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Diverse DB

Lender Profile – Guy Anker reports on DB Mortgages’ move into the broker market

DB Mortgages expects to be fully operational in the broker market by next March.

The lender, backed by investment bank giant Deutsche Bank, launched in April under the stewardship of Bill Dudgeon, former managing director at The Mortgage Business, but is in the middle of a phased launch which it says will allow it to deal with any teething problems it may have at the outset.

DB presently operates through around over 150 packagers – a total that has slowly crept up over the last few months – but it wants to branch out into the broker sector at the end of the first quarter next year.

The next few months will see the company transform its intermediary website while it is also toying with the idea of introducing instant offers via automated valuation models.

Managing director Dudgeon says: “We call it a phased launch. In April, we had just three packagers and in July there were at 20 and now we are at over 150.

“The next phase is the first quarter next year when we roll out to the broker market and bring further technology to packagers. We will have on-site underwriting and we are looking for underwriters. Towards the end of the first quarter, we will be fully up and running. The date can move but we are looking to the end of March.

“At the moment, the website is totally designed for packagers and they can submit a decision in principle online but we only then deal with it on paper. The next stage is decisions in principle and applications online for everyone but we will keep the paper option open.”

With those changes, DB aims to ensure its service is up to scratch after coming under attack from some quarters over the past few months about its quality of service. But Dudgeon stresses that any new firm will experience teething problems, hence the drip-feed start.

He says: “We felt that we would like to launch slowly and therefore if there are initial problems then they are not damaging.”

The lender is also seeing major changes on the personnel side. Dudgeon says: “It has been a fairly rapid growth period. There were only four of us in January but by spring we had 20 and then, at one stage, every three weeks we seemed to have about 10 at a time coming through the door. Now we have 140 staff.”

Dudgeon quit TMB in September last year, along with three other senior figures, to join DB. The other three were TMB sales and marketing director Mark Bergin, strategy and planning director David Parry and operations director Paul Graham.

Further HBOS staff jumped ship to join the expanding DB team in Chester over the next few months. Dudgeon says his smooth departure allowed him to start working with DB by January to help get the business off the ground despite a 12-month non-compete clause.

He explains: “We told HBOS intermediaries managing director Nigel Stockton in August we were leaving but we did not want to cut and run. We were disappointed to leave but we decided to work with them for a month.

“I was on 12-month non-compete clause but they let me go after three. We did it differently to Michael Bolton when he left BM Solutions so we could go after three months. We parted on good terms with HBOS.”

Dudgeon does, however, cite similarities between the DB and Edeus when it comes to choosing packagers. Edeus has been particularly vocal over the last few months in stressing that it does not want to deal with large parts of the packager market that it believes are offering poor value.

Dudgeon says: “We will probably end up with 200 packagers. We are rigorous about which packagers we can and cannot use. When we go direct to the broker market, that will include mortgage clubs and networks.”

On products, DB has no plans to go beyond its current batch of buy-to-let, self cert and sub-prime range but it will expand the choices it offers under those business lines. It recently relaxed its criteria, such as allowing CCJs up to £500 on nearprime cases, up from the previous £150 maximum.

The lender also points to its relationship with outsourcing firm Vertex as pivotal to its growth. The five-year partnership sees Vertex handling DB’s mail, back-office functions, pro-cessing and data entry to free DB’s staff to underwrite, sell and manage the credit risk.

Dudgeon claims: “No one has done the partnership like we have with Vertex in the UK. We knew Vertex’s technology strengths from our HBOS days and that has let us get up and running quickly.”

DB’s technology capability could develop further with an AVM to provide instant offers. Dudgeon says: “We have had presentations from four major AVM providers by the end of 2007 we will have it. AVMs are easy but even in the States they are only useful for 7 per cent of mortgages so AVMs will not be a key part of the proposition.”

The firm is considering a retention scheme but that it is not a top priority at present. It is also planning its first securitisation early next year but stresses that when it goes out to the wider broker market it will not sacrifice its commitment to packagers.

Dudgeon concludes: “We have shown affinity to the packager market so when direct proposition goes live, it is not at the expense of packaging – it will just be a more diverse distribution.”

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