Mortgage Valuations

payless

IMG... me defending NR... thats a first

dwight-van-man

The £220 is labelled a commission because under accounting legislation, it can be claimed by NR in the current years books whereas a product or arrangement fee has to be spread over three years. For years, this fee, while still collected with the val fee, had a different name (can't remember what) but it wasn't related to the actual val in any way other than it was paid at the same time. The £220 & £75 are basically part of the overall product costing and have little if anything to do with the val.

NR do disclose this - on thier KFIs, offers and all broker communication (intermediary update etc) - its a mortgage fee, so it must be disclosed. Its interesting that as a mortgage broker of ten years standing, you were unaware of this.

To the wider question of why lenders need to instruct the val themselves, I've no idea. Its a situation peculiar to England & Wales - in Scotland you can instruct any panel surveyor yourself...

PalSol

Sound like you are reading page 21 of N Rocks intermediary guide. I actually agree with all that you say - what i am suggesting is 1) It is not clear and transparant 2) It is grossly unfair and 3) Surveyors do not act on behalf of the applicant that has just paid for their work - they act for the lender.

PalSol

Dwight again i agree however i write this assuming not everyone on here is a broker like myself. Actually if anyone takes a little time to look at their KFI's and the fees being charged for valuation then investigates with the valuer (who is detailed on the valuation report) as to what the price would be if instructed privately there is usually a big difference regardless of what the other added fees total up to. In fact i would say that there is probably a handful of lenders that charge the same valuation fees to the customer that they themselves are being charged.

AndrewSmith

There are a number of issues to do with this:

Lenders, just like any other retail business, charge a premium on top of whatever they pay for a service provided by an outsourced organisation. This includes valuations. They pay x, add on y, to make z. Some of the cost is their own administration costs, some is profit.

Large corperate firms such as countrywide, connells etc 'bid' for the business by offering the lenders concerned a place on their lending panel. Eg:

Connells surveyors (part of the connell group who are owned by Skipton building Society) offer cut price surveys to a selection of approx 30 lenders. If those lenders agree to use them for x% of valuation/survey instructions then Skipton Group will include them on their lending panel. How does this benefit the lender you ask? Simple.

Skipton group own all the estate agency chains of Connell, Fox & son's Allen & harris etc etc in fact they own all of the ld Sequencehome group. Look at the expoure that will give the lender with regards to reciprocal mortgage busines coupled wiith the exclusive mortgage available to Skipton group from it's lending panel.

The whole thig goes far deeper than simply making a few quid on the cost of a survey. It is massively big business and is conducted at boardroom level between the Lending organisations and survey suppliers. There are lenders queueing up to get on these such lending panels as the reciprocal mortgage business gained from it is highly profitable to them.

With regards to the surveyor and lender declaring the 'wholesale' fee paid by the lender to the surveyor.

They are effectively employing a sub contractor to carry out the survey on 'their behalf' which is why they insist on instructing it. The valuation is for the benefit of the lender not the borrower thus the instruction is actioned by them.

Think of any other business where a sub contractor is employed. Buildrs, landscape gardeners, mechanics etc etc. You would never be told, nor expect to be told what the contracted company is paying it's sub-contractor for the work.

payless

PalSol wrote:

Sound like you are reading page 21 of N Rocks intermediary guide. I .

no its pasted from the KFI itself

dwight-van-man

PalSol wrote:

Sound like you are reading page 21 of N Rocks intermediary guide. I actually agree with all that you say - what i am suggesting is 1) It is not clear and transparant 2) It is grossly unfair and 3) Surveyors do not act on behalf of the applicant that has just paid for their work - they act for the lender.

1) The structure of the val fee is detailed clearly on the intermediary update, the kfi, the offer and on the details sections of Trigold, MBL etc etc - thats about as transparent THAT ITS CHARGED as you can get. As to the transparency of its purpose, well it certainly doesnt cost NR £220 to 'accept and evaluate' a val report. As I said, the purpose is that it is simply part of what NR have decided they want from each case, ie profit (which obviously covers processing, admin costs etc etc as well as keeping the shareholders fat)

2) You get what you pay for. you want the features & facilities you get from a NR mortgage then pay the fees. If you don't, don't.

3)True - but all lenders need a val, the client wants the house so why shouldn't the client have to pay for it. Most clients forget that a scheme 1 is simply a valuation - you want the surveyor to carry some responsibility to the client then pay for a homebuyers report

PalSol

Thank you. However, unlike the other sub contractors you mention Mortgage brokers, lenders and surveyors are all regulated persons, bodies and or companies. The scale is huge and the competition to be on these panels is quite fierce as is the money to be made by these surveyors and lenders who co-exist together.

dwight-van-man

payless wrote:

no its pasted from the KFI itself

Actually its from memory. sad, I know....

AndrewSmith

PalSol wrote:

Thank you. However, unlike the other sub contractors you mention Mortgage brokers, lenders and surveyors are all regulated persons, bodies and or companies. The scale is huge and the competition to be on these panels is quite fierce as is the money to be made by these surveyors and lenders who co-exist together.

As are Corgi registered gas engineers for example who are often subcontracted by larger builders.

Regulatory status is irellivent as to whether the costs of the sub-contractor should be disclosed or not.

In the same vain you could also argue then that a mortgage broker who charges fees to the client should disclose the amount of profit in that fee. Then we get onto the lender commissioins payable to the broker. Should the profit element to the broker be disclosed 'as he is a regulated individual'?

Solicitors are also regulated as companies. As such should they also disclose their profit margins in the fees payable to them when a lender instructs them to carry out legal work on their behalf (which incidentally is largely paid for by the borrower if you check the KFI fees payable)?

As I said I do not agree with inflated fees however it really is a 'like it or lump it' situation.