Flight to mortgage 'haven'

Whether moving money from risky debenture stocks to contributory mortgages is out of the frying pan and into the fire usually depends on the type of contributory mortgage.

In recent years the Securities Commission has nailed the activities of people peddling contributory mortgages schemes which bent the rules. It's estimated investors have either lost, or had returned late, around $100 million from such dodgy contributory mortgage schemes.

As a result, these products have all but disappeared, and no one (apart from their former promoters) is bemoaning their demise.

However, contributory mortgages as a genre are alive and well and have a good reputation - ie, those structured as unit trusts, with plenty of safeguards built in.

These do the same thing: break up mortgages worth several hundred thousand dollars or more into small chunks. They then sell those chunks on to a pool of small investors who own what is a blue-chip, "safe as houses" investment.

The big difference between the two types of schemes is the number of mortgages in each.

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