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Strike a poso

If moving home is one of the most stressful things that most people do in their lives, there can be little doubt that applying for the mortgage is one of the most stressful parts of that process.

Recent research carried out by You Gov for GMAC-RFC revealed that 72 per cent of mortgage borrowers felt that delays in the process caused them unnecessary stress.

Borrowers will often communicate their stress and frustration to their mortgage adviser so the ability to hand the applicant an uncond-itional offer on the day they apply will sound attractive to advisers and consumers.

The idea of a lender being able to generate an offer that could be printed in a broker’s office has been seen as something of a Nirvana for many years. I can recall the first time someone suggested to me that it would soon be possible and that was at least 20 years ago.

Technology is an area where it often takes longer than expected for reality to catch up with the spin but it is to the considerable credit of GMAC-RFC’that it has been the first lender to make such promises a reality.

Its new Point Of Sale Offer (Poso) system is an evolution of the Point Of Sale Decision originally launched two years ago. Unlike systems offered by many lenders, GMAC took the decision not to offer decisions or agreements in principle but to use its service to deliver decisions that are binding on the lender, subject only to valuation and no fraud coming to light.

The POSD system has, according to GMAC, enabled it to double the volume of mortgage business it is transacting without increasing the number of staff. Equally, it claims that the average mortgage advice firm can save £35,000 a year per adviser from the time savings that are created. This, it claims, will enable an adviser to carry out an extra two cases per month.

The new point of sale system now allows for automated valuation of properties and uses electronic identification and verification processes to protect against fraud.

Advisers are frequently concerned over whether a system will leave footprint on credit-reference systems when a case is processed. This is the case if the system’s full functionality is used but a KFI can also be obtained without a footprint where a binding decision is not required.

The service includes a cascade option to allow people to move from near-prime downward to less attractive products.

GMAC anticipates that Poso will allow between 50 to 60 per cent of cases to be eligible for an instant offer. The system will first carry out the necessary credit score to arrive at a lending decision. It then continues to the identity checks, using Experian to validate passport and/or driving licence information before proceeding to property details. At this stage, the system will indicate that either an automated valuation can be used or that a physical valuation will be required. If a physical valuation is required, the adviser has the option to defer proceeding with this.

This service is now available for all GMAC products except buy to let. Valuation fees can be paid by debit or credit card and are the same, regardless of whether an automated or physical valuation has been used. Even in cases where an automated valuation cannot be used, GMAC claims the service will be able to offer significant time savings as the valuer is instructed more quickly.

The system appears to follow a logical flow in assembling the information and the navigation clearly shows exactly what has been done and the progress of applications.

Once Poso has verified that an offer can be made using an automated valuation, further information is requested in order that an offer can be generated. Even if the automated process cannot be used, this information is still requested in order to streamline the offer process when it is available. Applicants can use either their own solicitors or use one from an online panel to be sure that the solicitor is acceptable to GMAC.

All information keyed in is presented back for data validation. Any requirements as part of post-offer conditions are listed at this point, for example, requiring physical ID checks if E-ID verification has not worked.

Having completed all the additional information, the system will then generate an offer. As this is produced on the system, it can be printed in the broker’s office and a PDF file is generated for record purposes.

Hard copies are also sent from GMAC’s offices in Bracknell to the applicant, their solicitor and the introducer. As part of the process, a hard copy of the application has to be printed for signature and then mailed to GMAC.

Where physical valuations are still used, GMAC will phone the adviser once thisis received and, assuming all is as it should be, the adviser can go back into the system to verify information as submitted and then proceed to generate the offer as outlined above.

GMAC is currently offering links to Mortgage Brain and Trigold for decisions but this does not extend to the offer process. I believe these would be a valuable and natural extension of such a service. Increasingly, I am seeing lenders rolling out additional services, such as affordability, that do not allow for the best use of sourcing systems.

This is regrettable as they have a very important role to play both in the advice processes and in meeting adviser’s record-keeping obligations from the compliance perspective.

I would be very encouraged to see either GMAC or other lenders make better use of sourcing systems as they develop these new services further.

Although GMAC is the first to deliver same-day offers, it will certainly not be the last. Edeus is set to go ahead with what it claims will be a market-leading system.

My own organisation, the Financial Technology Research Centre, is currently undertaking a major study into the areas of e-commerce services that advisers find most important when selecting lenders in the self-cert, non-conforming sub-prime market.

This research will be used as the benchmarks for e-Excellence ratings for each of these sectors, to be published in a special Money Marketing supplement in January 2007.

In the course of this research, we will be paying particular attention to what advisers consider most important for these new systems to deliver.

When I met with him recently, GMAC director of marketing Jeff Knight acknowledged that there “could be as many as seven lenders” using this type of service by the end of the first quarter of next year, so it looks as if e-commerce in the mortgage market could be set for a rapid evolution.

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