Following claims that housing completions in the UK are predicted to plummet by 20 per cent in 2008, the Centre for Economics and Business Research has gone on to say that the shortfall in completions will be one of the key factors driving the housing market recovery from 2010 onwards.
The onus is, therefore, increasingly on mortgage lenders and brokers to push through cases and get them placed. However, with poor economic conditions prevailing, lenders and brokers are suffering and finding it difficult.
The impact of the credit crunch has led to products being withdrawn from the market, leaving brokers with only a limited product range to offer their clients. And, with many lenders now going directly to borrowers, there are not as many distributors and networks around to help source business, with sub-prime cases particularly hard to place.
Exploit opportunities
However, packagers and brokers can help themselves despite the current situation. There are a number of distributors and intermediaries that are shy of exploiting every opportunity open to them and who don’t necessarily follow up the cases once they have been offered.
But, why do all of that work if the case ends up not reaching completion and the broker ends up unrewarded? Quite often, if the broker persisted he could actually do very well as there is a wealth of business to be written. Even in the current climate there are still real opportunities to place business and thrive, especially if a case has neared completion. But, all too often the easy work is getting the offer out. It often involves much harder work to get the case to completion. Brokers and packagers need to be determined to see cases through to completion, regardless of obstacles which appear to disrupt the smooth running of the administrative process.
Compliance
Of course, there are a number of reasons why a case might not reach completion. First, compliance demands that a whole set of documentation must be provided in order that the process can be completed successfully. Brokers and packagers need to have a rigorous and failsafe system available to them that can prepare complete and accurate paperwork in a cost effective and timely manner. For successful completion, the broker needs to know exactly what documents are required, as well as have access to technology that can facilitate streamlined processing of those documents towards a successful conclusion.
Secondly, the broker / packager needs to have a strong relationship with all key people involved in the process. Lack of communication and misunderstandings with, say the solicitors, for example, can slow down the process significantly, creating a duplication of work or a logjam of paperwork to wade through. Saying that, brokers and packagers need to create a clear communication channel between them, and it is the responsibility of the packager to chase brokers for any outstanding information that the lender might need to complete the case.
Communication
However, by using their contacts within the completions team and through maintaining good, regular communication with the customer, lender, packager and solicitor, there are ways in which a broker can identify such problems early on in the completions process, thus smoothing the way forward. It is important to remember that it is a lender’s completion team that helps to ensure that the broker gets paid, so having a good relationship with the team will be particularly advantageous to the broker. AToM works closely with lenders to ensure brokers are paid out as quickly as possible.
Technology is also an integral part to the successful completion of a case. Although purses have been temporarily shut due to the credit crunch, there are still a number of brokers and packagers who recognise that this is one ‘spend’ which is very important to ensure their place in the future mortgage market. The importance of having a seamless and accurate completions system, underpinned by state-of-the-art technology, is recognised as a sound investment.
Technology can dramatically reduce both time and expense. A number of packagers, including AToM, have systems which diary chase and which notify staff 60, 30 and 14 days before offer expiry. As a result, brokers are consistently reminded and updated. This is critical in today’s market as lenders no longer tend to extend offers. Any offer that expires now usually requires a rescore against the latest criteria, which is likely to have changed substantially since the original application.
Conversion
Finally, conversion rates are important. Packagers and brokers are monitored by lenders to ensure that they are organisations who can convert business effectively. For this reason the broker really needs to seek out opportunities in which he can maximise sales volumes – and then ensure that all of the cases are completed successfully.
The short term prospects for the housing market look gloomy, with estate agent Knight Frank revealing that mortgage sales volumes plummeted 60 per cent in May, and confidence falling to an all-time low. The sharp drop in building completions that we are currently seeing is a trend likely to continue – at least in the foreseeable future. In the long term however, possible interest rate cuts in 2009 and a relaxing of the current mortgage rationing will help boost market demand, and prices may recover sooner than one might think.
But, until then, it is imperative that brokers and packagers take a proactive stance and explore every opportunity to boost income. This will include sharpening up their business practices, exploiting cross-selling opportunities, building long-term relationships with lenders and clients and, most importantly, looking for new ways to enhance the completions process.
A Lender’s View
Mark Snape, director of sales, packager division, GE Money Home Lending, give his own view of how brokers can increase the likelihood of their cases actually completing
GE Money Home Lending recognises that in the current mortgage market every completion is even more precious than it was before and takes its commitment to working closely with brokers and packagers very seriously.
However for GE it is still a case of focusing on existing best practice standards and ensuring that processes are followed so deals do not fall by the wayside.
Of course it is not always that simple but if all parties work together then it can be done.
The moment of truth is the point at which an offer is made. Once that happens all parties should ensure all outstanding documents from solicitors and customers are chased as soon as possible.
However vital work can be done in the run-up to the offer being made which will make sure the process runs smoothly. A crucial point is ensuring that in the case of remortgages the customer has given their existing lender adequate notice to repay – generally a month is best.
When the offer is made the customer should be asked for a preferred completion date and every effort made to ensure the customer has returned documents required by lenders or solicitors.
Solicitors need to be chased to request a repayment figure from the existing lender and the customer has to make contact with the solicitor and be advised of a completion date. With that preparatory work in place the process should run smoothly.
