Openwork and GMAC-RFC have called for brokers to use credit checks when searching for sub-prime products to minimise possible discrepancies when cascading takes place.
Paul Shearman, mortgage proposition director at Openwork, says: “Cascading will push down a mortgage if any part of a client’s credit check is declined, and that should always be avoided in sub-prime.
“Without a credit check it is difficult to get past the problems that cascading can bring to sub-prime searches. Many of our brokers use checks to help their clients.”
Peter Izard, senior manager of corporate accounts at GMAC RFC, says: “GMAC-RFC encourages brokers to advise clients to access their credit histories from one of the credit checking services available.
“To avoid problems, we always try a mainstream product on clients who have adverse credit as this might be of a historical nature and might not affect their chances of getting a mainstream mortgage.”
These steps have been criticised by some as they do not solve the fun-damental issues of cascading in sub-prime searches.
Shaun Ginley, proprietor of East Anglia-based Magic Mortgages, says: “The problem comes when you have to go back to the sourcing system after a cascade. There’s no way of knowing what a client’s problem is. It may be a big issue or simply adverse credit that could be accepted by another lender.
“If credit checks are such a necessary tool why aren’t all intermediaries doing checks? There are numerous credit services on the market but they all give different results. A customer could need up to three different checks to be fully updated, which all takes time and money.”
He adds: “There is no reasonable solution to this problem without lenders making intermediaries aware of what clients’ problems are if they are refused.”