Our house is burning down, says AMI director

The director of the Association of Intermediaries has compared the mortgage market to a burning building and says urgent action must be taken.

Richard Farr’s comments come on the back of AMI’s credit crunch white paper released last week.

The white paper suggests one possible answer to liquidity issues in the market could be investment from sovereign wealth funds.

Farr says: “Our house is burning down and we should not be debating about who to call but instead be picking up the phone.”

His comments came in response to suggestions from a high ranking source at a leading lender trade body that investment from sovereign wealth funds and the establishment of a gold-standard for mortgage-backed securities are unrealistic.

The source says: “Sovereign wealth funds are an obvious solution, however, they won’t come quickly or easily and could leave the UK markets too dependent on foreign investments.

“Darling proposed gold-stamping MBS earlier this year and people did not respond well to the idea.”

Farr acknowledges the criticism but he believes that globalisation could open doors when it comes to sovereign wealth.

He says: “No one can say how sovereign wealth funds might react to UK investment. We have always looked west for investment, now it’s time to look east. The fact is, investors are driven by strong returns.”

Farr emphasises that the white paper is not an attempt to solve the problem but instead AMI picking up the proverbial phone and calling for input.

He says: “This paper contains “shoots”- ideas to stimulate debate and inspire action. We cannot simply remain frozen in hope that the industry will fix itself. It is in self-harm mode and we need to encourage it to move forward.

“This is not a panacea but a beginning.”