What part of the mortgage sector does xit2 specialise in?
xit2 began in 1996 and is involved in the management and automation of data transfer within the mortgage market. It has three products, Repossession Exchange is for all those involved in the repossession chain; estate agents, valuers, lenders, asset managers and contractors. Valuation Exchange is a platform allowing packagers, brokers and lenders to give residential mortgage valuation instructions through the internet. And the newest product, Conveyancing Exchange, manages conveyancing instructions between mortgage lenders and solicitors. It is setting up a real time status processing service and central data control system.
What automation will you be introducing for the Sellers’ Packs?
xit2 will provide systems for those who want to produce Sellers’ Packs. If you examine what a Sellers’ Pack actually is, it breaks down to e-conveyancing and a home condition report. Eventually the entire pack will have to be automated if it is to work the way it is intended. On the e-conveyancing side, the Valuation Exchange already transfers valuation information and is about the electronic transfer of legal documents. However, at the moment a solicitor needing a local search will write to the local authority and receive the reply in writing. When e-conveyancing becomes a reality, which will probably be before the mandatory introduction of the Sellers’ Packs, the search will be requested electronically from the National Land Information Service (NLIS), who will then send the search results back electronically, which will in theory, take about an hour.
How far in the future is this?
NLIS is up and running now but many of the local authorities have not managed to get online with it yet. The NLIS is supposed to be a central hub connecting all local government offices in a one-stop shop for land and property and information. It is also connected to other agencies such as mining searches. I think something like 11% of local authorities are in a position to input data, so they will have to get their act together. With or without Seller’s Packs, the NLIS will make e-conveyancy a reality.
What of the home condition report?
The home condition report will need to be online, allowing potential viewers access before seeing a property. However, the home condition report is a worry. We need to know more about it. One question relates to its size. At the moment it is envisioned as quite a long document and there might not be enough surveyors in the UK to produce them. In some cases, the people doing home condition reports are not qualfied surveyors ‘ there are builders working on the basis that the report is on the condition of the property and not a valuation or a structural report. For lenders the problem is the report may include a valuation and would probably be valid for six months, by which time the house price valuation would have changed.
Lenders may have to devise other ways of valuing their security. Most people have heard of database valuations, but another way could be to transfer the home condition report to a local valuer who would be able to come to a valuation by combining it with local knowledge. I suspect lenders would consider this up to about 75% loan to value (LTV), with properties traditionally valued separately or greater LTV risks. This is not set in stone and the lenders really need to get involved to have an influence in what will eventually be in the Seller’s Packs.
Who will be paying for the Sellers’ Packs and how much will they be?
The straight answer is that at some point the consumer is going to be paying but whether they actually pay out of their own wallet is debatable. The cost may end up hidden in a mortgage product or in other fees. It should cost around £500, the amount bandied about at a number of seminars I have attended, but that still remains a rough guide. It will be interesting to see how much e-conveyancing costs to implement. If IT infrastructure and development is needed, this all has to be paid for. It may mean that the conveyancing service alone will cost more. It is still important to mention that down in London £500 compared to the price of the home is likely to be neither here nor there, but if you are in Bolton or Blackburn, which is where I am from, you can still actually get a house for £20,000 which makes £500 look like a lot of money.
What effect will this all have on the mortgage intermediary market?
Intermediaries will need to keep up to speed on this subject. I know they have a lot on their plates with the CeMAP, MAQ and CP146 but they may find it to be a good client retention tool as they would be able to follow the online trail and keep clients updated. A concern may be that lenders may also see Sellers’ Packs as a retention tool. For example if you are thinking of moving house then keeping your mortgage with the original lender may result in a free Sellers’ Pack, which could cut the intermediary out of the chain.
The whole future of the market is going to be IT based so brokers and lenders will have problems, as lots of different systems need to start talking to each other. In the residential mortgage industry there is no common interface standard and the Sellers’ information Pack really requires one.