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In the second part of The Broker’s Deal Book, we look at a solution provided by Resicom after an aggregator’s white-label funding line had let down a broker on a "cash out" transaction that had to settle fast to seal a business purchase.
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The scenario
A health care professional and long-term client of a Resicom-accredited broker had an opportunity to purchase a passive 25 per cent shareholding in a company from a business partner that wanted to transition to retirement within two years.
The broker spoke with the aggregator’s white-label business development manager and credit team and the application was lodged. However, after three weeks, the deal was reneged on. This left only a short period of time — just four days — for the client to close the share purchase.
As such, the clients were looking to raise some equity on their owner-occupied home. They could show servicing on their current, full-time income without the need to consider adding any of the additional income derived from the new business acquisition.
Resicom’s senior credit and sales support officer, Andrew Myles, explained that the broker called Resicom and was “quite perplexed” at the service she had been given by the white-label provider, especially as she considered the deal was “a straight forward, full-doc loan with a strong employment track history and a solid repayment history”.
According to Mr Myles, Resicom often sees “these types of quasi-commercial transactions” where a bank or white-label underwriter “can’t seem to tick a box even though the transaction services well and [involves] a borrower of good character”.
The solution
The broker told Resicom the full story, helping it to choose the correct product and lender to approach.
Following upfront feedback from the lender’s sales side and credit team, the broker told the client that they could find a comparable solution, thus meeting the borrower’s needs and objectives.
CEO Stephen Mitchell said that the deal went through quickly as Resicom knows its non-bank lending lines and private funders well and can often foresee “pressure points” early on.
He recalled: “The loan application was checked, valuations ordered and solicitors notified on day one. Our back-end settlement process usually involves a lot of situation management, from finding the right valuer at the right time for quick turnaround, preliminary requirements to the solicitors (so documentation and searches can be started) and the borrowers are contacted and even booked in for documentation execution at this stage.”
According to Resicom’s chief operating officer, Craig Robertson, in this case there was a “slight delay” with a solicitor witnessing documents, but the deal was still settled in time.
Mr Mitchell explained: “This transaction was placed with one of our non-bank lenders at an opportune time to take advantage of a rate special, which was a great fillip for the borrower and broker.
“We also had the good news for the broker that the loan wasn’t subject to clawback provisions, so (if the client wished) the loan could be reset elsewhere if a better deal became available at a later date.”
Mr Mitchell recalled that the broker appreciated that the process was simple, highlighting the easy, seven-page application form and ability to walk through the scenario upfront, while being directed on how to get the deal done in just four days.
Resicom prides itself on being a “very hands-on business” that can help brokers settle deals even if they aren’t specialists in the field, and prides itself on its fast turnarounds, which it attributes to its “strong relationship with lenders, valuers and solicitors”.
Mr Mitchell added: “Resicom is used to getting urgent settlement requests, and although most transactions are bespoke at the front end, the back-end work usually fits into a manageable situation.”
Resicom is a specialist in everything out of the box, be it client type, speed of transaction, security or even the use of the loan.
[Related: The Broker's Deal Book: Part 1]
