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Mortgage brokers disputing more underwriter decisions than before pandemic – analysis

  • 21/09/2020
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Mortgage brokers disputing more underwriter decisions than before pandemic – analysis
Brokers are having to challenge underwriter decisions more than before the coronavirus pandemic as they battle to get cases through to approval, with issues including incorrect affordability calculators and bonus assessments.


Complications caused by the pandemic have understandably meant lenders are taking more time and being more diligent with the cases they receive, but some brokers find even when they feel everything has been filed correctly applications are being denied or amended. 

Saira Haider, senior mortgage and protection advisor at Mansion Mortgages, said she was challenging more cases than before the pandemic as she found mistakes were being made. 

She said she had a few cases come in with a reduced loan figure and noted one instance where the bonus income had been incorrectly calculated. 

“We had a nurse who opened a limited company, and the lender reduced the loan amount but had got it wrong.  

The underwriter calculated her monthly bonus amount as her annual bonus amount and when we got it back, I was thinking no we’ve done this correctly’.

“So, where we might have been relaxed and taken what they said before, now we’re looking at things more closely,” Haider said. 

Haider named Nationwide, HSBC and Accord as some of the lenders where problems with the underwriting had been seen.


Affordability calculators incorrect

Jo Jingree, mortgage adviser at Mortgage Confidence, said she noticed there had been an increase in the number of application decisions she disputed in August. 

In one instance, Nationwide reduced the maximum lending and when Jingree challenged it, she was told she would get a response from underwriters in nine working days. 

She escalated the matter to her business development manager (BDM) and let them know the income fit Nationwide’s own affordability calculator. 

It is then that she was told the calculator was incorrectly using a 4.75 multiple for an 85 per cent loan to value (LTV) mortgage, when it should have been a 4.5 multiple. 

Jingree said: “I talked to the client who was fairly understanding and found a new, lower value, property to purchase so the borrowing was less than the maximum Nationwide was offering.  

“They do not allow property details to be changed on a case so when I submitted the case again with the lower loan amount it declined on credit score and after six weeks, we are back to square one.” 

When contacted by Mortgage Solutions, HSBC and Nationwide declined to comment on any underwriting issues.


Majority of cases challenged

Dina Bhudia, managing director of P2M, said she was challenging 80 per cent of her cases due to income verifications. 

“Lenders are reluctant in taking any form of bonuses or commission, and the allowable income multiple has reduced overnight with some,” she added. 

“Before the pandemic lenders had a willingness to lend and come up with solutions. We are finding underwriters are clearly under pressure and are very quick on declining case.” 


Wider understanding 

Some lenders are creating an environment where brokers no longer feel confident about the business they place Jingree said, and while it causes frustration for professionals she noted it was clients who were being “disadvantaged”. 

She added: “I believe it is part of my role to ensure my clients get the best value, most suitable mortgage deal I can get them and if that means challenging lenders so be it, however frustrating it might be.” 

As everyone tries to navigate the evolving circumstances of the pandemic as well as the help available to them, Bhudia said lenders should not assess clients solely on the movements of their bank statements or the support they have applied for. 

“I find the lenders really should understand the overall situation of the applicants however they are not taking the soft facts into consideration and are taking more of a blanket approach.  

“Lenders should be looking more favourably at multiple sources of income,” Bhudia said. 


Obstacles on both sides 

Brokers said the responses to disputes differed depending on the lender, but it was noted that the usual channel of questioning decisions had also changed. 

Bhudia said as they were under constraints even BDMs did not have the influence or capacity to challenge cases on behalf of brokers and the usual route of taking it up with the senior manager of underwriting was no longer an option. 

For Haider, she found that as it was sometimes a head office decision with no room for dispute, she suspected lenders were not necessarily reluctant to accept new business but instead acting conservatively in preparation for any changes in the wider economy. 

She said: “I think they’re stalling because they don’t know what’s coming and waiting to see what risks are ahead.” 

However, Akhil Mair, managing director of Our Mortgage Broker, said problems were not just being felt by brokers but across the whole industry. 

“There are expected mistakes and errors to be found, but as solution providers and a team player we encourage all parties to rally together and get the end goal in a seamless manner,” he added. 


The lender’s view 

Despite noticing some issues with Accord at the beginning of the lockdown, Haida said along with some smaller lenders the Yorkshire Building Society arm seemed to be coping better than larger banks who appeared to have a handle of things in the beginning. 

Jeremy Duncombe, director of intermediary distribution at Accord Mortgages said this was because the lender remained true to its common sense lending approach and since received positive feedback on its flexibility during the pandemic 

Duncombe said: “We try to keep our policies simple and be as transparent as possible in communicating any changes.  

Brokers have direct access to both their BDM and our underwriters to discuss cases in advance to ensure applications are well packaged and reduce any unexpected declines.  

He also acknowledged that due to recent changes, underwriters did need to ask more questions.

As a responsible lender, if a case really doesn’t make sense, we will discuss our decision with the broker so they are comfortable with the outcome and can share this feedback with their client,” Duncombe added. 


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