Some sort of restructuring rather than a sale of Wizard Home Loans appears to be on the horizon, though the intentions of the firm's owner, GE Money, and the chair of its board, Mark Bouris, still are not too clear.
AAP yesterday reported that GE Money's Australian chief executive Mike Cutter said a strategic review of the Wizard business would consider options of selling the home loan business, establishing a strategic partnership or a joint venture.
"We do see that there are multiple potential structures that we could undertake with a number of different potential partners," Cutter said.
"We've made no pre-determination as to which particular model will be adopted. This is a process which will take a number of months."
The Sydney Morning Herald quoted Bouris as saying "I am engaged to assist GE Money facilitate a joint venture, partnership or sale.
"I am not a buyer and have no agreement or understanding with anyone to acquire all or a part of the business.
"If … an interested party seeks my participation, as GE did when it acquired AFIG in 2004, I would consider it."
The Australian reported that Wizard's management might outline plans to loosen credit policies at a meeting of franchisees in Sydney today.
New business originated through Wizard Home Loan outlets has been soft for almost a year, with the issues, starting with weak leads, pre-dating the credit crunch.
More recent talk is that most business now originated through Wizard is for other lenders, with Wizard acting as broker and earning a commission, rather than GE-funded loans.
Franchisees also complain of tighter lending policies by GE in recent months, though on paper the rates and fees on Wizard's loans are reasonably attractive.
The Wizard Smart Choice ongoing variable loan is around ten points lower than the major banks' at 9.39 per cent, a 9.44 per cent comparison rate, with no monthly fees but a $100 application and $660 settlement charge.
On the other hand borrowers have sought the safety blanket of seeking loans with the larger banks in recent months, with the perception future rate increases will be less than with smaller lenders such as Wizard.
Wizard also offers some cheaper options with the Clear Value variable 8.81 per cent, with no monthly fees but a $100 application fee and a $660 loan settlement fee. The comparison rate is 8.86 per cent applicable to owner occupied, investment and re-financers.
Discharge fees expire after four years, with 1.5 per cent charged within the first twelve months. The loan can be upgraded to Smart Choice.
The Wizard low documentation offering is the Fastdoc 70 Loan for self-employed applicants with less than two years' trading. It has a variable rate of 9.79 per cent, with no monthly fees but a $100 application and $795 loan settlement - with a comparison rate of 9.85 per cent.