Sub-prime lending and collective responsibility

Mortgages plc

Founded in 1997 and launched in March 1998 Mortgages PLC markets residential non-conforming mortgage products.

MPLC employs over 135 people. Its head office (pictured above) is in the City of London, while its mortgage operations centre is in Glasgow.

In December 2001 Nikko Principal Investments Limited purchased a majority stake in MPLC. The remaining equity is owned by the company&#39s executive team.

Q: What products and services does Mortgages PLC offer?

A: We have a broad range of products designed for the sub-prime mortgage market. The range includes near prime, super light, light, medium and heavy adverse offerings. Self-certification is available across most of the range. We also have products that are marketed exclusively via our Elite distributors who also enjoy an enhanced service proposition and special offers.

Q: What distribution channels are most important to MPLC?

A: MPLC has traditionally had a strong presence in the packager market and this continues to be an important form of distribution for us. However, brokers have the freedom to choose whether they wish to submit applications via a packager or direct.

We have also established a number of lender initiatives during the past year including a through lending scheme with Bristol & West and the Mutual Collective, which involves our working closely with various regional building societies.

Q: What is the Mutual Collective?

A: The Mutual Collective was registered as a company in its own right in June this year and is a scheme through which MPLC originates non-conforming mortgages for a collective of smaller building societies. Most regional societies do not have expertise in sub-prime lending but are interested in acquiring this type of asset to a pre-agreed profit and credit profile. MPLC has the ability to generate such assets using its expertise and established distribution network.

Q: What has been your main focus of attention during 2003?

A: We have put a big effort behind our service proposition and supported this with the launch of a charter and the issuing of weekly service bulletins. Feedback from intermediaries has shown that we have made major inroads in this area and we are committed to maintaining our high standards in the future.

We have also relaunched our product range and announced enhancements in pricing. We believe that our product and service proposition to the market is extremely strong at present.

Q: Why has MPLC been so vocal in its support for packagers?

A: Packagers are an important source of business for us and we have considerable experience in – and knowledge of – this market. Some organisations want to push packagers into extinction which we believe would be wrong. That is why we have been so vocal. Most packagers acknowledge that they have to evolve as we move into a regulated marketplace but they nevertheless have a valuable role to play in the future.

Q: What does the future hold for sub-prime?

A: In the past few years sub-prime has become recognised as a valid sector of the market and we now have a thriving group of lenders competing for business which is to the benefit of lenders, brokers and borrowers. There is now a greater choice of highly competitive sub-prime products available than there ever has been.

The transformation of the sub-prime sector has made specialist lending attractive to larger financial institutions and we have recently seen a number of acquisitions and mergers in the industry. We feel this trend will continue.

Q: Do you think regulation will help or hinder the sub-prime mortgage market?

A: It has got to be beneficial to have all intermediaries working within a common regulatory framework. The BBC&#39s recent The Money Programme highlighted the need for everyone to adopt industry best practice and regulation will force brokers to move from a guidance-based to a rules-based regime. Maintaining consumer confidence is of paramount importance and this is particularly the case in the sub-prime sector where we are often dealing with individuals in complicated financial circumstances.

Thumbs up or thumbs down?

John Stewart – PMI

Mortgages PLC is good on the occasions we use it but it is not the most competitive lender in the market at the moment so we are not using it as much as we did. Nevertheless service is consistently reliable – there is always someone knowledgeable at the end of the phone which makes all the difference when trying to get a case through quickly. Products are fine although rates are not as keen as they might be. So no real quibbles but its not our number one at the moment.

Clive Watkins – Members Mortgages

Mortgages PLC offers a solid level of service which is consistently efficient and I can&#39t fault it. Products remain reasonably competitive and are always worth a look. It also has a strong buy-to-let range which we use on a regular basis when products fit with a client&#39s circumstances. Overall Mortgages PLC stands up well in both markets and has a solid reputation with brokers and packagers which shows that good service is worth the extra but of effort.

Rob Clifford – mortgageforce

Mortgages PLC is one of the nonconforming lenders we support. Some lenders offer keener rates but Mortgages PLC has done an excellent job of differentiating itself in service and innovation. Its service charter introduced earlier in the year gives peace of mind to our advisers when talking to their clients, particularly those with completion deadlines. Its affordability declaration for self-cert applications was an innovative move too, particularly bearing in mind the recent BBC programme.