Surveying firms are openly refusing to deal with bridging firms, fearful of pressure from brokers to tailor property valuations to acceptable loan criteria, according to e-surv.
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.
The Council of Mortgage Lenders has come out in support of the FSA’s determination to “police the perimeter” of the bridging market to ensure regulated business is not being written in the unregulated sphere.
The Financial Services Authority has warned it will take action against firms who promote bridging finance as an alternative to Sale and Rent Back (SRB).
The regulator temporarily shut down the SRB market in February, but said that some firms are looking at other ways to generate SRB opportunities.
Signalling a crackdown on the regulated bridging market, the FSA has written to firms questioning their charging methods and demanding a full explanation of interest rate calculations within the month.
The regulator warned using retained interest calculations is “unclear, unfair and misleading” and demanded firms fill out a detailed survey on their charging structure within 20 working days, or by 24 August.
A property expert warns 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.
The FSA has been warning the industry for some time on their concern over the use of bridging loan products.
The FSA has been told that some people may be employing bridging finance when other loans, such as regulated mortgage contracts, may be more appropriate.
Some firms consider there is enough of an issue to start thinking of restricting who they will do business with.
Only regulation can help bridging lenders to get their own houses in order, say 80% of brokers in the latest Mortgage Solutions poll.
A further 16% believe bridging lenders will successfully self-regulate the market, while 4% of brokers remain undecided.
Precise Mortgages has entered into a partnership with seven mortgage distributors, in a bid to “clean up” the bridging market.
The deal involves Precise Mortgages becoming a preferred bridging lender for Ingard Financial, Mortgageforce, Pink Home Loans, Personal Touch Financial Services, PMS, Sesame and SimplyBiz Mortgages.