Wizard conjures new mortgage life

Licensees of fraud-hit home-loan network Wizard are set to relaunch the business as a nationwide mortgage broker under a new brand.

Just before Christmas giant financier GE turned into the Grinch for Wizard licensees, announcing the worldwide credit crunch meant it was pulling out of New Zealand.

While it had found a buyer for its Wizard franchise in Australia, its New Zealand business was to close.

The Serious Fraud Office has since revealed it is investigating allegations of fraud at two Wizard branches Henderson and Lower Hutt after complaints by GE. The alleged offending involved forgery on loan application documents that inflated property values and misrepresented borrowers' financial status.

But Wizard licensee John Lloyd said last week's revelations would not be allowed to deflect the plans of 20 of the Wizard licensees to relaunch under a new brand this week.

That brand was being kept under wraps, and by Friday not even all of the remaining ex-Wizard licensees had seen it.

Lloyd said the indications were that the licensees retained the support and loyalty of their former clients.

"We have been overwhelmed with support from customers. When the news broke [of GE pulling the plug], people were ringing to see how we were."

But although they have loyal former clients, the licensees have no loans.

"The loans are GE, but the client relationships have been with us," Lloyd said.

They plan to poach as many of those loans as they can after the relaunch and licensees would be contacting their former clients as the first step to building their new businesses.

The aim of remaining independent has been tested, said Lloyd, with the licensees having been wooed by some of the big players in the mortgage industry, which he declined to name. "Every mortgage group in the country has been on the phone," he said.

In time, Lloyd said, the licensees hoped to be able to source a line of funding, similar to that provided by GE, so they could start producing their own loans, which would be closer to the Wizard model they signed up for.

John Grant, of GE, said there was tremendous camaraderie among the Wizard licensees, and that the model of providing fuller service and customer support than banks do to achieve their financial objectives still held currency. The only problem was that it was a low turnover business with a high-cost branch network, and that might require culling offices in a bid to make the numbers add up.

There are few nationally recognised mortgage broking brands. There's Mike Pero, by far the best known, which has been working hard to diversify its operation, Roost, owned by AMP, and Adam Parore Mortgages.

Wizard made its name as an aggressive rival to the banks, and was one of the first proponents of 100% home loans.