From Rob Field
With the government seemingly keen to speed up the mortgage process, it would have been advisable for it to have spoken to brokers, packagers and lenders to find out what really slows things down. It might then have got the necessary reality check – and some good ideas too.
As all efforts in this area are intended to cut delays, here are two ideas that may help:
All lenders should be obliged to upload data relating to all live mortgage accounts to Experian, Equifax and other credit reference agencies. This would require an industry-wide acceptance of the need to introduce technology, including the costs this inevitably entails, but most of all it would need a collective will to undertake the task.
As we all know a major demonstrator of the repayment covenant is the conduct of the current mortgage and this must be proved to the underwriter's satisfaction when a loan is applied for. I appreciate that while this can also be demonstrated via mortgage statements we know applicants often throw these away.
And though the conduct of the current mortgage can be ascertained via a mortgage reference, obtaining one can be like getting blood out of a stone, usually at an extortionate fee (£65-plus in many cases).
If the conduct of the mortgage account is not readily demonstrable you can be assured of weeks of delays in obtaining the requisite proof. In these instances advising the client of the potential additional costs and delay early in the process can avoid too high a level of expectation.
More emphasis must be placed on the applicant's responsibility to provide the necessary documentation in good time. Applicants themselves often slow down the chain by not responding quickly to requests for information which to them probably appear excessive and pedantic. This scenario is repeated all too frequently resulting in huge delays and potential errors, so that when you do finally receive what was asked for four weeks previously the case has become urgent.
Rather than insist on a seller's pack, why not concentrate on a buyer's checklist of what will be required i.e. the documents you will need to successfully obtain mortgage funding? Clients should obtain their last six months' bank statements, most recent mortgage statement, two recent utility bills, two forms of ID and so on. This would fully prepare the client before approaching a broker, packager or lender.
If the chosen lender does not need bank statements then those received are surplus to requirements and can be simply kept on file. They will however be useful in the event that a different lender is chosen during the process and these statements form part of its underwriting criteria.
Perhaps we could also include in the checklist a copy of the client's own credit file. Again, many people will commit to a purchase of a property and agree a figure with a mortgage product in mind only to find out at the formal application stage that there is adverse credit registered against them of which they were unaware.
The broker might not – or cannot – advise the nature of the entry against the client for fear of repercussions under the Data Protection Act even though this is information about them.
Depending on the type and the severity of the adverse information the choice of lender could be restrictive and perhaps the interest rate unmanageable. This would obviously lead to the collapse of the chain and further delays.
But if the client has their credit file to hand, it is much easier to choose a lender in the light of information contained in it.
If an applicant was obliged to obtain a copy of their own credit file at the time of application, this might be a way of avoiding multiple searches by various prospective lenders and the detrimental effect this potentially has on the applicant's credit rating for lending purposes. There is also an argument to suggest that reviews of credit files are undertaken on an annual basis as part of a wealth check.
While we all have to ensure that we are doing the best for our clients, some emphasis has to be placed on their responsibility as prospective borrowers.
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