Andrew,
Sorry about the length of time getting back to you on this, but, I just felt the need (urge) to check our cases over the last two years and have managed to find one case where we charged a fee that totalled close to 3.5% (I thought we had some that were higher) on £125,000 (£4,375) with a approx. 1.5% (£1,940) proc from the lender.
Please understand this is not a typical case but I just want to illustrate why sometime that a seemingly high fee may well be justified.
Total earnings on this case £6,315, over the top? Well let me try and justify those fees;
(
Case type: Internet lead – (status, interest only, 2 year fixed. Product: SPML FT 65 Std Ver 2F Fixed rate: 6.29 Rev rate: 7.34 TCC rate: 7.5), remortgage to stop repossession by current lender, profile aged between 18 and 35 property based in the north of England. Serious adverse including; defaults and CCJs, turned down by current lender to refinance and one other lender)
Cost of sale initial cost centres
Initial lead cost
3 x 1 hour phone calls to Spain to fact find and qualify information gleaned from land registry searches (regarding second charges and current restrictions) and details on their credit file.
Advisor research into property value based on quest, land registry and average house price rises / falls in the area.
Sourcing products
2 x 1 hour phone calls to Spain to discuss product selection, benefits and pitfalls and to discuss MPPI requirements. (Full advice and recommendation given at this time.)
Cost of secure certificate key for clients email address for DPA reasons.
IDD, KFI, Suitability letter and copies of letters to the court and current lender emailed to the client via secure email.
IDD, KFI, Suitability letter and copies of letters to the court and current lender sent to the applicant’s home address.
2 x letters – 1 to the court and 1 to current lender outlining proposal and requesting postponement of court hearing by lender (refused).
In house solicitor attended repossession hearing on behalf of applicant as the applicant is still out of the country. (No additional charge to the applicant, she managed to achieve a 56 day extension with no additional to be paid to lender).
All before an application had been completed or an application fee had been paid!
On the applicants return to the UK – our customer service representative sat with the applicant at his home for about 1.5 hours to go through all the paperwork and help with explanations (no additional advice given at this stage). All required POR and PID collection and certified at this time.
Paperwork DX’d to our main office, audited and qualified and passed to processing for packaging.
This is where MOST brokers end their contact with the client and pass the case to a packager, we package in house!
Additional and ongoing cost centres
Processing welcome call to client to confirm application and criteria details and to advise of the continuing process to completion.
Additional continual update texts to client as case progresses to completion.
Solicitor instruction (in house software and direct contact).
Valuation instruction.
Redemption figure requested from all the applicants creditors (secured and unsecured to meet lenders affordability criteria)
References requested from employer and others.
Negotiating with applicants 14 creditors to reduce final redemption figures to allow remortgaging to fit lenders criteria. (no hour count logged, but case notes show 107 calls in total to creditors & applicant during negotiations).
Pre submission file audit, this includes a case manager and a director and happens on every application to confirm affordability and suitability of product selection.
Pre submission applicant call for final confirmation and acceptance of figures and fees.
Submission via DX to lender, offer received.
Offer audit, confirmation of offer details against KFI and suitability letter and a dispersal call to the client.
Completion date set. Final reception figures requested, two redemption figures come in higher than expected, no further negotiation accepted by lenders, our fee is deferred in favour of clearing reds to an in-house secured, no interest loan over the fixed rate period of two years. (We sometimes do this when an application is in danger of falling down due to unforeseen additional charges on final redemption figures, AS LONG as there are no affordability issues and will only be put in place for the fixed rate period).
Management of loan over the first twelve months (taking debit card payments and correspondence when a payment is missed – NO additional charges)
12 month application review call (this call is NOT a sales call) this is to review the applicants ability to pay the mortgage over the last 12 months and to record any additional borrowing, at the same time the applicant is advised on their next 12 months payment profile and the importance on keeping up their payments, so we can look to move them closer to a ‘high street’ product.
Management of loan payments over the next twelve months.
3 months to go on this applicants loan, we will contact the applicant six weeks before their fixed rate is due to expire.
Did we actually make anything on that application? It is a VERY close call… Could we, should we have charged more? Possibly, we are not a charity; we are a business and need to finance, current costs and reinvestment to be able to service future applications. And to be honest, there is no way we could have anticipated the actual amount of work involved in this case, an educated guess based on years of experience allowed us to estimate the potential costs,…
But, I believe the overall initial fee is amply justified. My point is / was; some of the new sub prime, quick kill brokers do not have the experience or the ability to apply the service level some of these applicants require – the fees are not an issue, consumers / applicants will sort that out themselves.
Sorry ever one for the long post…
FREE ADVICE IS THE BEST ADVICE
LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.
see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
http://www.leybridge.com/Leybridge-IDD.pdf
