E-surv’s director of business development, Richard Sexton, revealed in a Mortgage Solutions blog that a number of valuation firms are turning down bridging instructions fearful that the level of broker interaction on the deal constitutes a fraud risk.
Working with bridging firms can create a number of challenges, exacerbated by the faster turnaround time, said Sexton.
“Often, the level of ‘bespoking’ that goes into each deal also means that brokers seek a more detailed interaction with the valuer. Hopefully, this is to ensure that the surveyor fully appreciates the nuances of the deal and reports on the factors which are most important in each case – however, valuers can be uncomfortable with requests that appear driven solely by the need to ‘make the figures fit’,” he said.
Lenders have reported their discomfort over aspects of bridging lender and valuer working practices, said Sexton, as “too reminiscent” of boom-time packager introduced business.
“Lenders are typically seeking standardised reports of clarity provided by valuers who are demonstrably arm’s length from the transaction and any other party in the process,” he said.
“The sector feels like it could be close to establishing itself as a long term alternative approach to the needs of some – but one of the steps to doing so will be to demonstrably implement best practice in respect of property valuations,” said Sexton.
To make the most of the obvious market opportunities, surveyors and bridging firms need to carve out a way forward by “picking the phone up to one another,” he added.
Industry reports suggest lenders are actively warning brokers against buy-to-let deals with borrowers using deposits from bridging or other sources, like such as distressed property sales websites effectively borrowing with no deposit.
Back in May, a property expert warned advisers to avoid ‘no money down’ buy-to-let deals, where investors use bridging finance and two solicitors to avoid paying a deposit from their own funds.
John Grant, operations partner, at property site Property Angels International warned several of his clients have been encouraged to consider ‘double dealing’ and clarified this is mortgage fraud.
