Last week Mortgage Solutions polled brokers on how frequently their applications are turned down because of changes they have missed, with 23% saying it happened often. A further 45% said that it happens now and again, with just 31% stating that it hardly ever occurs.
Greg Cunnington, director of lender relationships and new homes at Alexander Hall, said that while historically there had been issues with surprise criteria changes, this was generally no longer the case.
He explained that the main high street lenders had improved communication to ensure that criteria changes, both good and bad, are known about in advance. However, this is not the case across the board, with small lenders most likely to spring surprise changes.
Aaron Strutt, director of Trinity Financial, said that this has not been such an issue of late as many criteria changes have been positive.
However he added: “One of our cases was declined six months ago because of a criteria change and the lender did not update its website with the new information.”
Alex Smith, senior mortgage and protection adviser at Capricorn Financial, said that it was very rare for an application to fall through in these circumstances, arguing that if it does, it’s generally the broker’s rather than the lender’s.
Clearly, the key to avoiding these application mishaps is to improve communication between lenders and intermediaries. But what does that look like in practice?
Strutt notes that while some lenders are more efficient than others at notifying brokers of changes, advisers always appreciate being told just what is changing.
He continued: “This can be via an email or a call from the business development manager.”
Cunnington argued that the clarity of the communication is just as important, warning that brokers will get frustrated if negative criteria changes are buried in an email and difficult to spot, and suggested notice of at least 48 hours is ideal.
He added: “We also then like the lender to follow up directly with myself and the other senior managers so that we can effectively communicate internally, as we are aware advisers get so many emails a day some information could be overlooked.”
Smith agreed that the way that changes are presented is important, adding: “Lenders need to be more upfront when they are changing things; don’t try to hide it, just communicate it better and clearly.”
Andrew Montlake, director at Coreco, said that an email is still the best way to update brokers, but once a change has been made it’s important for the BDM to follow it up in person to check that the changes have been understood.
He added: “The personal touch is still very important and the difference that a good BDM makes not only means more business for a lender, but much better quality too as brokers fully understand the criteria.”
The role of sourcing systems
Can sourcing systems do more to help avoid missing criteria changes?
Cunnington suggested that as the technology develops it would be welcome for sourcing systems to highlight criteria more prominently, for example by not allowing an application to be submitted if it shows that a piece of information does match the lender’s criteria.
However, Smith pointed out that he simply uses sourcing systems to find what sorts of deals are in the ballpark for a particularly LTV, before going off to check the criteria himself.
He explained: “It’s too much to expect the sourcing systems to get criteria right every time, they should just concentrate on getting the product features right, like the rate and fees.”
Montlake added: “Having the sourcing systems get “too intelligent” actually leads to issues and missing out better products from lenders.”