It's hard to believe a big firm wanted to buy into network
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There were some rather strange letters regarding The Mortgage Times Group situation in last week’s Mortgage Strategy.
I won’t comment on AC Financial Service’s Abu Choudhury encouraging others to join the network he had been a member for just over a month because it is friendly, helpful and honest, other than to say that Mortgage Times was once like that too.
But I wish everyone the best with whichever network they choose - I’d like to think we have seen the last of the failures.
As we all know the mortgage industry has been hit by a tidal wave. Many lenders have left the market and those that remain make it tough for us to support the specialist market.
On top of that consumers were well and truly stitched up in 2009 by lenders offering stupidly expensive rates coupled with ridiculously low LTVs. And I’m sorry some packagers didn’t see the collapse coming and so failed to take corrective action in time.
In 2006 Mortgage Times embarked on a huge investment and growth programme and established its Vision computer system that was brilliant
in helping advisers with both work and compliance routines.
It’s a shame that its steps to dominate the market failed because the industry it wanted to serve disappeared.
But as the ashes of Mortgage Times are thrown to the wind what concerns me more are some of the delusional comments and reminiscences in other letters in last week’s issue.
As an AR with the network, my experience of payment difficulties began in August 2008 but by Christmas 2008 it had squared my account.
Then, before I had a chance to start asking for payments for mortgage completions into 2009 the company started to ask me for details of not only my existing business pipeline but also the business I was in the process of writing. It wanted to know what my expectations were for this.
For some weird reason my contract was terminated although I had been one of the firm’s top individual producers at the height of the market.
I was trying to fathom out why it would decline my kind offer of paying £250 per month plus VAT for my membership fees when the FSA Register provided the answer.
According to this, in the period March to May 2009 the regulator suspended 70 firms and towards the end of the year that figure reached 110.
That’s a monthly income of £27,500 per month that was willingly declined.
On termination of my contract I received a phone call from Mortgage Times confirming that my commission account would be frozen to create a provision against life clawbacks despite the fact that my persistency rate in my 24 years in the business is first rate.
Last April I mentioned my concern that Mortgage Times might be trading while insolvent with a director of the firm and was assured it was not.
I estimate that administration and insolvency fees will be way in excess of £200,000 so I can give every AR or other adviser associated with Mortgage Times an absolute assurance that they will not see 1% of their debt when the estate is finally settled. I would advise them to get over this episode as quickly as they can and move on.
This is the second time around for me since I lost a lot of money with the demise of First 4 Brokers. That company went under suddenly in August 2006 and its estate is still not settled.
I wrote to Hector Sants, chief executive of the FSA, to make him aware of the situation so I would not be surprised if it was questions from the regulator that led to Mortgage Times relinquishing its authorisation.
Meanwhile, the comments from Andrew Botte and Charterhouse’s Terry Pritchard in last week’s letters pages were astounding.
Botte seems oblivious to the innumerable cries for help from desperate Mortgage Times ARs in the past six months.
I stopped processing with the network in April and from July spent as much time as I could spare on an internet forum telling as many professionals as possible that Mortgage Times was on its way out and that its ARs should stop processing immediately and save their business for when they signed up with new networks.
Finally, it is extremely hard for me to believe that any large company was ever truly hovering in the wings, seriously considering either buying Mortgage Times or investing in it.
After all, the company made an operating loss in 2007 - the best year anyone has had and probably ever will have when it comes to making a profit in the mortgage world.
Who on earth was going to sink money into the company given the state of its balance sheet at the end of 2008, let alone what this must have looked like by December 2009?
My guess is that the outstanding debt to ARs alone is likely to be at least £1.5m.
But that’s enough about Mortgage Times. Let’s move on and lobby for the improvements we need in the network sector.
FRANK JURGA
SPECIALIST MORTGAGE ADVISER
SWINDON
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