By MARK FRYER
Another contributory mortgage scheme has fallen foul of the Securities Commission.
The commission has ordered a Whangarei-based firm, The Mortgage Financier, to stop acting as a mortgage broker in regard to a development in Parliament St, Auckland.
The commission says more than 1000 people invested in the contributory mortgage
scheme, with the money to be used to build an apartment and car-parking building.
Commission chairman Jane Diplock said investors had put in more than $20 million.
Although The Mortgage Financier was the broker, the money was raised from investors via another company, Money Managers.
The commission says it has banned advertisements for the Parliament St contributory mortgage and passed management of the scheme over to a Christchurch firm, Crichton Horne and Associates.
The commission said it stepped in because the valuation for the contributory mortgage was "likely to deceive, mislead or confuse investors".
Also, contributions were paid to the developer before the full amount of the mortgage had been raised, when not enough money had been raised to finish the project and when the broker knew, or should have known, that the valuation report was false or misleading.
A director of The Mortgage Financier, Beau Davidson, said a confidentiality order prevented him from commenting on the commission's action.
But he said none of the firm's other mortgages were under investigation.
Diplock said it was up to the new broker to decide whether to press on with the project or try to return investors' money.
"If the project is able to be salvaged and is a workable proposition then, obviously, the broker will try hard, I'm sure, to make it work," she said.
Crichton Horne executive David Crichton said it was too early to say what would happen.
The firm would write to investors this week.
The Parliament St development has also been plagued by construction problems.
In January, a worker died when a bank collapsed.
A second collapse in February prompted Occupational Safety and Health to order the site closed.
