Return of the pac
History has a funny way of repeating itself. In the ‘olden’ days, packagers became popular because brokers didn’t know who the non-conforming lenders were, where to find them, or what schemes they offered. Back then, packagers seemed to almost magically find solutions from obsure lenders, for clients who previously stood no chance of obtaining mortgage finance. Understandably, brokers fell in love.
Then, as the industry matured, sourcing systems became more sophisticated and the existence of non-conforming lenders appeared at least somewhere. But the sourcing systems were not able to provide accurate solutions from these specialist lenders, and this kept packagers foremost in intermediaries hearts for quite some time.
After the debates surrounding whether or not packagers should be regulated subsided, things didn’t change much, except that access to quality distribution became a strategic issue that needed addressing by the packagers themselves.
But then came the non-conforming lenders’ own, online systems, which presented the biggest potential threat yet to the existence of packagers. Things were looking ominous.
While there were just one or two lenders with these systems, brokers could argue, even under regulation, that their clients were after a fast decision, and that’s why these particular lenders were recommended. But what happened next? Lenders needed to compete with each other and so, more and more started to release their own online systems, and there are now at least six lenders who can give varying degrees of rapid assistance, online, with more on the way. Now brokers are in a quandry. They like fast direct access but they have to source the most suitable products under regulation. Speed is no longer a good enough reason to recommend because speed can be achieved with a growing number of lenders. So it’s once again back to ‘thorough research city’.
In a regulated world, brokers must technically research all the available options, including those lenders that are not online, before making a suitable recommendation to their clients. If they don’t, and the FSA find out, then they won’t be broking mortgages for much longer.
Most brokers have a deep, burning desire to try and make their lives easier under regulation, not harder. That’s why so many have joined networks. All the required research; keying in and out of lots of different lenders systems, lots of different case-tracking systems for pipeline progress, speaking to all the available off-line lenders, avoiding automatic cascading, remembering countless passwords. It is a lot of hard work.
So, what’s the answer for today’s brokers? Well, it seems we have come full circle. Mortgage packagers who have embraced the lenders’ online technology and are integrating it with their own systems are now, very seriously, back in business.
Brokers can and will be able to once again go to just one place, with just one user name and password and one point of contact, to find those solutions for their clients, both quickly and easily. Instant, ‘multi-lender solutions’ and ‘cross-lender horizontal cascading’, can now all achieved from one place. Couple this with exclusives and online solutions, cascading and decisions-in-principle (DIPs), and why would any intermediary not welcome (and fully embrace) a service like that?
Yes, there are some brokers who will still prefer to access lenders directly. On behalf of all packagers, I wish them the best of luck trying. Most non-conforming lenders won’t be nearly as helpful as a packager when cases are declined, or have information missing, or when they are backlogged after the release of a competitive product.
A major resource
Packagers with technology at the forefront of their strategy will re-emerge as a major resource for mortgage brokers in the regulated world. The lenders will have to integrate their online systems into these packagers to be able to once again compete for business on those packager’s lending panels.
Enterprise, for example, launched its EDGE system, for online solutions and checklists. Phase two will be full integration with all the lenders online systems, so that binding online decisions can follow. Where the EDGE can’t help, specialist underwriters are on hand to help brokers with the off-line and newer niche lenders that have recently emerged too.
We are not the only packager with this strategy and I know of several others with similar plans. Make no mistake; packagers are making a comeback, and with a vengence.
There will, no doubt, be fewer mortgage packagers than before. But those left will be slicker, more efficient and more useful than they ever were in the ‘olden’ days, and intermediaries will be grateful for their continued existence.