Matthew Edwards

June 17, 2013

Samantha Cordon is a reporter at Mortgage Introducer

 

The job of a broker may feel like a thankless task some days but put yourself in the shoes of the post crash underwriter.

End of Help to Buy 2 a concern for high LTV

Dealing with tightening internal policy, woolly FCA guidelines and a popularity ranking coming in lower than traffic wardens – no thanks.

So with this in mind, should lenders be opening up a direct, two-way channel of communication to the underwriter, is it needed and can it be respected?

To address the first question – is there a need, I can almost feel the windows of the office rattle with a furious roar from brokers – “yes of course there is a need”. But if the decision is communicated clearly via the BDM or via a general email address why does there need to be another channel open to the broker?

The reason that came up the most from my discussions with brokers is that any small anomaly on an application, despite the broker providing back up documents, wreaks havoc with the turnaround time and can turn a “safe as houses” case into a “unfortunately we cannot proceed” situation.

I’ll give you an example. First-time buyer, 25% deposit, BP oil engineer, £55k per annum with a student loan. He had been earning danger money three months earlier for working in Angola but that bonus was not sustainable because he was now back in the UK so the broker had not included it. But, such a massive increase in salary had caused a huge leap up in his student loan during that time. Despite supplying three months payslips with regular loan payments showing, the underwriter used an average payment which made the mortgage unaffordable.

Direct access to the underwriter was not allowed in this case which resulted in several frustrated calls between the broker and the telephone team and after two weeks of wasted time and long letter of explanation by the broker, the underwriter conceded. If access to the underwriter had been granted on day one the wrinkle in the case could have been ironed out straight away.

It seems the most annoying phrase a broker can hear from their BDM or telephone enquiry team is “yes that seems fine SUBJECT TO UNDERWRITER APPROVAL”. It’s the biggest non-statement of them all and basically means I have no authority but by all means pay us an upfront admin fee and take your chances.

So it seems like a no brainer that a broker should be able to call their underwriter but I am not completely convinced, which brings me onto my second question – can it be respected?

The brutal truth is no. The well worn phrase, why have a burger when there is a steak in fridge, springs to mind. If you have your underwriter’s number look me in the eye and tell me you would not call them up to run a potential deal past them, check they have received your document and more importantly ask when they will look at it.

Then there are of course those brokers who could do with some anger management – we all know one, you might be sitting next to one who is as nice as pie until they pick up the phone and turn into Michael Douglas from the film Falling Down (in the film Douglas plays an unemployed defence worker frustrated with the various flaws he sees in society and begins to psychotically and violently lash out against them – sound familiar?).

 

All of this of course adds to everyone else’s turnaround time because underwriters are not underwriting either through the sheer volume of calls or because they are having a cigarette break after being berated because their nerves are shot to hell.

I know I sound like a primary school teacher but “it spoils it for everyone”.

So what is the answer?  There are a probably a few.  A broker friend of mine who had also been an underwriter for a high street lender wants to change the order of the process. Get the underwriter at the front end assessing the case as soon as it comes in and if the case is acceptable subject to valuation, take the application fee and valuation fee at that time.  No direct access but a more sensible approach.

My own preference would be the underwriter being able to contact the broker, from a group email or number, but the broker cannot contact them. That way, if there is there an irregularity which is detrimental to the case the underwriter can call the broker to discuss the issue but cannot be contacted for progress reports or random queries.

Lenders have to be accountable for decisions and underwriters cannot be untouchable but brokers can’t have it all ways. Unlimited direct access will slow down turnaround times. So as annoying as a one way street can be in the middle of a busy city it may be the only way to speed things for everyone.

 

 

 

 

  • Payam Azadi Niche Advice Limited

    I don’t think we can expect direct access to the volume lenders but certainly niche lenders need to bring this level of interaction back into the fold if they want to see better quality of business and application to completion figures improving.

  • Perhaps lenders need to consider having varying degrees of relationships with Intermediaries again? Specialist Distributors can help in this respect because lenders can become comfortable in controlling a limited number of relationships whereby communication of this nature can be greatly improved and where they know that providing direct access to their Underwriters won’t be abused. Unfortunately where they are dealing with a vast number of brokers then they are bound to encounter these issues.

  • The mortgage market is a little hamstrung by the overbearing regulations and funding restrictions which can hamper common sense underwriting decisions. However there are lessons to learn from the leading secured loan lenders, particularly Shawbrook where underwriting referrals are common place and there is every opportunity to explain the merits of a complicated application to a person who looks for the positives.
    Too many lenders have underwriters who are more interested in emptying their in box than proactively working with a broker to help get a deal to fit. This applies to some bridging lenders aswell where getting to the bottom of the story is paramount. Is it therefore any wonder that Shawbrook are the leading secured lender and most preferred by packagers.
    Advice may be steered by product selection, price etc but, in my opinion, if a decider is needed, good people, a slick process and good working relationships with underwriters will win every time. This is not an advert for SB by the way.

  • Charles Haresnape

    It would fantastic if brokers could always access underwriters but the large lenders would find this costly, inefficient and not necessary when what they really want is a computer says yes or no relationship. Increasingly BDM are relationship managers, giving guidance on criteria, but are pretty powerless to give firm indications of acceptability.

    Lenders like Aldermore can and do offer this access. Especially when the lender has a different proposition, it is important to give the broker a quicker way of checking if a deal is do-able.

  • A really good piece highlighting one of the major issues we face at present. As ever, communication is key and whilst brokers can sometimes be blamed for not "packaging" a case well enough for approval, there will always be instances where a case requires manual underwriting for logic to be applied and the right decision to be forthcoming. As criteria tightens, so too would rejection and if everyone had direct access it would be abused and ultimately slow down turnaround times even more, but a system needs to be in place for access to underwriters in extenuating circumstances. The key lies in identifying those circumstances and not abiding the system.

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  • Wearing my loan hat again, it seems a system is needed in the mortgage sector which can source for the whole market and allow the straightforward cases through but also be sophisticated enough to flag up cases where a referral to an underwriter is likely to succeed. This system exists in the secured loan sector and the referral rules have been built purely by experience of various individuals giving feedback on where lenders will consider exceptions. (somewhat easier as we only have 19 lenders to deal with and around 300 loan plans.) However it really makes life easier for the broker, identifies sales opportunities which might otherwise have been missed, and takes the pressure off lender underwriters dealing with no hope cases.

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  • Great article Sam, very thought and comment provoking!
    As a lender why wouldn’t you let the broker have access to the underwriter?
    At Masthaven we feel it is an integral part of the business to ensure that communication channels are open to all. This allows for smoother and quicker transactions, plus we get to find out what the real story is behind the deal.

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  • Simon Proctor

    I’m not so sure that this is a question of increasing regulation on the market and more of more and more erosion of underwriters ability to make a decision. Less and less Underwriters especially in volume processes have the ability to step outside of the proscribed guidelines from the policy and data analytics teams and make this kind of common sense decision. Whilst it would seem easy for the broker or the BDM for the decision to be made, in reality only the head of underwriting may have that level of discretion and whilst opening up the lines of communication work, my experience of this was I quickly became inundated with issues to resolve. One to take up in the market forums me thinks

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