Director Keith Dearling says brokers are wasting a lot of time using platforms to search for sub-prime homeloans because the in-built underwriting of these systems cannot cope with the more complex nature of these applications.
He says the main problem is that clients can be quoted unrealistic initial rates from a prime lender and then get turned down, leaving clients with a “footprint” on their credit record saying that they have been turned down for a loan.
Dearling says clients can be confused by being quo-ted a lower rate at the agreement in principle stage but getting a higher rate once their credit status has been checked.
He says there are clear advantages to using these systems – they provide audit trails and centralised information – but advisers should not rely on the accuracy of their information when talking to clients who are likely to end up with sub-prime loans.
Rebstone Mortgage & Finance adviser Marilyn Holmes says she often goes direct to the underwriters of main lenders as sub-prime quotes cannot be sourced.
Mortgage Brain chief executive Mark Lofthouse says: “Anything sub-prime is clearly going to be complex. Clearly, this is where an adviser’s knowledge comes to the fore. Advisers should not always abdicate their knowledge for technology.”
Dearling says: “It is imp-ortant that brokers continue to obtain their initial quotes for sub-prime clients directly from a branded mortgage arranger or len-der. Sourcers should let members know of their shortcomings.”