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News Review: Short Term Finance


The fittest bridging lenders will survive


by Paul Brett, business


development director, borro


The Association of Short Term Lenders has been criti- cised in some quarters for suggesting that the proposed arrival of three new lenders coming to market this year was a good thing. To my way of thinking the argument sounds more like sour grapes because new blood means more competi- tion and there are those lend- ers who are going to suffer as margins begin to be shaved as a result of the competition. Oversaturation,


if that


point is actually reached, will lead to consolidation and the weaker propositions going to the wall, which is as it should


be. The winners will be the consumer and the interme- diary. Both will have extra choice and those businesses that rely on high margins and don’t really have a strong position will have to adapt or withdraw. Survival of the fit- test.


When any sector starts to


grow there will inevitably be teething problems as the business starts to mature. Apart from the concerns over too many new entrants, the unscrupulous are never far away in a booming market. Reports in January of the conviction of an interme- diary working in harness with a solicitor to commit a £500,000 fraud illustrates the importance of ensuring that lenders’ procedures are consistently checked and re- checked - particularly where there is a reliance on external


News Review: Packaging MMR may support the future of packagers by


Ian Balfour, CEO, SMS


Mortgage Services


The implications of the MMR are still being digested and no doubt there will be further amendments before it is in place. However, lend- ers are clearly being put in the position of care as far as being tasked with calculating whether potential customers are going to be able to afford


a mortgage both at the time of execution and also into the future. MMR is going to mean extra cost in resourc- ing to ensure that its require- ments are met. The value of having inter- mediary focused specialist distributors becomes clearer because we can act as a pro- active filtering facility. This helps introducers at enquiry stage and provides a service which helps them see wheth- er an enquiry is worth pro- gressing in a timely fashion. For lenders it is a no cost option provided by packag-


20 MORTGAGE INTRODUCER FEBRUARY 2012


ers which can save thou- sands in staffing and ad- ministration costs. Far from being the death of packagers, MMR could prove to provide a defining moment for the reassessment of the value that packagers can provide in a post MMR world. As far as I can see, 2012 is going to be about consolida- tion, first and foremost. The MMR announcement will probably mean that potential newcomers will want more time to understand the rami- fications. That is why I remain con-


fident that when they digest the extra infrastructure costs, they will reach the conclu- sion that setting up profes- sional relationships through the packager channel to pro- vide the extra support they need is a sound investment, so they can invest in the fa- cilities required to gear up for a post MMR world. As before, if a lender wants to test products,


systems,


distribution in a controlled, professional, compliant, in- dependent and cost effective way look a little deeper into what is available.


www.mortgageintroducer.com


sources for professional ser- vices. Clearly there is always op- portunity for fraud in most lending sectors and the dam-


“The argument sounds more like sour grapes because new blood means more competition and there are those lenders who are going to suffer as margins begin to be shaved as a result”


age to the balance sheet as well as reputation requires extra layers of vigilance. For the short-term lending in- dustry at this point in its growth, there might be les- sons to learn from the way mainstream lenders are not only


vetting their solicitor panels but also tightening the criteria by which solici- tors can act on behalf of both the lender and the applicant. The same could be said for


vetting the firms which lend- ers use for the valuation of property, particularly where there might be evidence of a relationship between the seller, the surveyor and in the introducer. Thankfully, the majority of business is trouble free, but at a time of rising competi- tion, it is sometimes easy to let one’s guard down in the search for new business.


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