The Professional Mortgage Packagers Alliance is calling on lenders to review their position and ensure more reasonable notice on the withdrawal of products, allowing enough time for pipeline business to be processed.
Contributing to the debate initiated by the recent open letter to intermediaries from John Malone and other major mortgage luminaries, PMPA thinks lenders need to give more notice when withdrawing products.
Helen Hymos, lender relationship manager,at PMPA, says: “In the first instance, whilst the Alliance membership did not wholly agree with the content of John Malone’s letter, we chose not to react immediately, preferring to wait and see how the response from lenders would manifest itself in terms of more helpful management of product and criteria changes.
“We now have evidence that these problems are becoming even more critical and difficult to manage. Here are two very recent examplee, out of many that members have reported. An email notice from a lender arrived at packager’s offices at 4.40pm announcing that a product range was withdrawn at 4.30pm, the same day. There were to be no exceptions if cases were not already DIP’d, and the fully completed packages had to be with the lender by 5.00pm the following day.
“Another notice arrived at packager’s offices by email, at 9.50am, announcing that a specific product had been withdrawn at midnight the previous night. Again, there were no exceptions for cases which had not been fully DIP’d on line by that deadline.
“Both of the above examples demonstrate how totally unhelpful this approach is to packagers, as there is no time to halt marketing and promotional activities meaning that cases could still be on sale to consumers even after the withdrawal has been made. We believe that this makes it virtually impossible for brokers to fulfil the principle of Treating Customers Fairly.
“Packagers already have to cope with a loss of certain asset categories in the market, particularly in sub-prime, and we have had to adjust our business models accordingly in order to manage with far fewer lenders and these are now largely confined to the conforming market place.
“Being a resilient bunch, we have cut our cloth accordingly. However, by withdrawing and changing products with no notice, lenders are not allowing us time to process the business that we have already sold for them. These issues are the direct cause of a further drain on our income. Many packagers are still writing good business volumes in the expectation that lenders will honour them.
“No notice withdrawals mean little or no time to process cases and the subsequent loss of business and, quite probably, the loss of the brokers’ goodwill as many of them simply do not understand current market forces and therefore blame the packager. Lenders do not compensate the customers for wasted valuation fees where the case cannot be replaced. Packagers’ income/expenditure gap is compounded by the payment of overtime to staff in an attempt to get cases submitted in anticipation of unknown looming deadlines.
“PMPA accepts that there are commercial imperatives for lenders. That said, the Alliance is now calling on lenders to consider the commercial and reputational risks to their introducers, whether intermediary or packager, and structure their product withdrawals in a more timely and responsible manner. We are aware that this problem exists also for the direct intermediary so our plea is wide reaching ”
PMPA member packagers consist of, Praxis, Platinum Lending, Mortgage Match Limited, Countrywide Mortgage Centre, Niche Mortgage Solutions, AToM, BDS, Complete, Finance and Mortgage Solutions, Knight Funding, Open Door Solutions, OPM, Premier Mortgage Centre, Premier Mortgage Packagers and Primrose Mortgage Processing.