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Lenders should keep their promises

We brokers have to trust lenders to keep their promises but when they let us down we are the ones who have to break the bad news to valued clients, says Sue Read

I’ve recently been on holiday. It was half term and my eldest daughter was revising for her GCSEs so my mission was to keep the younger one out of the way. This proved relatively easy as my eldest daughter spent a large part of the week with a friend whose parents were away. I know she was working and I trust her.

Trust is important in our business lives too. We brokers trust lenders and packagers to deliver mortgage offers to us swiftly and without complications. Our clients trust us to fulfil their dreams and aspirations.

I’m an honest broker and I was an honest business development manager too. If I don’t believe something is possible I will say so even though it might upset a client. I’m sure that 99.9% of lenders and BDMs are the same. But our advice is often undermined by higher authorities.

Although I was on holiday I had several calls from my assistant about one of my clients. We’re doing a capital-raising residential remortgage and a related buy-to-let purchase for him. We submitted two applications three weeks ago and both went pear-shaped, the first because he had omitted to mention missing his January mortgage payment, the second because the lender had changed its income criteria since I first discussed the case with its BDM. An added complication is that the buy-to-let property is a single title, split into five self-contained flats.

So we were back to square one. In despair I spoke to the packager I usually turn to in these situations. I trust it. A couple of days later we were in business. The client came in to go through additional Key Facts Illustrations, complete fresh applications and to pay more money for valuations – although I should say I’m hopeful of partial refunds from the first applications so this will help. The applications were submitted.

Then we got a call from the packager. The buy-to-let application had been declined because the lender has changed its criteria and will no longer accept this property. It can now only accept properties split into a maximum of four units. The residential remortgage has not yet been submitted.

Questions start popping into my head such as when did the criteria change, why can’t it just honour this case and why hasn’t the residential remortgage been submitted?

Our client seemed likely to lose a potentially lucrative opportunity as well as the fees he’s paid.

But my trusty assistant swung into action and sourced another buy-to-let lender which promises it can do this case. And because of our need to restore our client’s faith in us we will have to trust it.

I’d like lenders to have to meet clients sometimes, look them in the eyes and break the bad news to them. I’d like them to have to explain to clients that while they said they could do something in fact they can’t, and won’t honour their promises. Because we trust lenders we sometimes end up with egg on our face and damaged reputations with valued clients.

The honouring of our trust isn’t a certainty – I just hope my daughter doesn’t work that way.

Sue Read – consultant, Marshall James & Co.

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