Valuations update - 01/04/20
|WON'T ACCEPT||UNLIKELY||POSSIBLE||LIKELY||WILL ACCEPT|
|FLEX CHOICE||CAPITAL CHOICE
We are delighted to announce that, with immediate effect, we will be able to undertake semi-automated valuations (desktop valuations) for this product line. There will be some changes to lending criteria and a small retention placed on the maximum initial release (or on the facility for drawdown cases) and those changes are as follows:
- All applications will be done on a semi-automated valuation basis and will have a physical valuation take place as soon as is possible afterwards
- 90% of the loan amount will be released, with 10% pending the physical valuation. For drawdowns the retention can apply to the facility (i.e. customer gets all of initial advance, and a lower facility that reflects the 10% retention on the entire LTV until the physical valuation takes place. For example, a total facility of £100,000 with a 10% retention means a reduced facility of £90,000. If the customer takes £50,000 up front this will leave a retained facility of £40,000)
- The following property types will be REMOVED from the lending policy while relying on semi-automated valuations:
Properties with flat roofs over habitable areas will not be acceptable
- We can proceed with Drawdown cases up to Offer stage at this point. We will release Offer letters as soon as possible (Lump Sum cases will go straight to Offer)
- Please note that our usual underwriting standards in terms of assessing each case will not diminish in respect of the new semi-automated valuations. Also, it will not be possible to challenge a valuation that does not meet the expectations of the client.
- Commission on cases will be disclosed at the full amount to the customer but the adviser will only receive 90% of the full amount and payment of the additional 10% will be dependent on (a) a full valuation supporting the LTV and (b) the customer agreeing to receive the additional funds.
For example, if the full lump sum payable is £100,000, the customer will only be able to take £90,000 (90%) up front and the adviser will receive commission based on the £90,000 taken with the additional 10% dependent on the client taking (and being able to take) the additional £10,000 at a future date
Any application for Maximum Choice (including Lite and Plus options) currently in our pipeline and paused at the valuation stage will now be restarted but subject to the new valuation process and 10% retention (but they will retain the existing rate and existing lending criteria for any Applications submitted before midnight on 08/04/20 providing the KFI is dated before midnight on Weds 1st April). Cases that have been offered and are waiting to complete will continue to completion on current terms without the 10% retention.
We have had confirmation from the funder that they are prepared to move forward with semi-automated valuations and we are now finalising the details of what shape these products will take before we communicate further with you regarding any changes to LTVs, rates, lending criteria etc. Given that these products operate at the very high/max cash end of the market in terms of LTVs, we are anticipating a possible restriction on LTVs.
Capital Choice (including Super Lite version)
We are confident of reaching a decision on semi-automated valuations across the Capital Choice range, including the SuperLite version. We are not there yet but we have had very positive discussions with our funder which are going through the final stages of internal debate and hope to be able to bring you news on this shortly.
Advisers may want to consider recommending Capital Choice SuperLite as a solution for clients looking for low LTV/interest rate. Our SuperLite option is currently only available to a select group of distributers approved by the funder. As the necessary governance from this funder has already been secured for members of Air Mortgage Club, advisers will need to submit applications via the Club to access the SuperLite option.
We are having positive, ongoing discussions with this funder regarding semi-automated valuations. We are hopeful of reaching a resolution on these product lines very shortly, albeit they may be subject to lending criteria and other restrictions like Maximum Choice.
We continue to discuss options with this funder and based on the most recent discussions we think it is possible that we will reach a solution regarding semi-automated valuations with them in the coming weeks. You can still submit applications for Flexi Choice on the current rates (up until midnight on Friday 3rd) and on the new rates going forward and these will be honoured for a period of 6 months but subject to the caveat that they can only be processed once a suitable valuation solution has been agreed. Even then the application may be subject to lending criteria restrictions, LTV changes or retentions. .
e.surv & fastpath
Our valuation partner, e.surv, has been tremendously supportive during the past two weeks in helping us deliver a solution on semi-automated valuations. Their systems and data insights into the UK housing market are second to none and, when coupled with our own fastpath portal, give us tremendous confidence that we will be able to speed your clients’ applications through to offer without delay.
Independent Legal Advice
You will have no doubt seen the latest news from the Equity Release Council that they are temporarily relaxing the standards relating to the need for face-to-face legal advice. Solicitors will be able to complete much of the conveyancing via the post and recorded phone/video calls. There remains the issue of a witnessed mortgage deed signature which will still require a solicitor/witness to attend the client’s home (with, of course, all of the necessary social distancing precautions taken). Most of the specialist solicitor firms are now able to deploy this new approach which is another great sign that our industry can keep applications moving through to completion without forgoing any of the important client safeguards. This is something that all of our funding partners are looking at closely when coming to a decision on moving forward with accepting applications.
Price changes, lending criteria changes and other restrictions
You will appreciate that as the market adjusts this new environment, wider economic factors as well as the difficulties in accurately valuing properties mean that we are likely to see price rises and lending criteria restrictions across the entire marketplace. It would be wise to forewarn customers you are speaking to in the coming days and weeks that, while options are opening up as lenders like more2life find ways to deliver an end-to-end process, the ability to access the full range of options and rates normally available is likely to be restricted for the time being.