packaging

The second coming

Traditional packaging may well be dead and buried but there is a new kid in town wanting to take over the once mighty throne

by

Ian Balfour,

CEO, Solent Mortgage Services

The landscape of the mortgage market

is littered with the carcasses of packagers whose business model was unsustainable in the wake of the hurricane that swept through the industry with the credit crunch and the closure of the wholesale and securitisation markets. According to many observers there has been much pontificating about there being no place in the new order for the packager and while I agree that the name ‘packager’ is redundant, the service their successors are providing is still as important.

If we examine the old packager model and where it came from it might be easier to see how its role has developed and is evolving today. Packagers were, in part, born out of the insurance company mortgage desks of the early 90s, which, when the world turned against endowment policies, became redundant. Those skills of taking in application forms on behalf of non traditional lenders with no branch networks and applying for references and valuation and ‘packaging’ up a complete file to send to a lender’s head office for underwriting, became known as packaging.

This developed over time into standalone companies, who were either ex insurance company mortgage desk trained or brokers who had applied for agencies from lenders and then discovered that they could offer the

32 morTgage inTroducer MAY 2010

service to other brokers who wanted to gain access to a particular lender. The explosion of new lenders looking for distribution during the ‘noughties’ saw the rise of larger packagers who were able to offer whole of market lending facilities to brokers backed up by extensive investment in technology to offer brokers a one stop shop for all their non standard mortgage needs.

Service provided

The service they provided was twofold. From the lenders’ point of view, they provided access to a proven source of distribution and much of the underwriting process could be achieved a significant cost saving offsite by providing a roving underwriter to provide offers produced onsite, which was certainly the case at SMS. From the broker’s side, they had access to a full suite of products and services with access available online and in many cases, total mortgage fulfilment on one site.

Now if we fast forward, the lenders who dominated the sub-prime and near- prime markets have all but disappeared, so the accepted mantra is that there is no place for packagers, because there is no demand for their services. Interestingly, I don’t hear this from intermediaries themselves probably because they were very aware of the service that packagers provided and in the main used it and came back for more.

I would make the case that those companies that offered ‘packaging’ services and survived the downturn are going to be more in demand than ever before, because although the market has gone through its own version of meltdown, the fundamental reasons why

the middleman role is important today and is going to be particularly vital as the market recovers remain the same.

relationShipS

The lending community, such as it is, has moved from a volume acquisition model to quality driven methodology. Apart from the fact that lending targets are very light in comparison with the boom years, they have a need is to identify partnerships that can help in filtering out applications and enquiries that do not meet the lender’s requirements. A good case in point is the relationship we are promoting to our introducers with Bank of China. While we do not package in the old sense of the word, we act as a door keeper and help intermediaries with their BoC enquiries, so that if a case does not fit, then the client and his adviser do not have their time wasted. We are able to offer BoC an effective mechanism to ensure that they only receive applications that they can take through to completion thus saving time and money.

I have no doubt that as the market starts to recover, new lenders will look to the most effective way that they can bring their products to market and clearly what better place to start than those companies which are best set up to help them market their products and service than the ultimate intermediary’s intermediary like us.

new order

So what do we call these new/old packagers? I am more than happy to drop the word ‘packager’ as it no longer applies to the role, but then again it probably hasn’t for quite a while. Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48