The mood seems to be picking up in the packager market this week, with two firms reporting record months for mortgage applications. It still remains to be seen whether these are one off cases or the market is indeed starting to show signs of recovery.
The biggest stumbling block for packagers though still remains the proc fee dilemma, which is steering many brokers away from wanting to use mortgage packagers.
No mortgage broker wants to put all the work in and come out with nothing at the other end, so associations and packagers are looking for ways to combat this, and hats off to Just Mortgage Packaging, which is offering its members packager indemnity insurance.
My first question was, how much does this cost the mortgage broker? and I could hardly believe it when I heard the word “nothing”.
It is a very brave move to offer brokers this kind of protection in a time when little guarantees are being made.
The packager indemnity cover will guarantee the proc fee from the lender should anything go wrong, which in principle is a great idea, but the question remains, what happens if something goes wrong with the packager? which is still a doubt in the back of many brokers heads.
Other packagers have tried to solve the problem by offering for proc fees to be paid in 48 hours or a similar time period. In the end it all comes down to trust, brokers still need packagers and packagers still need brokers, so it is vital that trust exists between the two. As lenders start to rattle down their distribution panels, it is clear to see that some packagers are just not going to make the grade, so packagers need to make sure that they instil trust in the brokers, so that they know their cases are safe.