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Ban on fast-track is forgotten issue of MMR

Homeloan Partnership’s Chris Tanner believes that the argument over the wider strategic outcome of the Mortgage Market Review is blinding the industry to smaller but vitally important issues, such as the potential loss of fast-track.

Chris Tanner, managing director of HLP, says that fast track is likely to disappear as the Financial Services Authority believes wrongly, but understandably, that fast-track is self certification by another name.

He says fast track is a worthwhile facility designed primarily to speed up processing which benefits the customer and the lender and also reduces administration costs as well.

He says: “Fair to admit that the industry has not done itself any favours in the past and the FSA has rightly come to the conclusion that fast-track is being used by some brokers as a substitute for self certification when it becomes obvious the client cannot support the claims made on an application form.

“But before we protest too much there is evidence which shows that Abbey has already excluded brokers from their fast-track panel when there is no response to a request for evidence to back up details on the application.”

“I feel that there is middle ground here. Rather than throwing the baby out with the bathwater, the FSA should consider allowing lenders to keep specific fast-track schemes but make them available only to good quality networks and firms.

“This will help maintain the quality required and help reposition fast track in the minds of intermediaries in general as a tool for speeding up the process and not to circumvent the veracity of the application.”

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  • Grey Haired Underwriter 26th November 2010 at 9:53 am

    So much of this comment just re-inforces stupid prejudices and it is quite annoying. Fast track has its place where a lender is reliant on credit scoring but a review of the workings of scoring might be a good idea. However it has to be borne in mind that we are all subject to MCOB and to responsible lending. The definition of responsible lending unfortunately relies upon an interpretation by the FSA and that is the problem. The definitions are high level and not precise. So we all have to be careful.

    As for dual pricing I have to again point out that it is not most lenders doing this. the major banks may do it but I repeat that they have access to cheaper money and other lenders can’t compete on a level playing field so the big boys can do as they like. If the rest of us could get our hands on cheap money they might find that improved competition limited their options to do what they want.

    I would also point out that most statistics point to the legal profession as creating the largest amount of fraud – not brokers. OK I accept that some brokers are guilty of manipulating a case in favour of the client but this is ‘soft’ fraud not the real criminal stuff that is hanging about. I think that this soft fraud is done as a misguided attempt to help the client but perhaps if the broker also had to do the repo they might think again before trying the same trick.

    Finally I think we all have to realise that the broker needs the lender and the lender needs the broker. The importance of one or the other may change according to circumstances but I firmly believe that the time of the broker will return and that a leaner sector is going to be good news when it does.

  • anon 25th November 2010 at 3:56 pm

    Luke – simple reason for dual price – no appetite to lend in volume – want to get at the customer directly to sell other products 9note that dual pricing is worst at 90 ltv where FTBs are ripe pickings for life asu bins etc) Back in 2006/7 dual pricing was in favour of brokers when lenders were ravenous for volume – by 2012 equalibrium will return. Hang in there

  • Dan McGeehan 25th November 2010 at 3:48 pm

    Whilst it may be true that fast track in past was abused by a minority of brokers the landscape has dramatically changed since then. Broker numbers have fallen from a peak of around 35k to 10/12k now and undoubtedly this has got rid of a lot of the bad apples. I would like fast track to stay but only be distrubuted to certain partners such as large AR or DA firms who have robust procedures in place. Regardless of if a case is fast track or not my network require our firm to have payslips, full months bank statement and employers details on file. Removing fast track would have only one implication now which would be to push up the cost to customers. Touching upon the fraud issue there is a lot of figures printed and the last I read was that solicitors where responsible for 70% of all mortgage fraud.

  • Luke Atkinson 25th November 2010 at 3:39 pm

    I’d like to believe that, so why dual price?

    why cut brokers out if they are a cheap alternative?

    Issues around fast track can’t be an excuse, as Natwest don’t fast track and they dual price?

  • anon 25th November 2010 at 3:14 pm

    @luke – sorry for anon – work for a big firm and its the rules. sorry you feel insulted – certainly not accusing you. my experience is that most mortgage fraud is committed via brokers as they either collude, or allow themsleves to be used as fraud vehicles – the sorry thing is that it is actually a big number. Going forward there will be a compelling reasons for lenders to use intermediaries if they are good quality – the fact is that brokers are cheap route to market and are flexible.

    what brokers need to do is ensure they are good value for lenders and consumers ie both borrowers and lenders would rather use a broker than go direct. that is the challenge.

  • Luke Atkinson 25th November 2010 at 2:26 pm

    @anon – I don’t think I mentioned MCOB, did I? I certainly didn’t mention regulation??

    I’m merely stating fact, lenders require all brokers to have evidence on file, whereas mortgage arrangers in branch aren’t required to have this on file.

    I find your comment about fraud insulting, perhaps this is the reason for your anonymity?

  • Cedar Mortgage Services 25th November 2010 at 2:07 pm

    It’s obvious that fast track was always being used instead of self certification. Anyone who thinks differently is disillusioned. The FSA are spot on here, as you have to consider the “knowing your clients” requirements. This states that you have to be able to prove your clients can afford their payments – meaning even though the banks may not require payslips, P60, accounts, etc.. you still have to retain these items within your file. This would also definitely be a prudent thing to do as if that client goes into arrears the first thing the lenders will check is his/her income and should they find irregularities then the first person they come back to is YOU. Now, if this is the case, why not submit them in the first place. The stupid thing here is that the banks are well aware of this, however, they wish to ignore it as they NOW want to lend money. If self cert was reintroduced back into the market place, this would resolve a majority of the issues. The removal of the self cert was totally the FSA’s doing. In the past it is true that the banks did not want to lend, however, this doesn’t seem to be the case any longer as banks seem to now be defending fast track. Realistically, if you remove fast track, only full status is left. And then, what exactly is the point of a broker, when clients could go to the lenders directly. This is turn would eliminate more brokers, which means clients will deal only with Banks. This is not good news for the banks as when the FSA issue fines, I think we can expect to see much larger fines and possibly more often. I really don’t think the FSA have really thought this through as ultimately all they are doing is pushing the last few remaining brokers out of this industry and in turn they also will suffer financially and have to make redundancies themselves. At least Bridging finance is non-regulated and you can still self declare your income. As a packager for bridging finance, I find that the brokers who work with us all agree that the regulated market is too difficult to make any money whereas with the bridging finance their incomes are close to the levels they were at before the recession started.

  • anon 25th November 2010 at 1:46 pm

    i see my last post was removed. i am not an FSA fan either but what i said was correct. The FSA certainly do feel that smaller brokers are responsible for a lot of fraud – lenders feel the same too – just look at numbers being struck off by lenders and FSA. Its not pretty and if you are not one of those brokers then ignore my comments – they do not apply to you – but censoring my post really is not very british is it???

  • Mike Cullen 25th November 2010 at 1:01 pm

    Most networks and firms insist on evidence of income due to lenders requiring it. Under TCF you are required to ensure that the client can afford the commitment, which cannot be achieved if income is not verified. I’m not a fan of FSAsetting lender policy, nor am I a fan of brokers being accused of fraudsters, based to my knowledge on no statistical data.

  • anon 25th November 2010 at 12:16 pm

    @luke atkinson – your posts often contain errors. You are not required specifically by MCOB to obtain evidence on income. Unfortunately you and others regularly misquote regulation and forward your opinions as if they were fact. As for double standards – its hardly surprising is it – most of the fraud comes from broker introduced cases.

  • Luke Atkinson 25th November 2010 at 11:41 am

    It will be interesting to see if the lenders in house arangers continue to have a fast track facility post MMR, whilst the broker’s facility is potentially being removed.

    We all know that as brokers we HAVE to collect and keep on file evidence of income on every fast track case and that lenders shoudl do the same but we also know that banks do not require their in house arrangers to collect and keep this on file.

    More double standards?