Mortgage Criteria

by Mark Johnston

The mortgage market has now become it seems one where lenders are creaming what ‘they’ believe to be the best applicants.

These applicants are the ones with a credit sore of 1000, unblemished payment history, minimal credit applications in the last 6 months, which is practically impossible to achieve.

Many responsible lenders now want to know that their potential borrowers can comfortable afford to manage any new borrowing, therefore many potential borrowers find that applying for a mortgage overtones of ‘Judgement day’.

Mortgage underwriters have now become; judge, jury and executioner, in their own little world they are ‘King’.

Most lenders are, on a daily basis effectively write off the majority of their applicants based on small ‘technicalities’ that could be easily resolved with a conversation or a greater knowledge of the customers situation or property itself.

Many mortgage brokers state that nearly all lenders these days are increasingly and heavily relying on automated processes to ultimately base their full and final lending decisions.

Lenders do this on a daily basis and therefore are effectively using ‘robots’ to decide on the release of millions of pounds in funding. Lenders use these systems because with thousands of potential applicants, there has to be a way of streamlining the best applicants.

Brokers believe that the sole use of computers is this decision can be unreliable , damaging and by this common process many could question the true worth of lenders loan books.

But instead of listening and responding to many brokers complaints and frustrations regarding these systems, those in charge continue to praise their underwriting processes.

The impact of computer based decision making means that major and influential lenders are processing thousands of cases and is therefore potentially declining or downgrading many of them simply due to a simple data entry issue.

Lenders do this on a daily basis and therefore are effectively using ‘robots’ to decide on the release of millions of pounds in funding. Lenders use these systems because with thousands of potential applicants, there has to be a way of streamlining the best applicants.

Many experts believe that on the whole the technology available is and can be very efficient. However, on it’s own it is unreliable and simply can not be allowed to replace insightful judgement when the computer does ‘say no’.

Surely it is common sense to test a system to the extreme as a major lender to ensure that every variation of data entry is to the automated process is analysed to ensure that the end result is as accurate as it can be.

This said many brokers and for that matter potential borrowers believe it is still important to ensure that there is still a human element involved in this process .

Experts predict in 2012 we will mostly seethe same demise and end result for many applicants. On the upside, interest rates will most likely remain low, as we will continue to see some of the lowest rates ever for first time buyers. If only they could meet the criteria……………



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