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Package up your troubles

In the specialist mortgage sector, the role of packagers is vital. The

majority of specialist lenders do not accept applications direct from

individual advisers but depend on packagers to screen potential borrowers

and submit good quality applications backed up with the correct

documentation.

In this area of the mortgage market, packaging is no easy business and

packagers often have to submit as many as four applications for every one

that is accepted.

Yet, despite being the indispensable link between mortgage introducer and

lender, packagers have remained a surprisingly silent voice in the debates

which have recently been aired.

Southern Pacific Mortgage surveyed packagers and felt it only right that

they had the opportunity to redress this imbalance by airing some of their

views on lender servicing levels and consumer awareness of issues which

affect the mortgage decision.

The packagers cited the need for faster response times and direct access

to underwriters as the two main areas for improvement. They also encouraged

lenders to embrace technology more fully and speed up development

programmes to fulfil the potential that technology can offer.

Above all, they exploded the myth that mainstream lenders understand and

are able to cater for the needs of non-standard or non-conforming

borrowers.

My own conversations with packagers confirm these findings. I was involved

in mainstream building society lending for many years and have experience

of the inflexible way that credit scoring is applied. This method of

accepting or rejecting applications is often rigidly adhered to and the

computer&#39s decision is final.

This way of operating is totally unsuitable for sub-prime mortgages, where

every case needs to be underwritten on its own merits. Perhaps 10 years

ago, the mainstream lenders could still have offered specialist mortgage

lending but now decision-making is too automated.

Brentwood-based FastCom Mortgage Packaging sales and marketing director

Paul Brett believes this demonstrates a need for “sticking to the knitting”

and that borrowers with specialist needs require experienced specialist

help, particularly when it comes to interpreting underwriting criteria and

cle-arly and fairly assessing credit profiles.

The mainstream lenders should continue to service the areas they know best

and leave specialist mortgage lending to the companies that have built up

valuable insight and experience over many years.

Regarding response times to submitted cases, 85 per cent of the packagers

surveyed believe lenders have to make improvements to response times. Some

76 per cent said they would like to see a medium amount or a lot of

improvement in terms of access to lenders&#39 underwriters to discuss cases

and help solve any problems that may arise with applications.

Again, when asked about the use of technology to enhance service levels,

many lenders were found wanting. Over half the packagers said lenders need

to improve a lot when it comes to providing online access to case progress

and another 22 per cent said they have to improve significantly.

Finally, the crucial question of quick lending decisions also highlighted

real room for improvement as packagers and brokers strive to satisfy the

needs of their customers.

First Union Mortgages director Adam Brand says a fast answer from the

lender is essential to success in specialist mortgage lending, especially

sub-prime.

He says: “We need to have an answer within 24 hours to meet the needs of

our clients (the mortgage introducers) and their end-customers. At this end

of the market, we are handling clients who need quick lending decisions as

they may have already been kept waiting by other lenders before being

rejected by conventional credit scoring methods.

“We are looking for a quick yes but, if it is going to be no, then we need

that answer quickly too, so we can speedily refer the case on to another

lender.”

In an age when service is everything, we have found that packagers feel

the lending community still has a long way to go to deliver the kind of

service they need. The consumer should be able to expect quick lending

decisions and be able to see how their cases are progressing as a right and

not as a privilege.

The current focus on internet-based mortgages within the lending community

is all well and good but the experience of packagers casts real doubt on

lenders&#39 abilities to make the most of new technology when providing online

access to cases.

It is up to individual mortgage lenders to address their service levels,

so packagers feel part of the mortgage process and not left to the side

feeling disgruntled, unwelcome and frustrated.

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