Message massaging: Brokers and media

With the media, regulators and politicians falling over each other to find a scapegoat for the sub-prime crisis in the US, mortgage brokers have found themselves among those blamed as credit markets continue to tighten. However, as Australian Broker's Kate Carr writes, being caught in the spotlight of a negative media blitz is nothing new for brokers who have struggled to establish themselves as respectable players in the broader mortgage industry

According to MFAA CEO Phil Naylor, working to foster a more positive portrayal of brokers in the media has been an important focus for his organisation.

"I would think probably five years ago there were many more negative stories than there are today," he says.

"We've worked really hard on this over the last couple of years and I think all the good writers out there in the media understand the role of mortgage brokers and understand that it's a positive role, and you tend now mainly to get negative stories where some mortgage broker does something which unfortunately does bring the sector into some sort of disrepute."

Apart from media coverage of brokers convicted of fraud or expelled from the MFAA, Naylor says the media these days tends to take a much more balanced tone on the broking industry.

"In fact most of the stories today are either neutral, in other words they are just factual stories, or they're positive stories about mortgage broking. The negative stories are probably less than a couple of percent," he notes, adding that the MFAA has compiled its own statistics on the media's reporting on brokers.

But Naylor concedes that while the media may be coming round to the importance of brokers, it is always going to be the more negative stories which attract the most attention.

"A lot of people don't sort of notice the good stories or even the neutral stories and I think there are some in the media who have possibly a bias against brokers who either write or allow stories or statistics to be produced which I guess sort of foster this bias."

One recent news story which particularly raised the ire of the brokers focused on Brian Johnson's comments about the salaries of brokers compared to bankers. In the article, which was published in the Australian Financial Review under the title 'Brokers in the slow lane' Johnson asserts that "brokers (are) driving around in Maseratis instead of bankers".

Plan CEO Alex Moulieris said he felt these views were clearly biased.

"Brian Johnson constantly makes snide comments on broker commissions..." he told AB, adding that the idea of brokers racing around in Maseratis, when most earned well under $100K was 'ridiculous'.

In a letter to the editor of the AFR, Naylor argued it was absurd to suggest brokers had more influence over the pricing of commission than the banks.

"Is he seriously suggesting in a market in which willing buyers (banks) and willing sellers (brokers) negotiate a price for broking services that the banks negotiating power has been disadvantaged?" Naylor wrote.

Naylor also cited a recent article in the Sun Herald which claimed broker commissions for inflation, as another example of biased reporting.

"Well I think some of the recent publicity about broker commissions being one of the significant causes of inflation was an over-the-top comment without any substance," he says.

"Now whether the person who wrote that was biased or did that out of ignorance I'm not really sure, but it seemed to have more of a bias attached to it rather than ignorance."

Bad apples and good news stories

But not everyone in the industry feels the media misrepresent the broking industry. Smartline director Joe Sirianni, for one, told AB media bias was not an issue that troubles him.

"I do not believe there is bias against brokers, I think there is just a natural focus on the more sensational or newsworthy issues, which by their nature tend to be the more negative aspects of the industry," he says.

"This is true for brokers, as well as banks, and many other players in our industry, and many other industries."

"It is not something that concerns me, although I do feel for the many very good mortgage brokers who can see their industry shone in a poor light due to the actions of a few brokers."

Minimising the negative impact of the media attention given to brokers involved in fraud or other dodgy activities continues to me one the major challenges for the MFAA, Naylor says.

"We've always focused on the good issues and tried to marginalize the bad, to say 'yes they are bad operators out there' but they are very much in the minority and they are what all the industry, or the majority of the industry are very keen to get rid of," he explains.

For Moulieris the emphasis on negative reporting by the media, while understandable in some ways is harmful to the industry as a whole.

"...I guess when the media reports on any topic it needs to be about an issue so we really can't expect them to do nice warm and fuzzy articles about how good we are, so they write about any shortfall they can find.

"What is disappointing is that when they do identify a bad practice it is reported as an industry wide problem rather than an isolated incident, which it usually is."

However, according to Sirianni there is a lot more brokers themselves could do to counter some of the negative stories.

"There are hundreds of good news stories out there, of mortgage brokers helping out clients in real difficulty, of mortgage brokers giving back to their community, of mortgage brokers building successful businesses off the back of exceptional service," he said.

"We need to get these good news stories out in the public domain, without the sales spin or the need to promote one company over another.

"Smartline has donated over $250,000 to various charities over the last few years, covering some of the neediest people in our community - something that receives no media attention. If other broker companies are doing the same, combined there is a powerful good news story there that is going unreported in the media."

Media education

In a bid to counter the impact of comments made by individuals with an anti-broker agenda, the MFAA strategy has been revolved around attempting to educate journalists on the mortgage industry and where brokers fit in.

"Well look we started out...nearly five years ago meeting with the key media writers, and sat down with them and explained to them how the industry works, the role of the mortgage broker, what we were doing to clean up the industry," Naylor explains.

"I suppose to get them onside, not that we expected any favours, but to get them onside to the extent that they understood what was going on the industry so that they wouldn't just write an article and take an automatic negative view just because the word mortgage brokers was mentioned, which some of them were probably doing in the past."

According to Naylor, a lot of people working in the media back then had little understanding of what a mortgage broker actually did.

He also noted the MFAA had also made it a priority to ensure journalists are aware that brokers themselves support such measures as industry-wide regulation, and notes that his organization had also been vocal in its opposition to predatory lending and broking practices.

But while much of Naylor's media work appears to centre on hosing down negative spin, he is also quick to concede the media is also an important positive tool for the industry as a whole.

"We get a lot of media coverage in regional and smaller suburban newspapers which is good because the customers of our members, they're the people that read those newspapers and anything they see that is positive about the industry is good for us," he says.

Overseas media on brokers

• "The blameworthy also sit in the credit rating agencies who endorsed the debt and extend wide across America to the network of thousands of mortgage brokers and lenders who sold bad mortgages over the past decade." The Times
• "Mortgage brokers threw caution to the wind and wrote mortgages with no downpayments and low initial "teaser" rates to lure those with questionable credit records and doubtful employment ("subprime" loans), all under the assumption of perennially rising real estate prices." Financial Express
• "Mortgage brokers who have had their commission payments cut by some banks are shifting their business to other lenders to get higher payments, it was alleged yesterday." Irish Independent