Before the credit crunch and resulting recession there were many thousands of mortgage products so some way of comparing what was available for a customer was handy and a useful tool when proving suitability.
With the increased focus on product suitability sourcing systems are more frequently being used as the solution provider rather than as a guide to the market. Now, sourcing systems are becoming available in other markets. But are they really as useful as they are made out to be or are they just a crutch or an exercise in “covering ones behind”?
The main benefits of sourcing systems are already mentioned above. As in any area where there are upsides, there are downsides and every business or individual must make a choice as to whether the pros outweigh the cons.
The main downsides of sourcing systems are as follows:
- They can be out of date, particularly if there are a lot of products to maintain.
- They can only ask a certain number of questions before selecting a product, thereby making selections on limited information.
- If there is an error in the sourcing criteria, a wrong selection comes out every time.
Rob Derry, Managing Director at Brunel Mortgages and Loans, said:
"Brunel have been arranging secured finance for over 25 years and we’ve always taken the approach that discussing an application and getting under the skin of it as soon as possible is the best way to move it forward as fast as possible.
"There are so many factors that can affect a loan or mortgage application that aren’t asked by sourcing systems that discussing a case is almost always better.
"Over the years, we have had many instances where brokers will phone us and outline an application and then say that they have checked on their sourcing system that it fits a certain product but after just a couple more questions it is apparent that it doesn’t fit. Sourcing systems may well have improved over the years, but they can never be perfect.
"When a lender changes their criteria or a new lender comes to market we don’t have to interpret the criteria and then get the IT department to load them on to the sourcing system or wait for the sourcing systems to catch up. We study the criteria and after a staff briefing everyone is ready to go.
"This approach means that we can pick up potential deal-breakers early on and address them by making sure the appropriate product with the appropriate lender is selected.
"That approach is even more important with secured loans because if you get the product wrong on day one and you have to re-issue documents later you are causing a delay to the client of up to 16 days with the consideration periods.
"The comic phrase “Computer Says No” has never been more appropriate. A case can be out of criteria by only a small amount but a sourcing system rejects it or selects an inappropriate product. Also, many lenders will break criteria if it makes sense to. That is particularly the case with the specialist lenders Brunel uses in the Secured Loan, Commercial and Buy-To-Let markets.
"In the same way that getting a “No” from a sourcing system doesn’t mean you can’t place the application, a “Yes” does not guarantee that it will complete.
"A “Yes” from an experienced member of our staff with their in-depth knowledge of lender guidelines gives you more chance of completing the application, as the conversation about the application brings out the real story behind the case and experience tells us whether lenders have an appetite or not."
