Connect Mortgage Group is offering to pay procuration fees to its 460 members when the mortgage is offered rather than the industry norm of after completion.
Tony Webster, chief executive officer at Connect, says: “The credit crunch is affecting everyone in the industry and some brokers are finding cash flow extremely tight. Allowing our brokers to receive proc fees some six to eight weeks early will help them significantly.
“Historically, we’ve always paid out proc fees earlier than most. We used to pay on exchange of contracts for purchases and the day of completion for remortgages. But once lenders started paying one to two days after completion, our facility only added value by a couple of weeks which wasn’t a big enough advantage. So we asked each of our members whether they’d prefer to get paid on offer and around half of them said yes. The service will be ready to launch in the next few weeks.”
Webster adds: “Several of the larger packagers have released statements detailing how they are going to guarantee proc fees if they got into financial trouble. From what I’ve read, these promises are not worth the paper they are printed on. I believe the only true way to restore confidence is to put your money where your mouth is and give brokers the option to take their proc fees at offer, which is some six to eight weeks before we get paid by the lender.”
Connect has a track record of introducing new ideas and products to the intermediary mortgage market, such as digital trading, technology that allows brokers to submit applications on line without using a key board. T
ony adds: “Once again we are leading the way – there are several distributors that pay proc fees on exchange but I believe Connect are the first to pay on offer.”