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Mortgage broking sector to survive another day

by Alexandra Cain | 21 Aug 2019
Mortgage brokers are welcoming the delay in outlawing trailing commissions, according to one industry leader who insists their role is critical in the home loans economy.

CoreLogic International chief executive Lisa Claes said: “It appears we've landed on a fixed cash up-front fee. For the moment, a trailing commission will remain in place, with commitment to revisit it in future years.
 
“Mortgage brokers play a critical role in the home lending value chain. Brokers are responsible for originating 60 per cent of home loans in this market. 

“They also play an important role ensuring borrowers can service their loans by checking income streams and expenses,” she adds. 
 
Claes says it’s important for the community to understand the value mortgage brokers add to the lending process. They avoid the need for consumers to compare and contrast loans by themselves, and help explain the complexity around loans including rates and fees, loan types, deposit amounts and repayment schedules.
 
“Brokers have a unique skill matching borrowers' particular needs to a lending product. The responsible lending regime also requires brokers to make suitable loan recommendations for borrowers. 

“Additionally, brokers have brought price pressure into the market, which has benefited customers.”
 
Turning to the CoreLogic business, she says the company is very focused on introducing innovations to its product suite at this point in the market cycle to help banks facilitate growth strategies and maintain their desired risk profile.
 
“We partner with Moody Analytics and have developed clever market forecasting tools. 

“Although there’s been a slowdown in the property market, brokers and banks still want to grow their balance sheets sustainably. This environment intensifies their appetite for targeting tools that can show where good value may lie in terms of preferred geographies or construction types.”
 
Another tool facilitates the overlay of the entirety of a bank’s property portfolio onto CoreLogic’s analytics to ascertain the bank’s current exposure to segments of the markets. This analysis enables a bank to determine if they may be over-exposed to certain markets and is a valuable filter in terms of when making decisions about prospective lending decisions. This tool also supports different ways of valuing a property. For instance, it will indicate if a property is located in a high-value area and may indicate that an alternative valuation method such as electronic or desktop valuation, as opposed to an on-site valuation, may be appropriate, which helps banks improve efficiencies. 
 
“There are many quivers in our armoury that can be of enormous value to financial services providers in this environment,” says Claes.
 
Last year a CoreLogic customer, property valuation firm LMW was involved in a cyber breach that was salutary to the financial services sector in terms of how to ensure customer data remains safe.
 
“Financial services businesses are highly diligent when handling third-party data, including customer data. Data is an asset that needs to be managed and handled very carefully. We take it extremely seriously,” she says.
 
Claes says when it comes to managing data, it’s essential to ensure systems are robust. “Data management is not a set and forget activity. It requires continual, rigorous monitoring. It’s important to remember systems are operated by human beings and human beings are fallible so it’s important to ensure the right calibre of people are managing that data. Hygiene factors such as access protocols must be constantly checked and audited by credible third parties on a regular basis.
 
“It’s also important to continue to invest in your systems and strengthen the moat around your castle. Data security is front and centre as a boardroom issue. It's not something that's delegated to the compliance department; it's a critical business activity. 
 
LMW is a timely reminder for everyone in the financial services industry about the adverse impact data breaches can have in terms of business health.”

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