CRL mortgage rejected advice needed

JCMG

Hi,

My mortgage broker has just contacted me to tell me that the mortgage provider I had applied to (Platform) had rejected my application as the new build flat has a CRL warranty. However, they said that the next lender on (HSBC) does accept flats with CRL warranties.

This has spooked me a bit however, from a little bit of research the situation with CRL warranties seems to be fairly complicated in that they are slightly less comprehensive than other more standard ones. In addition (and more importantly) the parent company has apparently gone bust and that is why lenders are pulling out. I've put a pause on things while I'm trying to figure out my options and I was wondering if anyone had any advice regarding the implications of having a CRL warranty?

It seems like lenders are still accepting applications, however, some have pulled out recently and I was worried that this would continue. How does having a CRL warranty affect the potential for selling on the property or making claims on the warranty if something goes wrong?

Any help would be much appreciated.
Cheers

[Deleted User]

Previous thread on this although I am not sure it will help, it might contain some information

https://forums.moneysavingexpert.com/discussion/5827521/crl-warranty-not-accepted

sal_III

It's not CRL parent company that went bust, it was their main insurer - Alpha. Apparently CRL are working on finding new insurer(s) for their warranties and rumour has it some lenders are OK with CRL warranties as long as they are not underwritten by Alpha.

Meanwhile some Lenders are erring on the side of caution and blanked refuse mortgages for properties with CRL warranty.

What this entails is that at least currently there are a lot of people being refused mortgaged for both new and old builds backed by CRL warranty, making such properties harder to sell. Whether this situation will continue or CRL will be able to "clear their name" in the future is anybody's guess.

Bear in mind that even if you are happy with the mortgage side of things and not planning to sell any time soon, there is chance the warranties themselves might be in danger. If their hardship continues and developers keep changing warranty providers, CRL might go under too, leaving the validity of your warranty in question.

SallyDucati

I'm sort of in the same situation, with my purchase on hold due to the CRL warranty issue. It is actually the underwriter (Alpha) that went bankrupt on the 8th May. Basically if the policy is underwritten by Alpha the warranty is void and is worthless. You would find it very difficult to sell in the next few years with only that warranty. I'm fairly sure there are no mortgage companies that will give a mortgage with a warranty underwritten by Alpha (Nationwide will accept CRL as long as the policy is underwritten by another insurer).

Until the developer you are buying off sort another warranty I'm afraid you are stuck, as I am. CRL seem to be rather unhelpful looking at their social media reviews, and the company I am buying off are looking at other brokers. Another side effect of this is that other brokers etc. are being inundated with CRL customers so everything seems to be taking ages!

You need to contact the developer and see what they are doing about it and decide if you want to wait or pull out. It's very frustrating I know!

JCMG

Yeah, I had a look at that, and that was partly what led to my questions. Especially stuff like this:

"I think some insurers are now accepting CRL cover as long as it is not underwritten by Alpha (eg. Nationwide). I'm also currently in the process of buying a completed new build house with the original warranty provided by CRL/Alpha. CRL have been very slow to get back to the developers with a re-quote and looking at reviews on their facebook page seems that is par for the course at the moment."

Should I ask whether the garantee is one underwritten by Alpha? Or is CRL as a whole quite shaky.

I find the fact that lenders such as HSBC are still accepting applications reassuring, but I'm not sure to what extent that is because they haven't reacted as quickly as other banks, so any more help would be really appreciated.

Cheers

SallyDucati

You definitely need to check if it is underwritten by Alpha, if it is then there is no warranty. Personally I would not buy a new build without a 10 year warranty and buildings insurance would expect that to be in place as well.

I don't think CRL as such are currently shaky but this and their response is not doing their reputation any favours.

sal_III

JCMG wrote: »

I find the fact that lenders such as HSBC are still accepting applications reassuring, but I'm not sure to what extent that is because they haven't reacted as quickly as other banks, so any more help would be really appreciated.

It's all about their appetite for risk. It's not like the lack of warranty will stop you from repaying your mortgage...

It's only in the eventuality that you default on your mortgage payments before the 10 years warranty has expired and they have to take over the property and try to sell it to recoup their money that they will be affected by this issue. Since the probability for that is quite low I'm sure some bean-counter at HSBC has done the necessary calculations and they have found it worth it to keep giving mortgages for such properties, probably with some restrictions on LTV levels.

Warrantyexperts

The issues with a CRL warranty relate back to their insurer Alpha going into liquidation in May 2018. Despite this being over 2 months ago there is still no clear picture emerging on how to deal with the situation largely because many people don't know they don't have insurance until they purchase/sell or refinance. This is a potentially huge scandal and one which the Financial Regulators should have been aware of. Most insurance brokers wouldn't place warranties with Alpha due to them being based offshore and not having good enough financials. If insurance brokers wouldn't use them then why did so many developers? This will run for years but the moral should be, speak to a professional independent insurance broker for advice. They can resolve the issues for you.