Title insurance is a type of indemnity insurance that lowers the need to complete many property searches, investigations and checks usually required at the underwriting stage and through the conveyancing process.
This will therefore reduce the time taken to process applications and offer loans to clients.
The firm is initially launching title insurance for residential BTL remortgages and bridging refinancing facilities up to £1m, with recently built properties, certain foreign nationals and offshore corporate structures included.
MFS said that it expects to introduce title insurance more widely across its whole product range.
Paresh Raja (pictured), CEO of MFS, said: “Brokers and borrowers are often looking for speed when approaching a specialist lender. We’re always looking at ways that we can responsibly reduce the time it takes to deliver loans to clients, and this is a positive step forward for us in that regard.
“Using Westcor’s title insurance proposition is very useful in reducing the time-consuming tasks involved in the initial underwriting of a loan, as well as accelerating the conveyancing process thereafter.
“We’re confident that brokers and borrowers will respond well to this addition to MFS’ offering, and we expect to make title insurance more widely available across our bridging and BTL mortgage products in the coming year.”
Borrowers will be eligible for title insurance if they are an individual who is a UK national or a passport holder of any country in the EEA, Channel Islands, Switzerland, USA, Canada, Australia, or New Zealand.
They will also be eligible if they are a corporate entity, trust and partnership line-up incorporated in the UK, EEA, Channel Islands, Switzerland, or the British Virgin Islands that is stated as the legal owner of the property.
Christopher Taylor, leading title insurance company Westcor International’s corporate development director, said: “Partnering with MFS as their dedicated title insurer is an exciting opportunity for Westcor International. Under the visionary leadership of Paresh Raja, MFS is a highly respected lender among institutional funders and high-net-worth private investors.
“We are delighted to be aligning our market-leading products with this team of award-winning specialists in the UK bridging market.”
Title insurance is a type of indemnity insurance that protects lenders and homebuyers from financial loss sustained from defects in a title to a property.
The lender will be able to use title insurance to quicken transactions for its bridging and light refurbishment bridging products on loans up to £3m.
Anna Lewis (pictured), commercial director at Castle Trust Bank, said: “Having a comprehensive title insurance policy in place enables a lender to focus on underwriting the fundamental elements of a bridging case and this supports a more efficient and effective application process.
“It also makes possible some transactions that would otherwise be impossible, where there are complicated legal issues surrounding the security.”
She added: “This gives a lender greater certainty and it means that we can, in turn, provide greater certainty to brokers and their clients. Increasing the maximum loan size available to use title insurance to £3m is a firm signal that at Castle Trust Bank, we are ready and willing to provide fast access to bridging finance on high value and often complex cases.”
The lender introduced the fast-track process in July this year and allows an automatic valuation model to be used as an alternative to a RICS property valuation and inspection.
Hometrack data supports the client’s estimated value or purchase price.
The AVM can be used up to 70 per cent loan to value (LTV) for purchase and 60 per cent LTV for refinance up to £750,000 valuation.
Higher value properties can be underwritten with a desktop valuation, and title and search indemnity insurance can be used.
Credit-approved term sheets are also issued within four hours of enquiry.
Personal guarantees, which mandate all parties need to have independent legal advice, are not required on cases at 65 per cent LTV and below.
The lender said that its average turnaround time since its fast-track process was introduced was 41 days and purchase took 23 days. The fastest deal completed was in seven working days.
AVM and desktop valuation have been used in over a third (35 per cent) of completed cases since July and loan enquiries were 26 per cent higher than in the fist six months.
There was also a 38 per cent increase in conversion rates, Tuscan Capital said.
Tuscan: ‘Real evidence of fast-track advantages’
Colin Sanders, chief executive officer at Tuscan Capital, said: “When we introduced fast-track we knew that many of our bridging loan customers would benefit from both cost and time savings. That said, we’re delighted to release these statistics which provide real evidence of the advantages from using fast-track
“At a time when bridging cases are taking longer to complete, we’re delighted to be bucking the trend. We’re equally pleased by its positive effect on completion rates.”
He added: “We’re not standing still, however; we recently added another underwriter to our team to improve our service and have further new appointments planned for the new year.
“I don’t think it’s an exaggeration to say that right now, Tuscan Capital has market-leading service and highly competitive pricing, which add up to make a very strong bridging proposition.”
The lender said that this would help applications progress faster as it reduces time and cost to borrowers.
Freehold and leasehold kerbside properties, including auction purchases that do not need significant works and can access standard bridge and light works products, are eligible.
Loans are subject to a maximum of £500,000 and properties must be located in England and Wales
Westcor International is providing the lender with perfect title policy to support its loans.
Founder and managing director of Mint Property Finance, Andrew Lazare (pictured), said: “With 11 years of successful lending under our belt we’re now at the successful stage whereby we are comfortable to embrace the more fully encompassing role of title insurance.
“We’re here to help borrowers, brokers and other professional introducers alike, and this is just one more step along the way.”
Christopher Taylor, corporate development director at Westcor International, said: “We’re proud to have provided support to Mint Property Finance from inception and have enjoyed being part of the business’s impressive journey.
“We have seen how the perfect title policy has been utilised in specific areas of the business for the benefit of all stakeholders and are delighted to see those benefits now made available to a wider audience. We’re pleased to provide ongoing support to Mint Property Finance as the business continues with its next phase of expansion.”
Tuscan explained that this includes a new valuation process, utilising an automated valuation model (AVM) to determine whether a desktop or short-form valuation can be used.
Alongside this, personal guarantees will no longer be required on cases at 65 per cent loan-to-value (LTV) or below, while a know your customer smartphone app will allow brokers to upload client identity documents more swiftly.
In addition, title insurance and search indemnity insurance can be used to speed up applications, while credit-approved term sheets can be issued within four hours of an enquiry.
Alongside the new fast track process, Tuscan has cut the rate on its lowest bridging loan to 0.64 per cent.
Colin Sanders (pictured), CEO at Tuscan Capital, said that the fast track process had “decluttered” the journey for brokers, making it more efficient.
He continued: “The new approach to valuations will result in a faster process for the vast majority of bridging finance cases, while the introduction of title insurance will be a breath of fresh air for those who need their purchases to be completed quickly, such as those buying at auction.”
The bridging revamp comes after Tuscan secured £150m for short-term buy-to-let lending, while it also launched into commercial bridging at the start of the year.
This is expected to speed up the legal process during a mortgage application as lenders will not need to carry out additional searches because the insurance will automatically cover the loss of property value if any defects are found.
Paul Brett, managing director of intermediaries, at Landbay, said: “Offering free title indemnity insurance on remortgages will decrease the amount of time it takes for the remortgage to go through, which means that landlords and investors may have faster access to additional finance should they need it.
“For intermediaries it also provides the opportunity of highlighting the importance of title indemnity insurance to their clients to ensure they are protected against all eventualities.”
Primis network partnership
Landbay also partnered with Primis Mortgage Network last week, opening the lender’s mainstream and specialist buy-to-let range up to its member brokers.
Primis’ advisers will also gain access to Landbay’s underwriting, post-case submission and case tracking teams.
Brett said: “A partnership between Landbay and Primis will benefit all Primis brokers who deal with specialist buy-to-let, particularly during this time of the stamp duty holiday.
“We look forward to supporting Primis’ members with a service that is second to none.”
Toni Smith, chief operating officer at Primis Mortgage Network, added: “Introducing Landbay to our lender panel is a fantastic way to give our members access to expert, competitive and innovative products combined with cutting-edge technology.
“The buy-to-let landscape is getting ever more complex, and we are continually striving to meet the evolving demands of our clients – Landbay is a fantastic partner to help us meet that goal.”
The lender, part of OneSavings Bank, said the change brings the product in line with its commercial and buy-to-let transactions.
Title insurance streamlines mortgage applications by providing cover for issues that may arise in the legal due diligence process, resulting in quicker completion times. It also provides cover for the bank in instances of property title disputes.
Darrell Walker, head of sales, second charge and commercial, said: “Efficiency and speed of service are key requirements of our brokers and their clients, particularly so for developers who have just completed a project and are looking to exit via InterBay’s developer exit product. Title insurance enables us to proceed without requiring the need for our solicitors to conduct a full investigation of the title, thereby resulting in increased time and cost savings for borrowers.”
As well as providing cover for the bank in case of any property title disputes, title insurance can help streamline the application process for brokers by providing cover for issues that sometimes crop up in the legal due diligence process.
Colin Bell (pictured), managing director of commercial mortgages at Hampshire Trust Bank, said: “As a former broker myself, I understand first hand the importance of speed and service. Title insurance is a useful tool that not only provides cover for the lender, but by speeding up the time it takes to process applications, can cut down on completion times.”
He added: “At Hampshire Trust Bank we are focused on providing a great service in a timely manner. While title insurance may not be appropriate in every case we will continue to go the extra mile to ensure brokers have access to finance when they need it.”
Chris Taylor, chief executive officer at Titlesolv, said: “At Titlesolv we are proud to provide solutions that streamline residential and commercial property transactions. We know that speed is often a priority and we are delighted to offer title insurance designed to improve the service clients receive. Hampshire Trust Bank are certainly market leaders in terms of the service they provide and we look forward to our partnership in providing brokers with finance in an efficient and reliable manner.”
