James Lindon-Travers of Lindon-Travers Associates, one of the country's top Mortgage Brokers believes that lack of underwriting expertise results in applications being denied by lenders. In a letter to Mortgage Strategy, he writes:
Lenders continually claim that the lack of wholesale funds and low levels of redemptions means they remain restrained. Yet a number of lenders missed their 2010 targets, showing there is more to this than meets the eye.
In a time when lenders have had to reinvent their underwriting expertise, this in itself causes further log jams. Gone are the days when every underwriting department had someone at the door with a green flag, waving every case through - whether it be fast-track, low credit score, self-cert or sub prime. With lenders showing off to the Financial Services Authority about how cautious they are in all aspects of risk, we must question how underwriting works in the new era.
One lender's head of risk told our firm that 75% of all his underwriters had been in the post for less than 12 months - which is concerning. He added that he was training them up as quickly as possible. But we established that they are typically aged 27-30, single or maybe living with a partner, no children and most worrying, living in rented accommodation.
I retorted, how can someone who has not been to the university of life, be expected to make a balanced underwriting decision on a mortgage proposal for an applicant making a life-changing decision.
He quickly defended himself by saying that, like all lenders, it had an underwriting guide. If a particular scenario is not in its guide - it does not lend. This results in cases that may fall outside of the lender's standard underwriting being declined. There are few opportunities where a broker can have a meaningful conversation with a decision maker with a mandate.
Luckily in my practise, with the volumes of business we complete, we have access to the right people and more often than not cases proceed.
But there are thousands of brokers doing acceptable levels of mortgage business who do not get past the call centre staff. If this continues, they will leave the industry.
I recently sat in on a further advance meeting with a client at a High Street lender. The adviser's expertise seemed lacking and again he was probably powerless to intervene in a case, a little outside the bank's criteria.
Once again the distribution capacity of the lenders will be challenging due to a general lack of quality staff.
The government's Project Merlin claims to make substantially higher levels of funding available in the SME / corporate arena.
But once more, the lenders are challenged by their own staff who seem unable to engage clients effectively, understand their businesses and subsequently fail to lend.
In time this lack of experience with lenders could benefit competent mortgage brokers, but we need the lenders to accept that good quality distribution can be achieved through quality brokers with experience and knowledge of their market.
Member since: 10th July 2012
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