So that’s why I think lenders should call time on ERPs. To someone like myself who strives to resolve problems it makes sense that if there is a clause in a mortgage agreement that causes the loss of freedom to move home it should simply be removed.There is a way forward without ERPs. You only have to hit a few buttons on Trigold or Mortgage Brain to see there are many lenders offering products free of them. Granted some of those same lenders are still offering ERPs with some products, but as with the wretched mortgage indemnity guarantee it’s time lenders introduced all products without this archaic penalty. It would simplify things for brokers and clients and hand back the freedom to move without incurring a massive financial penalty. It’s easy to say ERPs are covered in Key Facts Illustrations and explained at point-of-sale but the public does not hear the negatives, and of course they have selective memories when things don’t go their way. Six years a go I met Treasury officials to present a report I had written and to discuss the mortgage industry in general. The ERP was a topic discussed as was generic mortgage application forms. It was my opinion then that ERPs should be abolished due to the number of complaints I had received over the years from consumers. The reason I raise the matter again now is that in my area many properties are in negative equity due to the owners purchasing in the boom times of 18 months ago. Lack of equity affects them and they wish to remortgage to debt consolidate, then realise that due to a hefty ERP, they are unable to do so. There are ways of structuring deals to make them both attractive and profitable and the ERP is one area that should be looked at. On the positive side, imagine having a product to sell whereby you can say to your client, “Here’s a good product and one that gives you the freedom to move when you want to without incurring a financial penalty.” It’s swings and roundabouts. A move to abolish ERPs should have the same effect on all lenders over a matter of time. Think about abolition now, lenders. You might win over many potential clients and you would certainly endear yourself to every broker in the land.
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Bradford & Bingley announced the completion of the purchase of a mortgage loan portfolio from Kensington Mortgage Company, a wholly owned subsidiary of Kensington Group, for around 204m. The purchase, funded from B&Bs existing resources, has been made by Mortgage Express, its wholly owned subsidiary.The portfolio has an average loan size of approximately 122,000 and […]
Confirmation last week from Preferred that its joint managing directors, John Webster and George Patellis, have quit the company throws up a few questions. If, as widely rumoured, Webster is in line for the top job at lender Swift Advances, contractual obligations at Lehman Brothers are likely to be just as harsh as for the […]
Key early findings from the evaluation of the Local Housing Allowance Pathfinders, are published today. The report is part of a series that gives feedback on the evaluation and looks at the early impact of the LHA on landlords and letting agents, around a year after its introduction in each of the nine Pathfinders. The […]
From Kevin Friend Firstly I would like to thank Mortgage Strategy for a great boat trip. As always, a great day was preceded by the traditional late night. As I got on the boat surrounded by some of the industry’s finest I wondered what the day had in store. After the skipper had given us […]
By Kunal Desai, Neptune India Fund
As global investors continue to scour emerging markets through the lens of reform potential, India shines bright. Indeed, we think it can sparkle even brighter. We anticipate India’s self-imposed 10-year ‘policy holiday’ to turn into one of the most pro-growth and pro-investment policy calendars seen in Asia in years. The Indian electorate has engineered a historic verdict. We now have the strongest Indian government since 1984, with the pro-market Bharatiya Janata Party (BJP) achieving an absolute majority for the first time in the party’s history.
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