The committee considers individual circumstances 'using common sense'
Hinckley & Rugby For Intermediaries holds a Mortgage Referrals Committee meeting every day, according to Evan Crosskey, mortgage sales and distribution senior manager at Hinckley & Rugby Building Society. Why? With a panel of mortgage experts from the society, including executive-level decision makers, Crosskey believes it is a great way to discuss complex cases.
The committee considers individual circumstances using common sense and flexibility to make a decision, often on the same day of the case referral.
According to Crosskey, feedback from brokers has revealed that they believe it is a good way for them to share the cases of their clients who may not meet traditional mortgage criteria based on automated underwriting. Indeed, there has been a rise in complex cases due to the difficulties caused by the pandemic - and this has meant a flexible approach to lending has become increasingly popular.
“The committee, which has run for years every day, contains mostly senior members of staff,” said Crosskey.
He went on to explain that it allows for brokers to have their story told by members, which in turn improves the lender’s services.
“It also outlines the inner workings of our operation and allows brokers to clearly see what we offer and why,” Crosskey said.
He said that, through the committee, getting the chief executive to sign off on an application means that it is more likely to progress through the lender’s approval process.
Hinckley & Rugby For Intermediaries manually underwrite cases, which Crosskey said is its key strength as the lender focuses on niche topics - so he believes it is more important for each case to be assessed by an individual rather than a system.
Looking to its lending policy, Crosskey said the firm’s approval ratio is also strong.
“We are happy to restructure the deal while satisfying the risk. Our approval ratio through our committee is about 75% to 80%,” he added.
However, Crosskey explained that the lender’s sales team acts as a filter before cases are presented to the committee.
“While the approval ratio is high, this is because the sales team are highly experienced in reshaping cases in collaboration with brokers, so what is presented to MRC satisfies the borrowers’ needs and the society’s credit risk appetite,” said Crosskey.
He added that the society has six main pillars which are a part of the mortgage journey and the way it analyses affordability. These pillars are: loan-to-value (LTV), loan-to-income (LTI), affordability, credit history, security of property and assessment of the person. Security of property looks into what type of property the customer would like the society to lend on, for example whether the property is above a shop, or has been converted from a commercial property to residential. Meanwhile, the assessment of the person looks into their debt, income, job and borrowing history.
“Using these pillars, we weigh up whether to lend on the property and give the customer the mortgage,” said Crosskey.
He explained that for a mortgage to be approved, it has to fit into these pillars of assessment - so if a borrower’s LTV pillar is weaker because they want a 95% LTV mortgage, then it has to be made up elsewhere, for example by having a very good credit history.
He concluded by saying that those who join the two-hour event are welcome to discuss their cases, ask questions about the decision-making process, or simply watch the format of the Mortgage Referrals Committee.