MPLC, not anti cascade systems

Mortgages PLC has clarified its stance regarding cascade underwriting following a press release issued last week in which it urged intermediaries to exercise caution when using cascade systems.

The lender has also received a number of messages of support from key distributors in the market, including Pink, Genesis, and Enterprise.

Peter Beaumont, sales & marketing director at MPLC, says: For the sake of absolute clarity I would emphasise that MPLC is not anti cascade underwriting and we have not made these remarks because of an inability to offer such a service ourselves.

As our original press release pointed out, cascade underwriting is helpful in letting intermediaries know what alternatives are available, but intermediaries need to remember it is their responsibility to find the very best deal for their client and not to simply accept a revised offer at face value. To do so is not only selling their clients short, but is also exposing themselves to trouble if concerns are raised in the future about the product recommendation they have given.

Beaumont adds that MPLC is not being critical of other lenders. He says: Nowhere in our press release did we say that lenders should not make these systems available. As a matter of fact, MPLCs own underwriting system is capable of cascading up and down the credit curve. This system is currently being piloted with a number of intermediaries, and will go live early in 2006.

Three mortgage distributors, Pink Home Loans, Genesis and Enterprise, have endorsed MPLCs call for intermediaries to exercise caution when dealing with revised offers generated by cascade underwriting.

David Copland, marketing director at Pink, says: Cascade underwriting is an excellent development and we fully support it, but I wholeheartedly endorse Peter Beaumonts plea for intermediary to exercise caution when dealing with revised offers. Intermediaries retain a responsibility to recommend the most suitable product for their clients needs and they shouldnt assume that a revised offer resulting from cascade underwriting will necessarily be the best deal available.

Nigel Gardner, managing director at Genesis Home Loans, says: Mortgage intermediaries need to remain mindful that, if a query is raised in the future with the FSA about the suitability of a product recommendation, it will be the intermediary and not the lender who will be in the firing line. At Genesis we recommend our AR’s review any suggested product changes made by a lender as a result of cascade underwriting to establish whether the new terms being offered are competitive and in the best interests of the client.

Michael Clapper, CEO of the Enterprise Group, adds: The development of cascade underwriting is certainly a step in the right direction, as it is far more helpful for intermediaries to know which products are suitable for a client, rather than simply being told no.

However, the pressures of daily working life may encourage brokers to endorse the lenders alternative offer, because it is easy and convenient to do so. If an application is declined because further credit details have come to light, the intermediary should re-source the product on behalf of their client, something that we do automatically for our introducers.