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High quality packagers are not being edged out of the chain

In response to Chris Gardner’s recent letter to Mortgage Strategy, I’m aghast he could get things so wrong.

Personal Touch Packaging’s Rob Jupp and KGB Packaging’s Rachel Bancroft care about the industry and were genuine in their regret over LMS Packaging’s demise.

I’ve no doubt that if they get new business it will be seen as a bonus – when did that become a crime?

Gardner’s analogy of packagers be-ing like second-hand car dealers was hardly original – I wonder how long it took him to think that one up.

Quality packagers are not being edged out of the value chain. I can only assume Gardner has no idea of what they do.

And satellite packagers are already slowly being removed, a step that should have been taken some time ago.

I’m pleased to see that Gardner has never remortgaged one of his clients who has got into trouble with a sub-prime lender, but I’m unclear how packagers are responsible for borrowers getting into arrears with sub-prime lenders or initiating remortgages as he implies.

How time-consuming would it be for brokers to use several lenders’ point-of-sale decisioning tools to get their customers deals? Not to mention the un- welcome credit footprints such moves would leave behind.

With many top packaging firms either having their own sub-prime sourcing systems or being integrated with trading platforms, it’s clear to see which method is quicker.

In some 90% of cases, packagers have exclusive products and cheaper application fees, meaning customers are better served if their deals are processed via them.

Surely this means clients are being treated fairly – or perhaps National & Capital has special dispensation not to adhere to this principle.

I’d go so far to say that any broker not already using the services of a packager should sit down and talk to a quality one because there has never been a better time to get involved.

And Gardner does not seem to have a comprehensive understanding of what lenders want after their experiences during the liquidity crisis.

To put the record straight, with limited lending targets it’s cheaper to pro-cess deals through packagers than via brokers directly.

The percentage of deals done right first time is much higher and the conversion rate is also better via the packager route.

Also, it might have escaped Gardner’s attention that lenders have been making massive job cuts, with a number making significant cuts to sales staff targeting brokers.

The reason is simple – they want a higher percentage of their business to come via packagers. Sorry to be the bearer of bad news, Mr Gardner.

One of the many reasons the market is in the state it’s in is that lender entrants came into the industry writing loss-leading products to gain market share.

A simple economics lesson – these lenders got it wrong and priced their deals too cheaply against risk. Some of them have now paid the ultimate penalty by going to the wall.

It will be interesting to see how much business N&C writes this year compared with last. After all, the days of order-taking are over whereas the days of mortgage advising are here to stay.

We packagers are an integral part of the sub-prime market, which is another reason lenders are integrating their IT systems with us directly.

So Chris, if you need a packager, be sure to give us a call.

Simon Mouncher


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