Has underwriting become overwriting?

A number of brokers have expressed frustration on Newspage recently about the state of mortgage underwriting, specifically around lenders suddenly asking for huge amounts of evidence for even the most basic applications. We asked brokers if underwriting standards have fallen, and whether lenders are utilising more tick-box assessment processes and fewer experienced staff.

One, Justin Moy of EHF Mortgages, said: “There has been a drop-off in both the quantity and quality of underwriting over the past few months.” Another, Katy Eatenton of Lifetime Wealth Management, added: “I find the biggest issue is the case checking prior to an application being passed to underwriting, rather than the underwriters themselves. These are generally administrators working to a checklist with less experience, who ask the most bizarre questions. Common sense is definitely not common.”

A third broker, Steven Neale, suggested a solution: “I think a way round this is for underwriters to offer workshops so they can explain their thinking when assessing a mortgage application. We get lots of requests from BDMs offering to meet to explain their products but let’s have more meetings with underwriters. I for one would be happy to sit down with a cup of tea for half an hour to further understand a lender’s underwriting processes.”

Further reaction

Lewis Shaw, owner and mortgage expert at Shaw Financial Services:

“There’s certainly a huge disparity between lenders and there can also be huge gulfs in underwriting standards even within the same lender. A little more consistency wouldn’t go amiss.”

Anil Mistry, director and mortgage broker at RNR Mortgage Solutions:

“Gone are the days of common sense in underwriting, especially with lenders that have underwriting overseas and cling to their tick-box tactics. If everything isn’t just so, they’re back asking for more. At our firm, we combat this with transparency: every non-standard detail, every income calculation, is meticulously explained in our file notes and it is uploaded to their system. We only do this with certain lenders that we think need this extra explanation. This strategy often leads to first-time success. We’re not just filling out forms but need to set a new standard for clarity and efficiency, especially with certain lenders.”

Matthew Jackson, director at Mint FS:

“Without doubt, we have seen an alarming drop off in the standard of underwriting by the majority of mainstream lenders. This could be fuelled simply by a hardening attitude to risk but conversely, it could be an influx of new staff who appear to be painting by numbers with little to no common sense exercised. An example of this from a recent case is an underwriter requiring a written explanation for a £5 standing order that appeared monthly on a bank statement. It was pocket money being sent by the borrower to their 15-year-old daughter. Or querying a large transfer to another bank account, which they also have a statement for and houses the client’s deposit for the purchase. And perhaps the most common query raised at the moment is year-to-date pay not matching the stated salary. Pay rises and promotions are not to be expected in the current economic environment. Our clients expect better and, as an industry, we can do better than this.”

Bob Singh, founder at Chess Mortgages:

“Underwriters by and large do a great job. Sadly a small jobsworth minority are tick-box merchants who fail to apply common sense and concern themselves with microscopic and trivial issues that have little or no bearing on the case in hand. Of course they have to address AML and affordability issues as well as account conduct but some comebacks are a bit silly. In a recent case, the landlord and tenant both had the surname Singh. Not an uncommon surname and the underwriter wanted to know if they were related. No more related to each other than to me. Case declined despite my detailed explanation on Sikh surname nomenclature. The lack of cultural awareness is shocking. But we soldier on.”

Simon Bridgland, broker/director at Release Freedom:

“Some of the largest lenders in the UK have some of the worst underwriting, compounded further when part of it is offshored and so leaves the broker without the ability to discuss the case verbally. In these situations, it’s left to case updates or messages on substandard lender websites. Said updates and request are often written in Elvish riddles leaving you helpless due to an underwriter not being able to explain clearly what they are asking for. I’d say room for improvement from some corners, with Barclays seeming to struggle more than most.”

Luke Thompson, director at PAB Wealth Management:

“There are some real stand-out poor performers in terms of underwriting at the minute, with TSB being a good example of this. A recent case I have submitted to them took weeks to get to offer based on their insistence on getting a workplace reference that is never easy to obtain from big companies even though my customer has worked for his employer for over 5 years. Santander also recently offered a case in a matter of days, only to retract the offer and ask for several more documents from my client all because he is employed by a family business. Absolutely no issue with further checks being required but to issue an offer and then retract in my opinion is the height of poor customer service.”

Michelle Lawson, director at Lawson Financial:

“The level of service varies from lender to lender and some questions that get raised are just beyond daft. They have access to supporting documents and credit files to cross-reference data. There is often a lack of clarity on a request for further info which involves then a call. I have been asked what a payment to a credit card company was for, why someone has taken 12-month maternity leave, why a credit card has been repaid in full, what specific payments to Paypal were for just to name a few. It appears that some lenders have replaced underwriters with cheaper processing staff with tick boxes. This is not the solution. We need good underwriters with a good common sense approach and lenders with a decent risk team who gives the appropriate message that they want to lend and not be business prevention units. Lenders’ service levels are being hit right now and brokers and borrowers are being tested to the limits and this is one of the reasons why.”

Ben Perks, managing director at Orchard Financial Advisers:

“Sometimes it can feel like you’re dealing with the Mortgage Prevention Unit. There are lenders that have really tightened up and underwriters are clearly knit-picking. As brokers we have no problem clarifying points or providing additional information to help get cases through, all we expect is a common sense approach and a positive attitude towards lending. There are an increasing number of lenders that do really it well though. The access to underwriters is brilliant and they are a pleasure to deal with. You can tell when an underwriter has been given a good mandate to lend and they are eager to help borrowers. It makes all the difference and those underwriters are worth their weight in gold.”

Gareth Davies, director at South Coast Mortgage Services:

“We just need common sense to be applied. The quality of underwriting can vary hugely even within the same lender, from one case to another. Seemingly gone are the days where an underwriter could pick up a phone and ask the broker about a case in order to get an understanding of the overall situation the client is in. What could be resolved in a 30-second phone call, can take well over a week and countless emails to and fro. This doesn’t help any party at all. Oh, and if I get asked if ‘Moneybox LISA’ is a dependent one more time…”

Scott Taylor-Barr, principal adviser at Barnsdale Financial Management:

“I am finding that cases are taking longer and more input from us is needed to get cases to offer. A lot of this seems to be inexperienced staff dealing with cases, meaning that they asking for information they already have, but maybe in a different format, or failing to properly explain what information it is they require, meaning the broker then sends in what they “think” the underwriter has requested, only to wait for it to be assessed and then exactly the same request be made again.”

Hannah Bashford, director at Model Financial Solutions:

“When there are lenders that can get an offer out in a few hours, it baffles me some of the questions I get asked about borrowers and their applications. The biggest challenge I find alongside common sense is communication. Some underwriters will send an email or online update and when I reply it goes back into a queue. If they had picked up the phone we could have had a 30-second call and they could have closed the case off, but instead it goes back into a queue, wasting time and causing frustration.”