Service is at the heart of the mortgage industry, so how can brokers and lenders pull together to deliver the best for clients?
The Americans are renowned for offering good service but we Brits – mortgage market included – could learn a thing or two.
Although UK mortgage rates are at an all-time low, lenders in search of a boost to business will find good service the key to brokers’ hearts. A lender’s service can make or break a client’s purchase, not to mention a broker’s reputation.
Likewise, clumsy broker errors on the mortgage application can delay the process, frustrating both lender and client.
What can brokers and lenders do, therefore, to make sure both sides ‘have a nice day’?
After the implementation of the Mortgage Market Review in 2014, lenders were heavily criticised by brokers for service delays. However, London & Country associate director of communications David Hollingworth believes they are generally managing business volumes much better now.
“Post MMR you saw a lot of different interpretations of the rules,” he says. “Some lenders were more stringent than others in picking through paperwork and raising questions.”
Since that period of adjustment, he adds, lenders have improved and fine-tuned their processes.
Nevertheless, the practices of some lenders still have brokers tearing their hair in frustration. Just Mortgages and Spicerhaart group operations director John Phillips says his firm avoids certain lenders – even if they offer the best rate – because they are known for poor service.
“Due to the lack of properties on the market, clients need to act quickly,” he says. “If a vendor doesn’t see a survey being carried out or a mortgage offer within two to three weeks, it is likely they will put their property back on the market.
“One lender may have a lot of business on and its timescales will be stretched, but another may take just a few weeks to get an offer out. In this scenario, we would make it clear to the client that, if they want to secure the property, they may need to pay more to get the deal through quicker,” he says.
If a particular lender’s service is not up to scratch, the broker should ascertain why, says Hollingworth.
“Is it because its processes are slow and drawn out or because it has fabulous rates and the sheer volume of applications is beginning to weigh heavy?” he asks.
“It may also be that a client sits outside the mainstream criteria and needs an individual approach.”
The most common source of annoyance to brokers is being asked to send paperwork multiple times.
“Nothing infuriates brokers more than when they have sent all the information for a case and are then asked by the lender for something else,” says Phillips.
Hollingworth says that, although lenders are entitled to request whatever information they like to ensure the feasibility of a case, brokers and customers can become annoyed by lots of to-ing and fro-ing.
“Everyone tends to need to stump up more information,” he says.
“However, if a lender gives you a clear list of what they need and you are able to provide that, it’s frustrating for the broker and borrower if someone else within the lender then wants to see something different or even the same things twice.”
Another irritant is when lenders quote a deadline and then fail to meet it, says Paradigm Mortgage Services member and owner of Oakwood Independent Mortgage Consultants Russell Rogers.
“Accurate, fair and courteous feedback, plus meeting the deadline it sets us, equals good service,” he says.
“Just having a backlog is not bad service; that happens, primarily due to having a great rate. But not being honest about it or not providing us with a complete shopping list and continually adding to the list further down the line is more than just bad service.”
Time is of the essence when it comes to decision making too. Paradigm Mortgage Services member and Hawke Financial Services partner Robin Fawke says having to wait a week on a referred decision in principle can add to the stress a client already feels.
“Buying a house creates a high degree of emotion for the client and, if lenders can consider that the intermediary is managing this on their behalf, they may be quicker on delivery,” he says.
The facility to speak on the phone to someone about a case is valued by brokers.
“BDM support is crucial,” says Hollingworth. “If brokers have a question about something, being able to run that past a BDM and have confidence in their answer is not only good for brokers but good for lenders as well.”
Hawke adds that, if a case gets derailed, sometimes it can seem to the broker and client as if they are being passed from pillar to post.
“The challenge is having someone to help steer the ship when the weather turns,” he says. “Lenders that require the use of a packager to process the case can also add an unnecessary layer and subsequently delay the receipt of an offer.”
Rogers says that, if lenders continually delay processing or provide a poor service, in the client’s mind this reflects on the broker because they recommended the lender.
“This can cause the broker to lose faith, and if that happens it can be difficult to get back,” he says. “I often think lenders forget this or are uninterested in it.”
Technology too has a part to play in lenders’ service levels, particularly relating to the ease with which brokers can upload documents and make their own changes to an application.
“If a broker can effect that really quickly online, it has to be better than getting in touch with the lender and having to wait for another offer,” says Hollingworth.
Of course, implementing technology can be a significant cost for lenders, especially when integrating it with platforms with a lot of legacy issues.
However, brokers acknowledge that some lenders are trying to rectify the situation, according to Hollingworth.
“Brokers will come back to a lender that can show they are being proactive and dealing with any issues with their service,” he says.
Good service is a two-way street in the mortgage process, of course, and brokers must play their part if things are to run smoothly.
Despite bemoaning too much lender zeal on documentation, many brokers, it seems, are guilty of failing to submit the necessary paperwork.
“One of the most common reasons for an application being delayed is that the supporting paperwork has not been included,” says a Virgin Money spokesman.
“We keep this to a minimum by reviewing each application on day one and calling the intermediary to ensure they are aware of the requirements.”
The spokesman says Virgin minimises missing paperwork for remortgage applications because it has its own panel of solicitors, who are “tightly managed on turnaround times”.
“Once the application is fully packaged, we can move to offer quickly,” he adds.
A spokesman for NatWest Intermediary Solutions says: “Over the past three to four years, we have seen a massive improvement in the percentage of correctly packaged applications we receive.”
He attributes this improvement to the work done with brokers by the lender’s BDMs, including giving them more guidance on how to package cases, scan and email documents, and interpret its lending criteria.
Despite such efforts by certain lenders, however, cases continue to be delayed by brokers, with common reasons including;
- The mortgage reference number does not appear on every emailed document
- Documents have been scanned in colour, and/or sent as separate PDFs
- A lack of clarity on how income has been calculated or which payslips have been submitted – for example, a lender requires January, April, July and October payslips in order to check an applicant’s quarterly bonus
- The details of a customer’s bonus payments have not been substantiated – such as whether the payments are made monthly, quarterly, twice a year or annually, and whether they are guaranteed or discretionary; and
- The source of a deposit has not been declared.
TSB mortgage distribution director Roland McCormack says brokers generally do a fantastic job but some simple improvements can make a big difference to the mortgage process.
“For example, getting to know your BDM and understanding a lender’s requirements are vital,” he says. “We have nearly 40 BDMs and we are always upfront with brokers about what we require from them. This helps ensure they submit all applications and documents correctly, speeding things up.
“Making it hard to talk to each other can slow things down between brokers and lenders.”
McCormack adds that, if a broker’s TSB application is sent to an underwriter or declined, the underwriter always speaks directly with the broker to explain why.
The service delivered by many lenders and brokers undoubtedly has improved immensely since the immediate aftermath of the MMR.
In today’s market, however, the biggest frustrations – on both sides, ironically – are insufficient communication and problems with documentation, which are relatively easy to address.
A few small actions by lenders and brokers could go a long way to further improving the mortgage journey for customers.