual fact charged some of them exstra.

Hi Quinn

As for switching, I have no problem with it, but the banks shoudl rather pay a lower intor comm and spead the comm over the bond, this way the MO will maintain client for the bank and would do switching to keep his client happy and not just to make a quick buck.

If you are doing loans for the 4 banks, I thought rasing fees where against the NCA, and I know it is not alllowed accroding to NAMO, (a toothless, blind and deaf watchdog)

[garthu]

Hi Wukkie.. wont discuss the MO model her

On the EAAB side, they prohibit any form of kick backs. Dont remember the wording specific and aint looking for now what is generally and easily accepted is a kick back from an attorney, electrician etc is illegal. On the attorneys side I think it's part of there code as well. So why then is it acceptable that MO/banks can provide payment. One company started to pay through points, followed by an MO, there motivation was to keep in line with the law.... I just find it curious that no one questions it??? Surely good for the goose, good for the gander...

[Wukkie]

Hi Garth

No problem witha that, I completly understand. You never know who is out there. I see you removed your one link. sorry that I picked up on it. but th eindusrty is a very small place, As much as they think the one does not knwo what the other is doing, they do and there are only so many places where ppl can go, or land up.

The attorney point is valid, I think it is part of their code, but nothing in NAMO for MO's.

[garthu]

Haha, no problem... I removed the link, not just based on that, but other reasons... this was just a reminder

Heres another interesting thing that occurred yesterday...

Due to the current housing cycle in South Africa, there has been a significant decrease in the number of customers acquiring new properties. As a result, Absa Home Loans has taken a decision to reduce the number of attorney firms on the conveyancing panel.

I suspect this is based on discounts as opposed to service that the bank can also benefit from - but that is just assumption...

[Wukkie]

I would love to see what the firms are going to do. I know that SBSA used to track the attorney firms. I think the suppliers to teh market also track the frims so that they can see the time to Reg. the banks' always want the fasted turn around time, the sooner the loan is done the sooner they get income.

Well I think the market is in for a lot of changes going forward, and that is both the estate agent and the MO's.

[QUINN]

Not pay the agent... NOT PAY THE AGENT,,,, Huh...

Yup you right though. If i'm not mistaken it is in breach on code of conduct anyway. Funny no one has ever really been able to answer WHY as t how the banks/MO/agents get away with it... everyone seems to avoid the question hot rock style.

Also didn't know you did MO. We are making some hectic changes at the moment, please PM your info and also whats your current % success at mo. We may be looking at new MO's very shortly...

Garth, It has to do with a conflict of interest, if I had my way I would get every buyer in SA to appoint a buyer agent to negotiate on their behalf.
How can you expect the sellers agent to look after the interest of the buyer.
This will sort out a lot of issues. I'm working hard on this so hopefully thing can still be changed while we are in the mood for change.
I can see no conflict of interest is the bank pays the MO for business introduced. This is standard procedure in in sales business.
Will send you my info.
By the way my success rate is 90% on deals I accept on my standard terms.
90% of clients do not qualify if we screen them properly.
Every MO and Agent I know is crying about the NCA lets face it it was to easy to get credit.
If you know your "stuff" you can prepare a client's portfolio so the NCA has no effect.

[QUINN]

Hi Quinn

As for switching, I have no problem with it, but the banks shoudl rather pay a lower intor comm and spead the comm over the bond, this way the MO will maintain client for the bank and would do switching to keep his client happy and not just to make a quick buck.

If you are doing loans for the 4 banks, I thought rasing fees where against the NCA, and I know it is not alllowed accroding to NAMO, (a toothless, blind and deaf watchdog)

I agree with your first statement. But the bank needs to pay market related comm. I will not support a bank if I am not paid at least 2%.
Do the math, see what the bank makes on their home loans over 3 to 5 years.
Not to mention the term of the bond.

Raising fees are not in contravention of the NCA. bUT THAT WAS NOT WHAT i WAS TALKING ABOUT.
I ad value to every deal and here is were most MO and Agents fail.
Example: If i fix your blocked toilet and then offer to fix all you leaking taps and while we are at it lets fit that new shower head, I make 300% on the original sale.

NAMO........WHAT NAMO
Enough said

[Darko]

I can personally understand why banks are not so interested in MO's anymore. Firstly, the cost-benefit analysis of having outsourced originators as opposed to in-house employee-agents I don't believe was scoped correctly. The risk and where it lies was not transparent enough and evidently, the quick-buck MO's have ruined the reputations of those hard working MO's who actually can add value.

2% on a deal. That's very nice IMHO. With rates like that I am not surprised in the least that there was a flood of MO's into the market to make a quick buck. My brother-in-law is a case in point. 2 yrs ago (about 3 months after becoming an MO) he told me that he made R20,000 for 30 mins work which comprised of onnly completing mandatory docs which he then forwarded to the bank for approval. It should come as no surprise to anyone why the MO industry is flooded with soem quick-buck guys.

At 2%, on a R1m bond - that's R20,000 comm. Now that's approx what some in-house mortgage advisors within the bank would earn as CTC. You can not tell me that these in-house advisors would only bring in one bond per month. i.e. Surely it would be cheaper to retain in-house, or if market share is wanted then mobile / satellite advisors? Look where these great volumes of bonds have taken the banks - to the point of not having ANY cash for further homeloans, almost irerspective of your credit standing and earnings. This is very bad news for potential buyers and sellers.

Ultimately, greed is the reason for where we are now.

I am personally in favour of lowering comm for MO's as it will detract attention from the would be quick-buck guy, while keeping the good MO's honest and their hard work and volumes would still give them a good lifestyle. Quite frankly, the amount of money earned for the little work done by some MO's over the last 2 yrs was quite shocking - as I found out from 1st hand experioence. Not saying that its unfair - those were the rules and capitalism is capitalism baby - but we can't be surprised now.

I don't believe that interest rates will fall in 2010 - they will remain at their 2009 close levels for a while at best (just my opinion). SA has a major balancing act to pull in terms of interest rates. Whilst we must stimulate our own economy by reducing the rates (and bear in mind - this does NOT mean the banks will lend now, they don't have money), we also need to look at current account deficits and attracting foreign income and raising demand for ZAR. This is why we , I believe, we did not aggressively dcrease rates like the rest of the world - and rightly so I believe.

[garthu]

I would get every buyer in SA to appoint a buyer agent to negotiate on their behalf.

Now that's one of the first comments i have heard in a long time that makes sense for the industry... Impressed Absolutely right having a buyer agent and seller agent negotiating the deal would really put the seller and buyer in a good seat. Could come with challenges (love to see to hot heads facing down at the negotiating table), but the theory is sound