Nearly every aspect of the mortgage process has been affected as a large number of lenders have cut risks, product terms and jobs.
Now it is claimed that UBS could be the first organisation to be sued for sub-prime mis-selling. This news will send the debate off on a different tangent.
As an expert witness who was kept busy in the last downturn and who is already seeing a significant rise in witness instructions this time around, I’m not surprised at the news.
I’m already aware of mortgage portfolio buyers taking action against originating lenders on the basis that the original lending did not comply with the institutions’ lending policies or was negligent.
The simple equation is the bigger the firm that feels it has been wronged, the more likely it is to resort to litigation to resolve the issue and the deeper the pockets it has to fight the case.
Lending litigation takes many forms. Besides the litigation surrounding lenders seeking possession of properties, we see consumers suing providers for the alleged non-performance of products and brokers for supposedly inappropriate sales.
Lenders are also litigating against professionals for what they claim to be negligent work and, of course, buyers of securities for supplying allegedly misleading portfolio information.
These types of litigation absorb massive amounts of resources as huge numbers of cases are assessed with regard to their lending compliance. But many lenders don’t have the resources to do this.
It was once a tradition in the lending world that when sales teams were quiet they were taken off the road to assist in administrative functions.
But following the enormous number of re-dundancies in the in- dustry over the past few months, these resources are no longer available.
Brokers may dismiss this news as nothing to do with them but that would be unwise.
We’ve seen many lenders withdraw from the market permanently and others temporarily withdraw their products or tighten up their criteria.
While everything is cyclical and those as old as me will have seen such trends at least twice in their working lives, times such as these present particular challenges to brokers.
Not long ago, brokers operated in a world where difficult cases were easier to place than ever before.
This is not the case now and things will become more difficult be-fore the cycle turns again.
Customers with varying borrowing needs will always be with us and it is the job of brokers to match clients with particular needs to particular lenders.
The more difficult it is for customers to find the right lenders, the more they need the help of brokers. What a wonderful paradox.
With a little extra effort, brokers need not worry about their future – there’s a good living to be made to-day and tomorrow.
All it will take is an intensified focus on satisfying their customers’ needs.