We should have a switcher code for mortgages

[qwerty5]

Now let's look at the documentation required by a PAYE employee. Where would a Code help?

Hi Brendan,

What about for the solicitor process? I don't know much about what a solicitor does when switching (this is purely due to my ignorance and lack of interest, so maybe they're doing something that couldn't be streamlined). The end result is that we go in and sign our forms and pay a grand (at least). I paid the same solicitor a couple of grand 10 years ago when getting the mortgage (boomtimes, yay) and have to pay them again to do what seem to be the same checks when nothing has changed in the house or in our circumstances.

Similar for valuations. I got my house valued when I was thinking about moving to BOI. This is €95. I got no correspondence from the valuer and they dealt with BOI.
When I applied to Ulster Bank I had another guy come out. UB cover the cost of the valuer but it's still a cost that must be incorporated into my fees somehow. The BOI valuation didn't magically become invalid. I would imagine that having a pool of valuers available that the banks trust and could contact and once a valuation is done is could be valid for 3 or 6 months could be helpful. Similarly if my LTV is 61% now and I get a mortgage on that basis, for UB I've got to get it revalued if I think I've gone below 60% to avail of relevant rates.

 

[Monbretia]

There was actually a quicker legal process in place for a number of years, don't know if it still exists. I used it myself when switching mortgages, it was called Title Insurance and cost I think around 100 quid and you made one visit to solicitor of bank's choosing to sign the forms. Basically it insured the new lender against any defect in the original title *I think*, I'm sure one of the legal people can clarify what it was and if it is still used.

Regarding the valuations hardly any people are likely to switch within the 3/6 month window of 1st valuation being done so it will more than likely be well out of date on switching. All the lenders have panels of valuers and there is probably a lot of overlap. I know if the valuer has previously done a valuation on the same house then more than likely they will just do a drive by if within a reasonable time so while a cost to the the lender it's not major.

 

[Brendan Burgess]

Hi qwerty

I think that there might be some scope there for making it less costly. I can buy and sell a car without a solicitor. I think buying and selling a house, and switching mortgages, is far more complicated, but could it be simplified? The bank is giving you a huge amount of money, so they will want a solicitor with indemnity insurance to make sure that the paperwork is done properly.

I don't think that the valuation is a big problem. But maybe the new lender could use a three year old valuation and index it for the way house prices have changed? Especially for low LTV mortgages.

Brendan

 

[44brendan]

I think that there might be some scope there for making it less costly. I can buy and sell a car without a solicitor. I think buying and selling a house, and switching mortgages, is far more complicated, but could it be simplified? The bank is giving you a huge amount of money, so they will want a solicitor with indemnity insurance to make sure that the paperwork is done properly.

This raises a question that may require a response from one of our legally qualified posters. We are in the process of transferring all unregistered title to Land Registry. My understanding is that once registered a title search is pretty straightforward. No chain of title needs to be established. This should in theory simplify the process for the solicitors and result in a significant reduction in both time and fees. However I have seen no real indication in practice that there has been a differentiation in time/fees where land is registered as against unregistered. Am I correct in my understanding or not?

 

[gnf_ireland]

@Brendan Burgess

Hi Brendan,

I am not talking about myself personally. Because I am self-employed, I fully conceed that I dont fall into 'standard' anything when it comes to the banks. However, I am talking about a scenario which would help the masses.

So take Joe Bloggs - PAYE worker, with mortgage, current account, credit card and any savings with the same or multiple banks. Same appiles to his wife. The banks have been pushing people onto online banking over the last while, so does not have ready access to statements etc. All information relation to their earnings are available from the Revenue, and all information regarding their mortgage/spending patterns already exist with the banks.

So instead of Joe spending the next 3-4 weeks collecting the data ad-hoc, he simply signs a form and the banks go collect this detail on his behalf. All he needs to do is provide his PPS number and that of his partner, and sign the relevant form.

Benefits

(a) saves the customer collecting the details themselves. Yes I appreciate it is a minor thing in the grand scheme of things, but I wonder how many people enquire at a branch about switching a mortgage and never follow up as "it takes too much time"

(b) the next steps is then with the bank - it means that they are likely to come back with a pretty detailed response, positive or negative. On the assumption its positive, they can outline the amount to be saved and the remaining steps - should be pretty straightforward from there on in (for most people)

(c) Highlights to the original bank the customer is taking a step towards moving and is serious about it. Currently they only find out when the request for deeds has been made which is very late in the process. This may encourage them to rethink strategies and try and keep good customers

No one is (or could ever) question your commitment to this cause. However, as we discussed a few times, and are both completely confused as to why the level of apathy exists around switching. The only reasons I can think of are the person has no time to take the leap or the person fears they will be declined due to changing circumstances. This is where I feel a switching process would help, and let the banks do the groundwork and 'sell' the switch to the customer. Shocking I know that the banks would have to sell saving money to a customer, but clearly this is needed

On a side note, a single panel of valuers where a single valuation would support all banks would also be a major step forward for switchers, especially if you wish to keep 2-3 banks in the frame until the very end.

 

[Sarenco]

I don't think anybody is suggesting that the introduction of a switching protocol along the lines suggested would be a radical development.

But even if it attempted to make the process slightly more consumer-friendly then surely that should be welcomed? Where's the downside?

I genuinely surprised at the negative reaction to the proposal.

 

[Brendan Burgess]

I have explained the downside a few times, but I will do it again.

It will achieve nothing at all. I don't think it will even achieve "slightly".

Yet, it will allow the CB and the government and the lenders to claim that they are doing something.

I want the government and the CB to do something real. That is to force the lenders to stop fleecing people.

There is also a cost. Banks will have to set up systems. If we adopted GNF's suggestions, we would have to integrate the banks, revenue, his accountants, the credit unions, and everybody else. That would actually take the control out of the hands of the lender. The bank would apply to the credit unions. They wouldn't respond in line with the code. The borrower would end up chasing everyone.

Do you know what? It's easier to print out the stuff and hand it in to the banks.

Brendan

 

[elcato]

I am in agreement with BB on the fact of requirements to get a switch. Realistically, there is no way revenue will divulge any information by post or otherwise to anyone except the person in question. Ditto other financial institutions. I still await an answer to 44B regarding the legal process and also believe there are other ways to streamline the process.

 

[Brendan Burgess]

Coincidentally, I got an email from a friend who is a first time buyer and not a switcher and she says:

"My current bank BOI have been extremely difficult to get some basic documents such as original statement from."

It seems that AIB wants original statements. That surprises me.

 

[44brendan]

It seems that AIB wants original statements. That surprises me.

Fair comment and one that I've come across a few times. most people now access their statements by printing them off internet banking. More or less what we do ourselves internally. Only difference is that statements are on headed paper. It should be fairly easy to amend the internet format slightly to include a bank heading and address and that would sort out the process. getting original statements is now a big hassle and banks are making it more inconvenient. yet they still look for them in their assessment process. It would be reasonable for them to sort out this problem which was created by them!!

 

[SS expert]

I switched my mortgage away from KBC a few months ago, I taught the whole process was very straight forward however it took 2-3 weeks every time to get a response from the bank.
The underwriter took over 3 weeks to approve the mortgage, I taught everything was fine at this stage, 2-3 weeks later they requested documentation that was already supplied,
What I don’t fully understand is why everything took so long, why it is done in a central location rather than at a branch level.

 

[Brendan Burgess]

Hi SS

Just to clarify. Was the delay at KBC's end or at the old mortgage lender's end?

What do you think could be done to make it less hassle for borrowers?

Brendan

 

[Sarenco]

Hi Brendan

As noted earlier in the thread, I think we will have to agree to disagree on this one.

Your principal objection to the introduction of a switching code for mortgages appears to be a political judgment that the introduction of such a code may be used as a reason or excuse not to introduce legislation to empower the Central Bank to intervene in the pricing of mortgages. Is that fair?

I don’t pretend to know anything about politics but I would note that the sponsor of the Bill that will shortly come before the Dail in this regard does not share your political judgement. On the contrary, Michael McGrath has described the introduction of a switching code for mortgages as “essential”.

Similarly, I don’t pretend to have any expertise on technological matters but if I can log into my own accounts online, I would be very surprised if it was not be possible to authorise somebody else to do so for a defined time period.

Do you know what? It's easier to print out the stuff and hand it in to the banks.

Perhaps things have changed recently but banks certainly used to look for original account statements – they didn’t accept print-outs. Gathering original bank statements for multiple accounts was a complete PIA, particularly if you had to subsequently repeat the process when the statements became "stale". It would put anybody off switching.

Incidentally, I dug a little more deeply into the switching process in Italy. Apparently it’s effected by a process called loan subrogation, where the new lender steps into the shoes of the old lender without taking new security. The interests of the new lender is then noted in the appropriate land registry by a notary. The whole process takes less than thirty days from the first application by a borrower to the new lender and is cost free to the borrower. Penalty or break fees are now prohibited and the changes have resulted in a refinancing boom in Italy with a sharp reduction in the spreads charged by lenders.

Edit: Apologies, I hadn't read you subsequent post re original bank statements before I posted.

 

[44brendan]

The underwriter took over 3 weeks to approve the mortgage,

No reason whatsoever for this type of delay. Its a few years since I worked as an underwriter but we had KPI's in place with a minimum response time.
The only reason for delay should be that the quality/quantity of information supplied to the underwriter was deficient in some way. response time is only measured from the time full information is received.

 

[44brendan]

What do you think could be done to make it less hassle for borrowers?

Borrowers should be fully appraised of all required information and documentation at 1st mortgage meeting. If this is done properly then there should be no difficulties in getting a quick decision.

 

[SS expert]

Hi SS

Just to clarify. Was the delay at KBC's end or at the old mortgage lender's end?

What do you think could be done to make it less hassle for borrowers?

Brendan

I went from KBC to Ulster bank.

I think the bank should keep you more informed if there are any holdups. Perhaps a weekly scheduled update to keep things moving.
It would be quicker if it was managed by the person you meet on day one.
there seems to be a breakdown in internal communication between various departments.

 

[qwerty5]

Maybe hire people that give a crap about the product they're selling

I applied to BOI. They sent me the letter of offer and a list of requirements. I spent a day getting everything together and noticed that the letter of offer had an old fixed rate (it changed the week before).
I rang the mortgage advisor. Got voicemail.
I emailed her. Got no reply.
I emailed the initial adviser in BOI HQ somewhere. He replied saying he'd get on to her about the new letter.
I got nothing. I rang her again. Got voicemail.

At this stage I was talking to Ulster Bank and reading threads here thinking that BOI were a bad idea so I stopped bothering with them.

Now I'm at the stage of waiting on UB to send the details to my solicitor.
This has taken a month
I contacted my adviser a couple of weeks ago and he told me it was sent on 28th April.
I waited until yesterday to contact him as neither myself or my solicitor have received anything.
He said he'd get it emailed to them immediately. I asked him to cc me. I rang the solicitor about an hour ago. Nothing.
I get better service really from somebody in a clothes shop. I'm buying a product which will give the banks probably €100K profit and they don't seem to care. And I'm stuck. I either keep pestering my adviser (which I'm doing) or I apply elsewhere and start again (not an option as UB have the best rate for me). If the new entrant appeared tomorrow I'd apply to them straight away.

In the meantime BOI got on to me (about 2 months after I gave up on them) asking me if I was still interested in going ahead with the mortgage.

 

[Brendan Burgess]

qwerty

That is, not just very funny, it's extraordinary.

As I was reading it, I thought that if the CB ever gives Frank a license and they have half decent competent service, they will clean up.

Brendan

 

[gnf_ireland]

I don't think that the valuation is a big problem. But maybe the new lender could use a three year old valuation and index it for the way house prices have changed? Especially for low LTV mortgages.

This works in the insurance industry for valuations for things like engagement rings etc - they will take a valuation which is a few years old and work from that, indexed if they need to.
The alternative is a single panel of valuers which all banks will work off. With the property price register, one would assume its pretty straight forward to do a reasonable valuation on most properties these days. Hell, they could even work off the LPT valuation in the worst case

Realistically, there is no way revenue will divulge any information by post or otherwise to anyone except the person in question. Ditto other financial institutions.

Disagree re Revenue - you can assign an agent for your tax returns and the revenue will divulge everything to them. I think it all depends on the context. There has been a lot more work done in this area of data-sharing over the last few years.
Financial institutions also already do this for the current account switching process - to facilitate the moving of direct debits and standing orders

"My current bank BOI have been extremely difficult to get some basic documents such as original statement from."
It seems that AIB wants original statements. That surprises me.

Ok, so for a first time buyer they have to go sort this out, no matter how much hassle it is perceived. I am wondering how many switchers would be turned off by this inconvenience? I am guessing too many, which is why I would hope some sort of switching pack would make things easier

most people now access their statements by printing them off internet banking.

getting original statements is now a big hassle and banks are making it more inconvenient.

I am going to go a step further on this - how many people now even use printers regularly. Most people I know use tablets rather than laptops or PC's and many only have access to printers at work. Given everything is going digital and online, this again backs up the suggestion that maybe banks should sort this out between themselves, since they want to save the costs of actually issuing paper statements

 

[Monbretia]

Maybe hire people that give a crap about the product they're selling

They got rid of us, we were costing too much for their liking