The mortgage broker industry around the world

In Australia, the mortgage broking industry has seen phenomenal growth over the past decade, and this appears to mirror what is happening elsewhere around the world. Here we look at various aspects of the mortgage broking industry internationally.

The United Kingdom
Mortgage brokers in the United Kingdom account for around 60% of all mortgages sold. Since 31 October 2004, mortgage brokers in the UK have been regulated by the Financial Services Authority (FSA). Previously, there was a voluntary regulation regime in place called The Mortgage Code which was administered by the Mortgage Code Compliance Board. However, following several scandals, and the fact that the European Union demanded stricter standards, regulation was taken over by the FSA.

Now, all UK mortgage brokers need to be either authorised by the FSA to provide mortgage advice or be an appointed representative of an authorised company.

The European Union
In the European Union, brokers are subject to limited regulation under the Consumer Credit Directive legislation. Under the legislation, brokers must:

• be registered within the member states in which they operate
• offer or arrange the most appropriate type of credit
• show whether or not they work for a limited number of lenders in any advertising or documents they provide to clients
• not ask for, or receive, brokerage fees from clients if they are paid commission by the lender.

The United States of America
In the United States, there were around 53,000 mortgage broking companies, employing more than 418,700 people in 2004 . Mortgage brokers are the largest source of mortgage lending in the US, accounting for approximately 68% of all home loans . Representing the US mortgage broking industry is the National Association of Mortgage Brokers (NAMB). NAMB has around 27,000 members across the United States and is the only national association representing the mortgage broking industry. Members are bound to a code of ethics that covers:

• honesty and integrity
• professional conduct
• honesty in advertising
• confidentiality
• compliance with the law, and
• disclosure of financial interest.

There is no one body responsible for the regulation of the mortgage broking industry. There are Federal laws and enforcement agencies and State laws and licensing boards. NAMB represents the mortgage broking industry in dealing with the different government regulatory bodies and agencies and regularly testifies before Congress and provides guidance to regulators and legislators.

Canada
In Canada, the Canadian Institute of Mortgage Brokers and Lenders (CIMBL) is the main body representing mortgage brokers. The CIMBL was founded in 1994 and has over 8,500 members. It promotes the professional development of its members and represents mortgage brokers in the media and to government. Regulation and legislation of the mortgage broking industry in Canada is left to the individual provinces.

In 2004, the CIMBL introduced a professional designation for mortgage brokers called an AMP (Accredited Mortgage Professional) designation. The AMP designation aims to provide a higher level of professionalism and credibility to mortgage brokers who earn it. The AMP designation has been enthusiastically taken up by member brokers.

New Zealand

The New Zealand Mortgage Brokers Association represents around 900 mortgage brokers. Founded in 1997, it is a voluntary organisation, and is the main voice of the mortgage broking industry in New Zealand. The mortgage broking industry in New Zealand, while not having as large a slice as other countries, is expanding rapidly and it is estimated that over 30 per cent of all mortgages now originate from a mortgage broker .