News Review: Specialist Prime


Are you being served?


by Colin Snowdon chief executive, residential mortgages, Aldermore


the quality of service provided by lenders has always been a bone of contention for intermediaries. in the boom days before the onset of the credit crunch, large volumes of new business put lenders’ processing and administrative capabilities under enormous strain and, as a result, turnaround times and service standards slipped within some organisations. i’m sure many brokers remember all too clearly which lenders were guilty of providing an unreliable or slow service. as the boom times turned


into a market slump, service issues reared their ugly head yet again as some lenders turned their backs on brokers, preferring instead to give their branch networks preferential


dual pricing became a real issue and in some instances lenders withdrew from the intermediary market altogether. again, brokers were outraged at the shoddy treatment they received from some sectors of the lending community. the reduction in the


number of lenders operating in the market has led to a situation where the supply of products is dominated by the big lenders: including Santander, Lloyds Banking group, nationwide and Woolwich. the nationwide’s specialist


intermediary business, the mortgage


Works, has built a justifiable reputation for its intermediary focus and now has a very strong proposition. it recently increased its maximum buy- to-let LtVs and has been innovative with corporate buy-to-let products and guarantor mortgages. unfortunately,


a treatment.


consequence of its dedication to delivering a better deal for intermediaries is that it appears to have been inundated with new business and as a result has recently confirmed that its usually high service standards have slipped under the strain. in a statement, it said: “due to our competitive product range, we’re currently receiving record volumes of applications and our service delivery has been affected. our focus is you so we’re actively working to restore our service to the high level you’ve come to expect from the mortgage Works.” i believe them and am sure they’ll be on top of the problem quickly, if not already. this


unexpected


development highlights a new issue facing lenders across the country: their ability to be able to respond quickly to changes in demand. First direct has admitted that it’s struggling to keep up with demand as a result of its new £99 fee offer and has quickly had to recruit more staff. the Skipton has also been forced to withdraw its 2-year fixed rate products because of concerns about service levels. the truth is that during the


past couple of years, many lenders have rationalised their underwriting and service centres, cutting


6 mortgage introducer SEPTEMBER 2010


back on staff numbers and resources. For many organisations it has been a necessary consequence of the economic downturn. the Ft estimates that approximately 130,000 jobs have been lost in the financial services industry over the past 12 months, which confirms just how deep the cuts have been.


“The reduction in the number of lenders


operating in the market has led to a situation where the supply of products is dominated by the big lenders”


at the same time, lenders


have taken the opportunity to restructure their back offices, with more emphasis being put on the use of technology to automate processes. unfortunately, underwriting and processing mortgages is never going to be a process that can be completely automated. mortgages are complex transactions that involve a large number of people from mortgage brokers to borrowers, solicitors, valuers and estate agents. it’s folly to believe that computers can faultlessly co-ordinate and traffic manage the activities of all these people, especially at times when matters don’t go


entirely according to plan. Skilled people will always be an essential part of the mortgage process and if staff numbers are severely reduced, then lenders must accept that they have also downgraded their ability to respond quickly when business levels pick up. there is also another


unintended consequence of an over-reliance on automation and technology, which is the exclusion of certain groups of borrowers. unfortunately the type of mortgages which are easiest to automate are those which are straightforward and uncomplicated. However, not all applications are straightforward and many require the intervention of skilled underwriters to assess if a specific application is creditworthy or not. For example, at aldermore we have seen a number of applications in recent weeks which have been rejected by high street lenders because of minor issues such as a single missed credit card payment several years ago! Lender’s systems rejected the applications but if an underwriter had looked at the cases, they would have seen that the missed payments were quickly resolved and that the borrowers had an otherwise unblemished credit record. greater reliance on credit scoring has straight-jacketed lenders’ ability to deal with non-standard cases which is causing real problems for a growing percentage of homeowners. Yes, brokers across the


country will be saying ‘here we go again!’


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