Review of governance in the South African mortgage origination industry and suggested framework for a governance body
Thesis (MBA) -- Stellenbosch University, 2012.
ENGLISH ABSTRACT: The elements of concern around ethics and how individuals conducted business were highlighted as key contributors to the economic recession experienced globally, especially after the sub-prime crisis in 2008. The subject matter of corporate governance and good governance has therefore become highly relevant. South Africa, although affected by the economic crisis, was not as affected as the United States and most first-world and developed countries, due to strong legislation and governance within our financial frameworks. Although South Africa was not exempt from the fallout, and our real estate market also entered an economic recession, the impact was far less than in the United States and other developed countries. This research study explores one of the elements or stakeholders of the real estate market, namely, the mortgage origination industry and the lack of a governance framework for this industry. The advantages and benefits to the industry should a framework be adapted are investigated. The mortgage origination industry in South Africa, and even globally, is a relatively new business concept, which emerged approximately ten years ago. Most countries have adopted a governance and regulatory framework; however, South Africa has not implemented an accepted industry body that has been properly scoped and implemented and is adding material benefit. The National Association of Mortgage Originators (NAMO) was a body established under the pretences of becoming the regulatory framework; however, this has fallen well short of expectations and has been subject to much ridicule and lacks any integrity. In reviewing the various governance models across the globe and even more specifically the mortgage industry frameworks, this report presents a proposed framework, and argues that the appropriate model in the South African environment would be one of self-regulation, as opposed to a legislated framework. The benefits and advantages of the self-regulated framework outweigh the legislative frameworks and are presented as the appropriate model for the South African mortgage origination industry.