Of late there have been fleeting glimpses of a spirit of cooperation breaking out in the mortgage industry. Some notable examples have been Mortgage Intelligence, Mortgage Next and Pink sharing their exclusive products, and Network Data integrating its mortgageLink system with the Mortgage Trading Exchange.
Perhaps I might spend a few minutes on the good tidings of the latter development before getting back to grim reality and the unhelpful posturings of a number of lenders in the market at the present time.
MTE is a means by which lenders can provide a seamless link between the sourcing systems (Mortgage Brain, M2000/Encore, mortgageLink) and their servers for the purposes of decisions in principle, full mortgage applications and sending back tracking information to brokers on the progress of the mortgage application. Whether or not the same e-commerce link can be used for the production of a KFI from a lender's server is a moot point.
My article in the August Network Strategy supplement caused some adverse reaction from certain lenders, principally Accord and BM Solutions.
Linda Will of Accord used the opportunity to generate more publicity for the launch of its website; good for her.
On the other hand, Michael Bolton of BM Solutions (see below) is adopting a strangely aggressive stance and threatening to withdraw all its products from sourcing systems. Quite belligerent and not really in the spirit of co-operation that would benefit the industry.
At least Michael may condescend to allow the sourcing systems to keep products for comparative purposes but not to allow production of a KFI unless it is from the BM Solutions website. Whether or not the sourcing systems will want to do this remains to be seen.
I do appreciate that BM Solutions and many other lenders have poured huge amounts of money – sometimes running into millions of pounds – into developing their websites to promote their mortgage products and to provide a means by which brokers can buy their products from the website in an execution-only manner.
This being the case, there is a natural vested interest in making sure brokers use the service not only to produce new business but also to justify the investment that has been made. However, to try and artificially manipulate the market to achieve this may well prove futile.
BM Solutions has stated that linking to the MTE system is not on its agenda and leaves the broker no option but to dial up to its website and re-key all the client data that had been entered into its sourcing system in order to produce the KFI.
Brokers will, without doubt, take the route which makes life easiest for them and may well select another lender's product – one whereby the KFI can be generated by the sourcing system.
Another lender that has taken a decision not to cooperate with the sourcing systems is HSBC. Admittedly only 1% or less of its new mortgage business derives from the broker market but this is symptomatic of a number of lenders who are less than co-operative in forwarding details of their calculation algorithms.
There are a number of components that make up the structure of the mortgage intermediary sector and the sourcing systems market is one of these. How else can you search the market and select the most suitable products for your clients? The old days of selling the clients whatever you want without fear of reproach from the authorities are coming to an end.
It is in the best interests of the mortgage industry for all parties to recognise and respect the position each holds in the market and to seek to achieve even better electronic communications and other efficiencies to cut the cost of placing mortgage business on the books of lenders.
Let's do it in public
Michael Bolton, director of mortgages at BM Solutions, chose to address a letter to mortgage sourcing systems through the public media and I am sure he will understand why I will be responding in the same manner.
I will be replying in my capacity as managing director of Network Data, proprietors/publishers of the mortgageLink sourcing system, which has been in operation since November 26 1986. However, as I am rushing around finishing off various articles for Mortgage Strategy before my imminent departure on holiday, it will have to wait until I return. Watch this space.