By Brian Rubins, Executive Chairman, Alternative Bridging Corporation
Think of it this way – first this has been the warmest, driest April in decades, next with no football being played there is no nail-biting for the Cup Final or who will play in Europe next year and lastly, when did you last wear a suit? I could go on.
There is another positive to the COVID-19 pandemic, it has generated change in our industry at an unprecedented (how I hate that word) rate for borrowers, brokers and lenders, not just in how we work but hopefully how we think.
Clearly, working practices have already changed with self-distancing and now we are holding client and broker meetings by Zoom, office meetings via Teams and less emails and more ‘phone discussions. As a result, applications are being interpreted far more accurately, misunderstandings are being avoided and relationships are being strengthened.
For those lenders who have strong funding, more than ever they are reviewing proposals which have been started with other lenders who are no longer able to offer funds. This is creating new relationships for both borrowers and brokers and, of course, handled correctly these new friendships can blossom in the years ahead.
Let’s admit it, valuations are a headache! Some small loans will be satisfied by AVM’s, perhaps supported by a drive-by or an internal video but this will not work for larger loans where a Red Book report is essential. However, that need has also driven change and many applications are supported by an acceptable valuation carried out for another lender and so more lenders are prepared to have reports readdressed.
Lenders are facing challenges which are new to some and uncomfortable, in particular the need to grant interest holidays. Borrowers must understand that all holidays end and there needs to be a plan for the unpaid interest to be repaid while current interest is serviced on time. It is probable this will need time so it is better to agree a payment plan which can be achieved.
There is also the need for lenders and borrowers to take a grown-up approach to expiring loans. In current market conditions, sales are either not possible or at best delayed and the same applies to refinance. An extension of three or even six months may be needed and for the well-established and experienced lenders this is challenging. However, they have been there before and know what to do, for the newcomers it is a wake-up call which they may or may not react properly to.
Out of adversity, there is always something to learn. For brokers it is be sure you introduce your clients to lenders who are there for the long term and have the ability to be flexible when necessary and for borrowers it is to stay in close contact with their lender and broker and to deal with the problems before they occur. It is not all gloom and doom, just a new and better way of working.
Click here to read the full article in Mortgage Introducer.