Packagers and brokers have retaliated against comments made by an IFA who attacked lenders in the sub-prime market and claimed those that earn higher fees from those in bad debts could be seen as immoral.
Harry Katz, principal at Norwest Consultants, says that those who earn higher fees from those who already have solvency issues could even be classed as immoral.
He also believes of the prospective client is hard to place it means they shouldn’t have the loan in the first place.
Vic Jannels, group executive chairman at All Types of Mortgages, says it is sad to see another supposedly knowledgeable and high profile individual showing an unpalatable lack of regard and care for circumstances borrowers might find themselves in.
He says: “Has Mr Katz heard of redundancy, divorce, ill health or other similar circumstances as a result of which borrowers might find themselves in difficulties?
“I have sympathy with his assertion that bad debt, if wilfully obtained, is a cause for shame but there are examples where people have this blight on their credit history without actively seeking it and that is where I find Mr Katz to have fault, in that, as a professional advisor, his task is to help and advise clients. God help us if a doctor refused to treat a sick patient who may have caught a disease simply by being in the wrong place at the wrong time. Can you imagine him saying, saying, “Sorry old son, I don’t treat sick people like you.”
He adds: “Here is a heartfelt message to Mr Katz. Instead of seeking to denigrate sectors of the mortgage industry and those who seek to eke a fair living from it, why not try something new? Like finding ways for us to work together to try and regain confidence in the sector to the benefit of the one person who pays all our salaries, the consumer.”
Lorraine Niederlag from Cedar Tree Finance, adds: “When Harry Katz took out his first mortgage I suspect house prices were no-where near what they are today in relation to the income multiples that are now needed.
“If the sub-prime mortgage market did not exist the rich would get richer as these home owners would be forced to rent off the prime clients.”
She adds: “Harry Katz has obviously never placed a sub-prime mortgage and does not understand the role of the adviser and the packager to make sure the best possible mortgage deal is obtained. Mortgage packagers merely exist to meet the need of the “laws of economics” so that lenders do not have to pay staff salaries during times of low business demands and earn a bad reputation for business backlog during times of high demand. The packager fulfils this role, effectively on a commission only basis for a number of lenders.
“I’m proud to represent customers from all sectors of economic life in their desire to own their own home.”