The astl answers: Bridging needs mainstream lenders

The astl answers: Bridging needs mainstream lenders






Providing the opportunity for you to put your questions to the body representing the lenders in the short term finance sector, B&C has got together with the Association of Short Term Lenders (astl) to address any concerns or questions you may have.



Responding on behalf of the astl membership, the Association’s Chief Executive Benson Hersch will voice the view of the lender members – which currently stands at 22 - with the aim of promoting a better understanding of the issues currently affecting principal lenders and how you submit more effective finance applications.   



To submit your own questions to the astl, 

click here. 



What are lenders’ main concerns about the industry and what can brokers/the Association do to improve these worries?



Concerns differ from member to member but a major worry is the increase of fraud. Other concerns include the image of bridging and the sometimes very negative (and sometimes uninformed) press comment. 



The industry is very fragmented, and not all bridging companies follow the standards which astl members uphold. Members who write regulated business do have apprehensions about ever-increasing regulatory requirements, which they consider to be too broad-brush and do not take the short term nature of bridging into account.   



The Association has taken positive steps to deal with these issues and is in the process of taking delivery of an advanced computerised anti-fraud system, which will be rolled out to members at a discounted price. Members have also signed up to a Value Charter, backed by a code of conduct which will ensure that they maintain high standards.  



The astl has regular discussions with the FSA, and the regulator has taken on board several of the Association’s recommendations. I wish to encourage all responsible bridging lenders to join the Association, so that membership will be seen as a mark of quality. I would like responsible brokers, in turn, to recognise this and place business with members. 



What do lenders think is the biggest barrier in the deal process?




Underwriting methods differ from member to member, but all place emphasis on anti-fraud and anti-money laundering methods. The Association is providing access to a computerised anti-fraud system at a discounted price and it also maintains a suspected fraud register. 



In addition to this, the ever-diminishing number of long term products makes it difficult for some customers to provide a viable exit route; the mortgage industry as a whole needs lenders who are prepared to lend. Some long term lenders seem to be concerned with collecting their book and repairing their balance sheets rather than in making new advances. Long term lending criteria need to be clear and not subject to sudden change. Brokers can assist lenders by providing full information up front which should ensure that there are no delays or unpleasant surprises. 



The astl also proposes on-going relationships with other complementary trade bodies, to mutual advantage. It also needs to make brokers and the public as a whole aware of what bridging is, and when it is (and isn’t) appropriate.



Is there anything lenders are working on to inject innovation into the short term industry?



Members are free to set their own terms, and provide their own products, provided that the terms are clear and reasonable. Some lenders provide a range of products, from bridging to longer term loans and some provide services to developers and investors; each lender strives to provide the service its customers want. Products can be designed to meet the specific needs of the customer by, for example, offering staged drawdowns. Products also are arranged to meet the cash-flow resources of the customer.   



As there are many different ways in which loans are redeemed, the method and timing of redemption is an important factor in tailoring the loan to the customer’s needs. The beauty of a bridging loan is that the customer is not locked into a specific term, and the loan can be redeemed early as the circumstances of the customer allow; generally without any early redemption penalty. Each member will diversify as they see fit and as the market changes and evolves, members will be ready to meet new challenges and find new opportunities.




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    Marc Turner

    I agree with Simon regarding lenders pulling out of deals and I appreciate a lender needs to assess the full facts of a deal before providing their terms. Too many lenders are still happy to progress a deal on the basis of a basic agreement in principle which costs clients expensive valuation fees and initial legal fees. Although these are important factors to a lender they seem to manipulate the terms outside of their published criteria. I understand that a lender should analyse an application on a case by case basis but there should be clarity and transparency, maybe the ASTL and AOBP should work more closely together to protect professional introducers and lenders alike.

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    Simon Allen

    As well as lenders' concerns within the industry, brokers also have concerns about lenders. There needs to be a way to collate info on the lenders that pull out of deals because they don't have the money to lend. Their astl membership then needs to be terminated.

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