In recent months specialist lenders have begun strengthening their underwriting teams, with an apparent shift from hiring business development managers (BDMs) to a strategic focus upon good underwriters. Notable lenders, including Masthaven and United Trust Bank, have, in recent months, taken on new underwriters - allowing them to complete cases much quicker.

With increasing regulation of the short term market and the growing importance of fraud detection, quality underwriting is now taking centre stage. With this in mind, we asked two key recruiters within the market to explain what they think has prompted the underwriter drive.

Why the focus upon hiring underwriters?

Kerry Stephens at Coast Specialist Recruitment described the trend: “It is logical to say that due to the influx of BDM recruitment last year the market should be stronger for underwriters this year. As with any lender there are more underwriters and case managers than BDMs, as a good BDM should be able to keep more than one underwriter busy.

“If last year’s BDM recruits were successful in generating more sales for the lenders, it is only fair to assume that the need for new underwriters would be on the increase this year after the BDM’s ‘bedding in’ period. There is no reason for a lender to have a really successful BDM if they cannot pass this work through to an efficient back-office team.”

So why are underwriters the new prized recruit?

Peter Gwilliam, owner of recruitment firm Virtus Search, said, “In building underwriting capabilities and, ultimately, their capacity firms can get deals done more quickly, but because of the significant risk of fraud there is a necessity to also be protecting the business in having more resource and expertise in this area.

“The prevention of just one fraud pays for an underwriter many times over, whereas a BDM would have to create many deals to be cost justified, so you can certainly appreciate why the skills of experienced underwriters are sought after, which in turn leads to the price firms are willing to pay increasing, since there is only a finite supply.

“A football adage that springs to mind is ‘the benefit of signing a great centre forward is quickly lost by a dodgy goalkeeper!!’”

However, Kerry stressed that the rise in underwriter recruitment may not be a conscious shift. She added, “Although we have seen an increase in underwriter vacancies this year I do not agree that it is purely down to a ‘new trend’ in the recruitment market. Many vacancies have become available organically, due to the natural peaks and troughs in recruitment.

“As one underwriter terminates their contract with a lender, it leaves a space, which is filled by another lender’s underwriter. As technical knowledge is so vital currently it is unlikely that lenders will bring on-board underwriting candidates without suitable experience, so they will look to take from competitors.”

Yet despite this apparent vibrancy within bridging recruitment, Peter highlighted his concerns about the way in which this is usually carried out. He said, “In relation to its much bigger brother, the residential market, the bridging sector is yet to appreciate the relationship between paying professional fees to get sought-after talent.”

Peter further explained that his discussions about the history of the sector have confirmed that it was once very parochial, with businesses usually taking the form of tight knit clusters of executives making the decisions while the employees did all the legwork. However, he believes that the recruitment outlook is brightening due to “…growth in the sector” and “the increased risk of fraud has necessitated systems and controls.”

What’s next for underwriters and lenders’ recruitment generally?

Kerry believes that underwriter vacancies are actively being created with a specific intention to train the successful candidates to become future BDMs after they have gained crucial market knowledge and an understanding of the company’s technical processes.

Although she clarified: “This only occurs within companies that can offer full training; it makes good business sense for a long term solution.”

Despite currently having more underwriter vacancies, Kerry told us that the BDM market is far from asleep. She added: “As the market continues to grow, with new lenders appearing and approaching the intermediary market, it is equally essential to continue marketing the company brand properly.”

Peter predicts that in the near future there will be a high demand for compliance professionals who have specific insight into the sector, especially those “…who understand how to detail and document lending policies and process controls, whilst delivering an outstanding service.”

Leaving us with a final thought, he described the two choices lenders have when considering their next recruitment step for those who are prepared to plan ahead, alongside proposed regulation:

1. Have to pay what it takes to get the services of the right people;

2. Don’t take action and let the regulator take it for you.