Round-table


Is the shift towards a more professional market and better quality underwriting a reflection of an increasingly watchful FSA?


LL: no. LG: i don’t think that GL: From my perspective i don’t think it is. it’s an evolvement of who you’re dealing with in terms of clientele and let’s face it, it’s probably magnified more when you’re looking at bridging finance in terms of you saying that before a bridging finance loan would lend against the asset then yes we would because that was the market that it was. DW: Because they’ve always got someone else to take over the problem, the sub-prime market was so fast and there was lots of liquidity within the sub-prime market they could rest assured that they would find an exit that way and also the property market was bailing them out of a lot of problems as well because we were seeing significant capital growth in the property market over a decade period of time and now we’re looking at assets which are a bit more stagnant with a lack of liquidity within the high street markets. LG: We’re a regulated lender and we apply FSA regulatory principles and assistance to all of our lending even though 95% of are loans are unregulated, we do everything as if it was a regulated loan in terms of our finance structures, tcF issues, compliance issues and information flow etc. And not in terms of just loans you need to demonstrate to your investors that you are


professional and good at what you do and there are no gaps at all in your underwriting and in your credit control processes. GL: Bridging finance is always evolving. Whatever the need is of that product at that moment in time follows what that lender does. So as the market changes that lender evolves. You see it more with a niche lender and considerably smaller lender than the main high street banks. Bridging finance has had to evolve to that market and what trends that market is following so you continue to evolve. DW: that’s an excellent point because the bridging market has always been quite dynamic so as and when liquidity does return there comes more exits for bridging lenders. there’s no doubt they will loosen they will loosen their underwriting criteria and they will adopt a fair approach to risk but in the current economic climate and a lack of exit then you can’t blame people for looking at a complete holistic view of the application. GL: When the credit crunch happened it could’ve been quite easy for bridging finance lenders to just turn around and say, “we don’t want to be involved, we don’t want to do anything. We’re going to stop and pack it in.” And the sector could have died. But what they actually did was they evolved the business to make sure they continue to lend through the turmoil when there wasn’t anybody else backing that market place. it goes back to the principles of what bridging finance is all about, it’s using your common sense. FA: People used to go for a bridging loan when they needed money


First Class Service Short Term Lending Mortgage Introducer Creative.indd 4 www.precisemortgages.co.uk 26 BriDging introDucEr july 2011 27/06/2011 18:42


quickly but now you’ve got to underwrite everything properly and there’s not the liquidity there. But you can underwrite a case fairly quickly and then it’s down to the legals and how long that takes and it use to be that you could go in and see someone Monday and you could have your money by Friday and we’ve kind of lost our track in that regard because it’s taking forever and a day in post-underwriting to actually draw down the monies. in that sense it has lost its way. LG: Fahim’s right, it’s not down to the lenders it’s down to the legals. Don’t get me wrong that’s probably poor words to choose for an answer. But lots of lenders share the same view. FA: now what’s changed in the legal process then? if we remove the market forces aside what’s changed? LG: the cynics view is that the lawyers are so bereft and instructed. over the last four or five years a piece of work they could’ve done in two days, four years ago they’re making it last two weeks now so they can charge more fees it’s as simple as that.


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