Many lenders are working hard to streamline their processes and take advantage of technology so that applications are smooth and proceed as quickly as possible to offer.
However, if it all slows down at the legal work stage, what’s the point?
Not all mortgage offers are issued with a six-month offer validity; some come with just three months.
This should be plenty of time; however, it is surprising the number of cases where we have to go back to the lender to ask for an offer extension.
Lack of skills
Some of the issues appear to be the lack of skills, particularly in the specialist sector.
Large firms use paralegals to process cases, and the lack of experience often results in requests to the client, or the client’s solicitor, that are not relevant or not clearly communicated.
The client can often instruct a solicitor based on price, but many of these offer conveyer belt processes.
After paying referral fees, the solicitor may be left with just £150 to cover the cost of the service, which may work if things run smoothly, but not if issues arise.
Not all solicitors are ‘broker friendly’ meaning they will not automatically communicate with the adviser, even though the broker could be instrumental in assisting with issues.
When it all goes wrong
Good solicitors get recommendations, but we have also seen these same solicitors get swamped and the service levels then nosedive.
One recent scenario went from a portfolio client singing the praises of a solicitor for the first few completions to refusing to work with them due to lack of communication and progress, resulting in offers expiring and new valuation costs.
Another case saw a catastrophic error by a solicitor. Not only did they take three months to process a BTL re-mortgage that involved the repayment of an existing first charge and second charge, but they also took 12 days to send the client the money he was expecting as surplus from the re-mortgage.
They then sent him £270,000 instead of the £70,000 he was expecting, they had failed to repay the first charge lender and had not even applied for a redemption statement from them.
Needless to say, the new first charge lender with compromised security was less than impressed, particularly as it was the only solicitor they would allow to act for them.
Lenders helping out
Normally these types of stories are few and far between, but they seem to be increasing.
Many brokerages like ours are now employing dedicated administrators to manage the process between offer and completion.
What can be done to improve this?
Lenders do not always make things easy by adding their complex requirements to the standard legal process often driven by their risk appetite and commercial reasons.
It is good to see lenders like UTB and West One launching first charge re-mortgage products where the legal work is swiftly managed in-house, similar to second charge completions, for clients who need the guarantee of a swift completion.
In other scenarios, brokers should look to manage their client’s expectations.
Particularly with specialist cases or from specialist lenders, the conveyancing process may not be as straightforward as the client’s perception and a range of queries will need to be answered.
Checking in advance a solicitor’s capacity and experience of the mortgage type proposed may also be useful in the long run.