Thousands of satellites fly over us every single day transmitting a huge range of information, from aiding scientific research and warning us of an imminent downpour in Bognor Regis to broadcasting a watermelon seed spitting contest from the deepest darkest Midwest USA.
When we think of these hugely sophisticated metallic objects we tend to associate them being launched high into the Earth’s atmosphere and left flying solo while we suck all the intelligence we can from them.
For those uninitiated out there, satellite packagers could also be looked upon from afar as a floating entity with no visible support network as such but in reality it is generally the complete opposite. The support from the main packager is fundamental to the satellite’s offerings as it can bring its own specialist benefits to the table. Below are just some examples of what a good support packages could include;
- Dedicated sales managers providing a full business development service.
- Initial and ongoing packaging training, plus comprehensive packaging and underwriting manuals.
- Initial and ongoing lender training on products and underwriting.
- Individual feedback on each submitted satellite packaged case.
- Regular training days covering packaging, underwriting, credit search interpretation, and sales.
- Placement and credit search facilities.
- Ongoing accurate product launch/withdrawal communication.
- Marketing support – design of many lead generating ideas.
- Lenders with good exclusives.
The benefits this relationship can bring enable satellite packagers to gain more control over timescales and the ability to form stronger relationships with their clients and introducers. Their earning capacity also rises due to the greater amount of work they are undertaking.
This relationship also works for the main packager as using satellite packagers to do the basic work enables it to increase volumes, therefore strengthening lender relations and the opportunities for greater commissions and securer distribution without the risks of over-extending itself with the addition of extra staff, office space and the additional costs associated with any type of expansion.
Control
It is imperative that the principal packager assesses each potential satellite packager ensuring that it has the ability to meet the volume and quality standards for both itself and its lender partners. No satellite packaging arrangement can exist without the knowledge and permission of the lenders and these lenders must remain confident of the main packager’s ability to delivery high quality packaged cases. For this reason, satellite arrangements do need to have stringent controls and checks in place.
Some lenders still perceive that there is a greater risk attached to mortgages which have been packaged by a satellite packager. In our experience, when the case has been packaged and underwritten by the satellite, and has also had the expertise of an underwriter checking and re-checking all aspects of the case, then generally the risk to the lender is lower than where only one packager is involved.
Quality is everything in these relationships and maintaining high standards are essential in maintaining lender, packager and satellite confidence. Before opting to become a satellite, there are a number of things that a firm must consider. Two particular questions that should be asking are; is it able to meet the required levels of business for each lender chosen? Does it have the required administration support to carry out underwriting/packaging processes?
An emerging market
The concept of satellite packagers is still a relatively new one but while it has come under some criticism from certain quarters it is continuing to develop, and in some quarters flourish. A recent study by The Mortgage Business (TMB) highlighted this as an emerging market.
Analysis revealed that packaging companies had 6.9 satellite packagers on average, but the common number for those companies that had any at all was 14.9 satellites.
Of the 54 per cent of respondents who said they did not have any satellite packagers, 23 per cent said they were considering them and 13 per cent said they were not, although a high proportion – 64 per cent – of those without satellite packagers did not answer the question.
Nigel Payne, managing director of TMB, said: “We had a suspicion that the number of principal packagers using satellites is going up but we were getting a benchmark of the market at the moment. This is a snapshot of a point of time and next time we’ll be able to see the growth. Satellite packaging is an emerging market.”
I agree it is an emerging market and there are strong opportunities available to small, medium and large, experienced or non-experienced brokerages, provided they understand the rigorous procedures undertaken to possess the necessary quality and high standards to benefit the individual firm, the main packager and of course the end customer. Master packagers do have a responsibility under ‘Treating Customers Fairly’ to ensure the satellites are up to the job that we’ve painstakingly developed over many years. If these responsibilities are understood there is the potential to gain access to more choice, more control and, importantly, more money.
