Mortgage Advice

[mikebdomain]

An ‘independent mortgage broker’ is something completely different and has nothing really to do with the lender selection that the broker has access to. Most ‘independent’ brokers are single advisors that are linked to a packager network and is usually restricted to the packagers lenders and their products. That said, most of the bigger packagers have access to the whole of market.

All advisors / brokers must declare their own status on their Initial Disclosure Document (IDD) the most common declarations on an IDD are;

We offer mortgages from the whole market.

We only offer mortgages from a limited number of lenders. Ask us for a list of the
lenders we offer mortgages from.

We only offer mortgages from a single lender.

You can see from our IDD (shortcut below in my sig) that we only offer insurance from a small selection of providers and only offer a few insurance products. But we are whole of market for mortgage products and do offer full advice.

How does a consumer know if they are getting the most beneficial quotes? Make sure the broker can select from whole of market and you talk to a couple of brokers, the selection of products they can offer should be based on a very in depth fact find and a credit search (to confirm the applicants status) – the rest is down to best advice.

How many lenders are there out there? - I asked the same question of one of my advisors the other day and his answer was, I can tell you we can offer 16,000 products because the software tells me it does, but I am not sitting here counting all the lenders - so in all honesty I do not know...

[johnz]

Part of the FSA compliancy is that a document is produced showing what was quoted. The broker then has to provide documented proof of what he/she has recommended, why they recommended it, did the client request that advise be given on that area, what the client chose, if it was against the recommendation, why, could the client afford it, if not why was it recommended, and on and on it goes.

It is very strict.

Johnz

[MelanieGiles]

Thanks for the detailed response Mike - and as ever this forum is such a wealth of expert advice. You have highlighted a lot of things I was not really aware of - and should have been so I am grateful for the clarification.

Just one point on credit checking. If a client shops around for a mortgage to say 3 different brokers, will that mean that 3 different credit checks will register at the scoring agencies - and if so will this affect any of the applications as a result - ie loading the interest rates?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[mikebdomain]

Johnz

The documents you refer to are the Initial Disclosure Document (IDD) and the Key Facts Illustration (KFI) the timings of the supply of these documents and their accuracy in very strict. It is not unusual for an applicant to receive more than one KFI. More customer focused brokers will also supply a Suitability Letter which should explain in detail why the products recommended was specifically selected for the applicant.

- - -

Melanie

Not all brokers carry out a credit search (which seems a bit daft to me)

Broker / packagers will every time. If credit searches are carried out for an applicant for a mortgage and the details for the request of the search are the same in each search, it should not, have a detrimental affect on the applicants credit record.


FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker & Mortgage packager
Specialising in adverse credit.

Firm FSA No:313790
Personal FSA No:MJB01557

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

[MelanieGiles]

Thanks once again Mike - appreciate your help.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[bagpuss]

mike..is this where the term footprint come into play...i have heard people say it leaves a footprint but not a rejection ???

Angie xx


My IVA Story......http://bagpuss.blogs.iva.co.uk/2007/09/ ... iva-story/

[mikebdomain]

I used to train staff to carry out credit searches in my last company, this was for the new intake of staff every other Wednesday morning. I used my details to carry out the search, it left a footprint of the search on my record and affected my ability to obtain credit (although it should not have done).

A footprint should only be left when a search is carried out for an applicant when they are attempting to obtain credit. It only causes alarm bells with certain creditors when there are a lot of searches for varying amounts and varying reasons.

No one should carry out a credit search without your permission.


FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker & Mortgage packager
Specialising in adverse credit.

Firm FSA No:313790
Personal FSA No:MJB01557

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

[JulianSampson]

Morning!

If I can add my experience on this as we deal exclusively with sub prime Lenders. As a professional, Melanie, I would recommend that you get pally with your brokers (Mike etc!) and ask them to take you through the key lenders in this industry- you are only really looking at 10/12. I have found it invaluable to learn from the Lenders directly what their underwriting or credit risk perspectives are on heavy adverse cases because then you can legitimately bring this experience into your own advice- trust me this doesnt lead to giving regulated advice but you can get an idea of some key pointers,

1. which of the lenders are the real bottom feeders and which have delusions of being "near" prime;
2. which lenders sell on their loan books and which are balance sheet lenders (those that sell do so to a limited number of buyers but you would be surprised how confusing this gets for a client when somebody else starts asking you for money!)
3. which lenders deal directly with the public, which have preferred or exclusive packager partners (Beacon springs to mind) or which have broker offerings.
4. which lenders have fantastic online services (GMAC) or gimmicky ones (Edeus) but perhaps at the expense of genuinely underwriting the client and at the end of the day the best underwritten mortgage means that both lender and client are aware of what they are each letting themselves in for!
5. which lender owners (US/ SA/ German banks) are suffering and pulling their products or even pulling out of the market completely.

On the credit search question many of the agencies are much more sophisticated now with the footprint left. We operate an electronic ID system for anti money laundering and whilst this shows on any credit record it is footprint-neutral.



Julian Sampson
Solicitor
Wright & Wright LLP
www.wrightandwright.com
See my article in Clean Slate magazine

[MelanieGiles]

Morning to you Julian and thanks for the tips.

I prefer to make the referral and then allow the brokers to advise my clients directly - making it clear that I am not authorised to give financial and investment advice.

My query on this thread is how can brokers who claim to be "whole of market" be "whole of market" when they may only be dealing with a dozen lenders, and do my clients get more balanced advice from brokers who genuinely have access to every possible lender rather than a selective few who may be on their panels.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[JulianSampson]

The term "whole of market" (from what I see) does not include a panel of all lenders but a panel of 1/2 lenders from each sector (High Street/ Near Prime/ Adverse/ Heavy Adverse) allowing the broker to give a broad spread of options.

What I believe whole of market should include (and this is certainly what I try to get my brokers to do) is a consideration of other options beyond mortgages too and I suspect this is where good advisers such as on this site work well. The argument I have seen put (which sounds good) is as follows,

MCOB 4.7.6 states:
"where a firm makes a personal recommendation for a mortgage, the main purpose of which is to consolidate existing debts, the following matters must be considered:
1. the cost associated with increasing the period of repayment
2. whether it is appropriate to secure a previously unsecured loan
3. if the customer is known to have payment difficulties, whether it would be more appropriate for the client to negotiate an arrangement with his creditors than to take out a mortgage".

It is this latter section that I have seen some of the big debt companies latch onto and, even if you do not agree with their proposition, I cannot fault the logic.


Julian Sampson
Solicitor
Wright & Wright LLP
www.wrightandwright.com
See my article in Clean Slate magazine

[MelanieGiles]

So if a "whole of market" broker, knew of a better deal that was avaiable from a firm to which it did not have a connection, would it be possible for them to approach that company for their client, or are they tied to the 1/2 companies they do have a connection with?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[JulianSampson]

they shouldnt be tied- I know my brokers will dump a lender in favour of another quite readily Some brokers will only have a small panel because then they can source more competitive products because of volume and this (even though it restricts the number of lender options) can be good for the client because the rate will be better; others have a wider panel but use sophisticated sourcing software with people like Trigold or Mortgage Brain and this sifts through some generic criteria to leave the broker with more tailored options. Brokers are widely read and very knowledgeable about available products (they get plenty of literature each day!) so it would be unusual for a fanastic product to be available on the market and for it to be ignored by the broker community. I am sure I will be contradicted but I suspect the only time a broker can't get to a product is where that one has been offered to one broker/packager only. I do know an IVA specific product was being tailored by Unity (because I was advising on it) but then they went under! I know of another from Beacon but I think this was on restricted access.

This may seem unfair but the Lenders do believe they are exposing themselves when they come up with innovative products and they tend to offer them out to select packagers who they trust with their trials. I know some posters will have little sympathy with Lenders but I do work with some excellent credit risk guys and they genuinely do try to develop good products for the clients- unfortunately the market doesnt always let them!



Julian Sampson
Solicitor
Wright & Wright LLP
www.wrightandwright.com
See my article in Clean Slate magazine

[MelanieGiles]

Thanks Julian - makes a little more sense to me, and my main concern of course is that the IFA is independent and will find the best deal possible regardless of ties, fees or commission rewards.

In your experience, do you see a softening of lenders attitudes within the IVA market towards the final year equity release type of re-mortgage - when the prospective customer can demonstrate four years or so's worth of regular repayments to their creditors?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[JulianSampson]

They were loosening just before the Summer and I am sure they will do so again. The problem at the moment is that we are finding a lot of competitive products being pulled and business levels are massively down. One big big sub prime Lender is down 85%!

I think I posted this advice elsewhere but if the client can show consistent repayments of any sort of commitment- be it mortgage or IVA (ideally both!) then that will be like sweet music to any Lender because the next 6 months they will move the focus of their consolidation from the front end (sales) to the back end (arrears management and repossessions).

Julian Sampson
Solicitor
Wright & Wright LLP
www.wrightandwright.com
See my article in Clean Slate magazine

[mikebdomain]

I am sure I will be contradicted but I suspect the only time a broker can't get to a product is where that one has been offered to one broker/packager only.

This is certainly the case in my experience.

Just before the recent problems hit; we were working with Infinity, similar to Unity in that they were both backed by Investec, on Leybridge exclusive products targeted specifically at the IVA market. These products would have only been available to other brokers who used our packaging services. Unfortunately Infinity lost their backers at the same time as Unity did; they are still on the scene, but not in the same format.


FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker & Mortgage packager
Specialising in adverse credit.

Firm FSA No:313790
Personal FSA No:MJB01557

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