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ISCOVER
“I wish it was Christmas every Day”. I would like a dollar for every time I have heard this from my kids.
And it’s a compelling wish when you think about it: the collective good will that pervades every part of our lives during the festive season is infectious; from the usually morose cashier at the supermarket now effusively ebullient – to the habitually ambivalent butcher gloating in anticipation of excessive orders, the festive mood prevails. Despite the pressures of time as we roll towards the inevitability of Christmas Eve, with the frantic flurry of activity and social commitments, everything simply seems to get done. And it makes you think, why can’t it be this way every day of the year?
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In our industry of mortgage-backed non-bank commercial and bridging finance, this is particularly relevant because of the need for speed attached to every application. It is perhaps because of this that the first question of a broker is usually “How quickly can you get this settled?” Our answer is inevitably the same, “Just as soon as we have everything we need.” Of course, what we need differs with every application but at the very least we need to understand the extent of our exposure to risk. So this means being able to assess the value of the security assets versus the loan sum and the capacity and commitment of the client to repay the loan. And as simple as these sound the extent to which the successful outcome of a loan can be relied upon has many variables; the higher the variability of risk the less uncertainty in the assurance of a positive outcome. In these cases we need to drill deeper and this inevitably means a lot of questions needing answers.
We have found that experienced brokers and introducers understand this. They can perceive when an application (as they say) “has hair on it”. And they naturally prepare by seeking supportive information to allay any concerns; perhaps in relation to serviceability, or strength of exit. This is good forethought and shows a commitment to the lender that invariably bodes well for the applicant. What is irritating for all concerned is an attempt to hide the elephant in the room. If a property value is suspect (and these days this is easy to determine) then any attempt not to have it valued is going to lead to immediate rejection. If an applicant has unqualified income but the claimed exit is an 80% refinance from one of the big banks then we know that is not going to happen. All these things lead to delays in getting a loan settled.
Of course there are matters outside a lender’s control which affect speed of drawdown such as valuations. The more complex the valuation the longer it will take. The only positive issue here is that it will take the same amount of time for every lender and, if the client is so desperate as to accept a much more expensive offer provided by a lender who is willing to risk not valuing the property, then that is their prerogative.
In the week before Christmas we received two urgent applications: one which was particularly interesting. It was a consumer bridging loan. The applicant faced the loss of a $46,000 deposit on an off-the-plan purchase when her own property sale became delayed. But only part of the exit funds would come from the future sale of this property, half would come from 18 separate maturing superannuation funds. To assess this loan we had to arrange a valuation of the property to be purchased, assess the validity of the sale contract on the property being sold and validate the receivables on each of the 18 Superannuation funds. The application arrived on my desk on Thursday lunchtime December 19th, it settled Tuesday lunchtime December 24th. In this time we were able to arrange and complete the valuation, convince each of the Super funds to confirm the sum of their accounts and check the bona fides of the sale contract and land value. I can tell you that under any normal circumstances this would not have been possible because everybody involved would have perceived any claimed deadline to be false. They would have taken their own sweet time to get information to us. They would have taken days to arrange a valuation and even longer to write them up. Their lawyer would have been ambivalent in arranging an appointment to provide independent legal advice and been slow to get contracts transported for lodgment. But, with the looming reality of Christmas Day, and the absolute threat of office closures for two weeks, and a desire to bill before then, (by the miracle that is Christmas) it all got done.
For us these time pressures were normal. We completed our work as required. And this is how it is, always. The reason we managed to complete the loan under such time pressures was because for once, during the one time of all times throughout the year, everybody was motivated by the exact-same time pressure.
So next time a broker asks me “How quickly can you get this settled?” I know what to say. I will say “I wish it were Christmas every day but, as it’s not, just as quickly as everyone else moves as fast as us!”
