The club does intend to charge brokers to receive advance fees on exchange instead of completion.
Optoma’s managing director, Matthew Bright, described the new system as a ‘proc fee management system’ which would be run via a software solution, allowing brokers to keep track of their commission payments.
He said brokers would be charged according to the size of their proc fee.
“The average proc fee is between £450 and £600. For this we will charge £30 to pay on exchange. This compares with most mortgage clubs who would charge around £75,” he said.
Bright continued: “We consider the proc fee on mortgage club entirely the introducer’s income, not something to be skimmed by the club’s operator. Optoma will therefore ensure intermediaries income is maximised by paying on the full sum negotiated by Optoma with the lender.”
Stuart Johnson, head of sales and marketing at The Mortgage Operation (TMO), said while it was an interesting concept he would not be changing the way TMO’s sticker club operated.
“This is not the first time that a club has paid gross, though usually it is done by companies who use mortgages as loss leaders to sell other financial products like insurance,” he said.
Kevin Paterson, managing director of Park Row Mortgages, dismissed the scheme as ‘smoke and mirrors’. “The club has to take a cut at some point or there would be no point in doing it,” said Paterson.
Commenting on the development Julian Wells, head of marketing at Mortgages plc, said: “Mortgage clubs are all looking for an extra edge in the run-up to regulation. This can only benefit the broker. From a lender perspective this kind of development leaves us relatively unaffected.”
