The non-conformist that joined the mainstream

Southern Pacific Mortgage Limited first entered the UK non-conforming mortgage market in January 1997. Its products now cover the complete credit spectrum, with a prime lending product available since February 2003. The SPML portfolio also includes second charge loans, a flexible mortgage and bridging loans. The company occupies two sites in Kensington (pictured above), with the administration and accounts departments located in High Wycombe where a second office will be opened shortly.

Q: How is SPML structured?

A: SPML is a wholly-owned subsidiary of Lehman Brothers, the global investment bank. The managing director is Bill Cherry; John Prust is sales and marketing director; Angela Davies is director of operations; Stuart Aitken is director of credit; and the finance director is Andrew Townsend. SPML and SPPL (for second charge loans) have a team of eight regional managers covering the UK, supported by regional business development managers.

Q: What are the pros and cons of your core product range?

A: The pros of the range are that it covers the whole credit spectrum from non-conforming to prime and it offers a comprehensive range of mortgage products including standard, buy-to- let, Right to Buy, large loans, bridging and second charge loans – all with options for self-certification of income. Competitive fixes and discounts are available on the majority of first charge products.

SPML also offers third party loan servicing to other lenders – principally building societies that have purchased pools of non-conforming mortgage loans – and has recently achieved excellent loans servicer rankings from Standard & Poor&#39s and Fitch Ratings. As far as cons go, we are told by some of our packagers that our credit criteria can sometimes be on the conservative side.

Q: What is your distribution strategy?

A: SPML is a wholly intermediary-introduced mortgage lender and does not accept applications direct from the public. Applications are submitted via a panel of mortgage packagers and the company is currently rolling out a programme of branded lending with selected packager partners. SPML&#39s front end operation, underwriting, technology, and administration are all geared to fast lending decisions and post offer completions. We believe regulation, consolidation and the growth of IT will radically reshape distribution channels in the intermediary lending sector.

Q: What services do you offer to intermediaries?

A: With regulation at the forefront of everyone&#39s minds, SPML continues to give strong support in this area. A third round of regulation roadshows will take place during November and our packagers have access to a highly experienced SPML compliance team if they want to discuss regulation issues. Regulation updates and other information are regularly emailed to packagers and are downloadable from the website – as is other mortgage documentation and information. SPML also offers support from roving and inhouse underwriters enabling speedy decisions to be made from the packager&#39s own office. Tailored marketing support schemes are offered to provide business synergy and a packager training scheme is in place to provide the company&#39s introducer panel with help in training staff.

Q: What impact will regulation have on your business?

A: We have a full compliance team and all the procedures and controls in place for authorisation. The impact of regulation will be felt across the whole market rather than by individual lenders. For example, the FSA&#39s ban on cold calling will impact across the board. However the larger, well established packagers are well-run businesses and they are putting strategies in place to adapt and prosper.

Q: How do you see the intermediary market in two years&#39 time?

A: In one year&#39s time, when the authorisation status of intermediaries is known, things will be a lot clearer. Over the longer term SPML certainly anticipates consolidation in the market with fewer, larger packagers and the rise of networks.

However there is no reason to suppose that the overall volume of business will diminish. On the contrary, the publicity surrounding FSA regulation is likely to lead to a larger intermediary sector as borrowers are reminded that mortgage choices are important and start to seek third party advice more actively. Just like any maturing market the better providers will be more successful than the more mediocre ones.

Thumbs up or thumbs down?

Paul Brett – Fastcom

SPML has gone from strength to strength in the past few years. It has not tried to please everyone and has never bowed to pressure to open its doors directly to brokers and the public. This has enabled it to streamline its productivity and service above its competitors. It has embraced the changing sub-prime market by diversifying into prime lending and secured loans, offering greater all-round service. It offers genuine support to its packagers and still attaches great importance to relationships.

Phil Jay – BDS Mortgage Group

A good working relationship is vital in today&#39s mortgage market and that&#39s what we have with SPML. It offers a competitive and simple range of non-conforming products. SPML achieves a good rating in the light adverse sector, based on rate, entry and exit fees. Service is also strong. Mobile underwriters are always on hand at SPML&#39s processing centre so decisions can be made inhouse and packagers have one port of call which is invaluable. This is how we promote the use of our sub-prime panel to our intermediaries.

Bill Curran – Capital Mortgage Lending

SPML&#39s service is particularly strong and it turns cases round impressively fast. Underwriting is realistic. Technology is all well and good – and SPML&#39s is excellent – but it is great to be able to speak to a real person. The personal touch makes a difference. The prime products are good and there is a good range of buy-to-let, Right to Buy and flexible deals, but SPML is not trying to be all things to all people. Rates are strong at present and we use SPML&#39s products for remortgaging above all.