More than half of advisers vented their frustration over indecisive lenders, when polled by LendInvest at the recent NACFB expo in Birmingham.
The change of heart can often occur because of a disconnect between the lender’s Business Development Manager (BDM) and the underwriter.
Dan White, managing director at White Finance Services, told Mortgage Solutions: “One of the biggest frustrations is speaking with a lender’s BDM to place a case first and talk through the details, then to have an underwriter decline the case after it’s been submitted.
“I think there are certain BDMs who don’t necessarily have the authority to override or go to a more senior level.”
Kim McGinley, director at Vibe Finance, said: “When a lender commits to a case upfront and then changes its mind as the deal progresses it can be down to a variety of reasons; underwriting and the credit team that signs off the case are not on the same page, or the lender may simply move the goalposts.”
Lenders changing their mind isn’t a regular occurrence, but it is frustrating when it happens, according to Colin Payne, associate director at Chapelgate Finance.
He said: “Ultimately, brokers concerns are no doubt borne out by sheer frustration at the time invested and having to do their job twice.”
“I had a case with a lender recently whereby I had numerous detailed discussions with them over the course of a year and understood from those conversations that they would almost certainly look to do the loan but on submission they decided that it wasn’t one for them.
“Clearly at the time, it was incredibly frustrating given the groundwork and time invested over such a long period notwithstanding the heavy level of input from the client to meet the lender’s various requests.”
Jane King, mortgage adviser at Ash-Ridge, agreed that a change of mind doesn’t happen too often, and being thorough helps.
She said: “There is nothing worse than an application passing on lending criteria, affordability etc only for an underwriter to decide it does not fit after all and often for some really minor reason.
“Lending criteria is now so complicated and it changes all the time, it is really difficult to keep on top of it.
“It doesn’t happen to me very often as I try to be thorough, but it does every now and again and it wastes so much time and the client’s time too.”
Broker reputations on the line
It is the broker who ultimately suffers the consequences of an indecisive lender.
White said: “If a broker looks to talk through a case with a BDM, relays the message back to the client and then the underwriter declines the case, it then reflects very badly on the brokers integrity and reputation which could then cause a breakdown in trust from the client.”
McGinley said a lender’s commitment, or lack of, can be “make or break when representing a client”.
She added: “Transparency is required now more than ever.”
However, Payne said brokers should understand that there is no guarantee an application will be approved.
He added: “There is a huge pool of lenders out there nowadays, competition is high and most circumstances are met by at least a few lenders, so while it can be frustrating when a lender can be considered to have ‘changed their mind’ more often than not a plan B or C exists.”
Matthew Tooth, chief commercial officer at LendInvest, said the key to preventing disappointments for a borrower is putting communication lines in place between the broker, underwriting, sales and credit teams.
He added: “Sometimes changes in circumstance cannot be helped; however, taking the time to properly review a case and stick to the decision in principle benefits all parties involved in the long run.”