Responsible Bridging
to the client, Lender B has simply resubmitted the app to Lender A. Proving that there is ill intent
is virtually impossible but is yet another reason why some of the larger lenders are keen to shine a spotlight on the practice and flush out poor behaviour.
ResponsiBle BRidging gareth Lewis, head of business development at Tiuta, says transparency is the key to responsible lending. “unless everyone involved is
“A responsible bridge is
one where there is a clear and plausible exit route,” he says. “An irresponsible product is one where the lender can see from the outset that the borrower doesn’t have a hope of refinancing and is in serious trouble. All the lender does here is potentially delay the inevitable and the only exit route will be repossession and sale.” MCIFA’s Antoniades says bridging
is a different beast from residential lending altogether and so alignment in assessing how responsible criteria
“Responsible lending is all about whether the customer can afford the loan in various different stress scenarios. In bridging this means looking at the planned exit and the likelihood of it materialising”
absolutely sure of what is involved and the responsibilities for all sides, then the deal should not go ahead,” he says. “This means being clear about all the associated costs that come with the loan.” “The other major responsibility
for lenders is when you should and shouldn’t lend,” he adds. “There is no point lending when the likelihood is that you will only be recouping the loan through possession.” Meanwhile Cleary is sure about
what constitutes responsible bridging. “Responsible lending is all about
whether the customer can afford the loan in various different stress scenarios,” he explains. “In bridging this means looking closely at the planned exit and the likelihood of it materialising. “If a customer is stating that the
exit is going to be a remortgage to a longer term loan but the customer has a poor credit score alarm bells should be ringing.” Mike Lawton, mortgage director at John Charcol, agrees.
and affordability are measured is unrelated to the mainstream market. “Because these loans are
not in place for years on end like a mainstream mortgage is, there doesn’t need to be the same concerns over long-term affordability as there is with mainstream lending,” he says. “As for there being an alignment, I think the more alignment there is the more the purpose of bridging will become diluted.” Omni’s Colin Sanders says new
players are driving the shift to responsibility. “It’s important to recognise that
the face of bridging is changing,” he says. “Attracted by its vibrancy and opportunity, new lender and intermediary firms are moving into the sector. Many of these have recent experience of working in fully-regulated markets and understand the importance of treating customers responsibly.”
BRokeR ResponsiBility Lawton says brokers must take up some responsibility for the deal
12 BRIDgIng InTRODuCER septemBeR 2011
being done properly as well and not leave it down to the lender. “When looking at any
development deal brokers must question their client’s experience – have they successfully developed before and if not, do they have an experienced team to deliver the project for them?” Sanders adds that experience is
also critical to responsible advice in the bridging sector. “While there’s no hard-and-fast evidence of recent systemic or endemic abuse, it’s a question that shouldn’t be dismissed lightly. “The bridging sector has seen an
influx of advisers keen to tap into its opportunities. Some have limited experience of bridging and may not always be in the ideal position to offer end-customers the best advice or support.” Lucy Barrett, director of master
broker Vantage Finance, says it’s becoming increasingly difficult to get away with dubious practice. “There will always be those who
abuse products if they have the chance but I would say this has become increasingly difficult due to more stringent processes being introduced by the vast majority,” she says.
tRust is cRitical WLB’s Johnson says it’s unfortunate that a few sharp practices can impact on the whole sector. “Most term lenders including
ourselves are very nervous about refinancing these facilities. “Regaining trust is vital and this
will only be achieved if the market participants improve and then maintain standards. “unfortunately a small number
can poison the pond for others. It is for this reason the continued proliferation of lenders is cause for concern.” Cleary says it’s in the industry’s
interests to weed out bad practice. “The rule I always bring in is:
would you do the same thing if it
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