Mortgage Broker Complaint

123imp

Hi Everyone,

Thanks in advance for reading my post, and doubly so if you take the time to respond.

I have recently had a property purchase fall through as I was not able to secure the mortgage I was expecting. I am quite upset with my mortgage broker, but I'm unsure whether I'm letting my emotions rule my head.

I had an offer of 200k accepted on a property in September. I went to a mortgage broker and sat down with them. They went through my situation, all my finances, etc. They went through my options in detail, I decided I wanted a 90% LTV and I had the 20k as a deposit. I am a contractor with an hourly rate, I had just hit 1 year of continuous contracting in September (started September 2021), and previous to September 2021 I had been out of work for a few months - the broker had all this information. They told me which mortgage products I would be accepted for, and an application was submitted to HSBC. As the weeks went on the broker continued to come back to me to ask for more and more documents - mainly various payslips which the lender had asked for. In the end, they phoned me and said that they had managed to get through to the lenders underwriter team, and had been told that the mortgage application was not considered based on the previous years earnings - as the broker had calculated for - but rather the earnings from the 2021/22 financial year, which were significantly lower due to my period out of work.

Ultimately, the offer was to be significantly reduced based on the calculation being based on the previous financial year rather than year from September. Therefore, I was not able to secure the property. The broker had all my background and financial information, including the period going back before September 2021. Is this a simple mistake on the brokers end, the lenders fault, or something I should probably make a complaint about?

Thanks.

tripled

Sorry to hear of your problems. I don't know who you used, but also being a contractor, I recently had a very similar experience remortgaging with L&C, although the application was with Halifax. They managed to thoroughly confuse the lender, and it dragged on past my contract end date, and so Halifax rejected the documentation. It caused a huge amount of stress and I thought it was going to fall through, but it eventually it did get resolved, only because I managed to get another contract off the same client.

I would absolutely raise a formal complaint to the broker, you have nothing to lose. In my case I got £150 compensation even though it did eventually get accepted.

welly_59

What is it that your want to complain about? The broker cannot second guess the underwriters, there are plenty of times when someone will meet criteria and underwriter still turns it down.

If the broker had said that the lender would look at income from 21/22 what difference would that have made, as your still works have not met the income requirements

ACG

If the lenders criteria is 1 years contracting, then it is just unfortunate that your case has been declined. It is not the brokers fault, it is the lenders/underwriters, they did not like your application as a whole. 

If the lenders criteria is over 1 years contracting, then the broker has made a mistake it would seem and so they could be held liable. 

I do not have access to HSBC so cant comment on their criteria. I would suggest speaking to the broker and finding out why it was declined and also finding out what HSBCs criteria is regards to contracting. 

123imp

tripled said:

Sorry to hear of your problems. I don't know who you used, but also being a contractor, I recently had a very similar experience remortgaging with L&C, although the application was with Halifax. They managed to thoroughly confuse the lender, and it dragged on past my contract end date, and so Halifax rejected the documentation. It caused a huge amount of stress and I thought it was going to fall through, but it eventually it did get resolved, only because I managed to get another contract off the same client.

I would absolutely raise a formal complaint to the broker, you have nothing to lose. In my case I got £150 compensation even though it did eventually get accepted.

Thanks for the response. For me it will be a big financial hit, as the difference in mortgage rates compared to the 3.8% I applied for, will mean an extra 7k over the next few years.

123imp

welly_59 said:

What is it that your want to complain about? The broker cannot second guess the underwriters, there are plenty of times when someone will meet criteria and underwriter still turns it down.

If the broker had said that the lender would look at income from 21/22 what difference would that have made, as your still works have not met the income requirements

Hi, thanks for your response.

My earnings contracting from September 2021 to September 2022 would have been sufficient for the amount that I was looking to borrow, and these were the earnings the broker based their advice and application off. However, 6 weeks into the application HSBC informed the broker that the application was assessed based on earning from the 2021/22 financial year (April to April). As I had been out of work from June to September 2021, and was earning less in my previous role, my earnings were significantly lower (over a 12 month period) compared to the September-to-September period.

Therefore, based on HSBC's criteria I was never eligible to borrow the amount the broker applied for - due to the way HSBC assesses income. I can accept that possibly the broker didn't know HSBC's rules and criteria, so maybe a simple mistake, but I am not learned in the inner workings of brokering - and whether this is something they should have known. After all, the reason I used broker was because I had no knowledge of how mortgage applications worked.

ACG

I have just been on the HSBC website, it says 12 months contracting. So it would seem it does fit criteria. 

However, I think I can see where it might have fallen down and it was to do with evidencing it...

• Latest P60 AND;
• Last current contract of employment
• The latest one months’ worth of payslips in line with the basic income requirements

The latest P60 compared to the annualised figure from the latest months’ worth of payslips will be used in the affordability assessment.

• If the figure from the latest P60 is lower than the annualised figure from the latest months’ worth of payslips, then the latest P60 figure will be used.
• If the annualised figure from the latest months’ worth of payslips is lower than the latest P60, then the annualised figure will be used.

If I am reading it correctly (I may not be) then because your P60 and payslips would not marry up as you started part way through the tax year, they have used the lower figure. 

If I am reading it correctly, then I would say the broker should have picked up on this or if they ran it by their account manager then it should have been discussed. It might not be the brokers fault if the broker called up to ask and was given incorrect information. But it does not appear to be a case of the underwriter not liking your income, in which case I would say someone is at fault. 

But dont hold me to that. 

123imp

ACG said:

I have just been on the HSBC website, it says 12 months contracting. So it would seem it does fit criteria. 

However, I think I can see where it might have fallen down and it was to do with evidencing it...

• Latest P60 AND;
• Last current contract of employment
• The latest one months’ worth of payslips in line with the basic income requirements

The latest P60 compared to the annualised figure from the latest months’ worth of payslips will be used in the affordability assessment.

• If the figure from the latest P60 is lower than the annualised figure from the latest months’ worth of payslips, then the latest P60 figure will be used.
• If the annualised figure from the latest months’ worth of payslips is lower than the latest P60, then the annualised figure will be used.

If I am reading it correctly (I may not be) then because your P60 and payslips would not marry up as you started part way through the tax year, they have used the lower figure. 

If I am reading it correctly, then I would say the broker should have picked up on this or if they ran it by their account manager then it should have been discussed. It might not be the brokers fault if the broker called up to ask and was given incorrect information. But it does not appear to be a case of the underwriter not liking your income, in which case I would say someone is at fault. 

But dont hold me to that. 

This is it! Wow. That's exactly the reason why my application was rejected then. The broker paraphrased over the phone, but I didn't fully understand at the time. So they took my P60 from the 2021/22 financial year and assessed me based on that, even though in the 12 month period previous to applying I earnt at least 25k more than what was on the P60.

I guess the question would be then, was the information available to the broker when they applied for the mortgage. If it was, then they have been extremely negligent, as they knew about my earnings from that previous year.

Thanks a lot.

ACG

When I am researching a case, I do not always use the lenders website. I sometimes call the BDM. 

Just giving the broker the benefit of the doubt here, if they have called up and asked if they will accept someone who has been contracting for 12 months and the BDM has said "yes", its not the brokers fault. In my eyes it would be down to the BDM to go the extra mile and confirm the criteria. 

However, if that were the case you should still not be out of pocket. 

So it is not necessarily the brokers fault, but I would say unless he/she has a bad BDM it probably is.


This information is on HSBCs brokers website. I am not registered with HSBC so I have access to the same information you will. Just type in HSBC intermediaries. Under criteria, search for contractor.  

123imp

This is so helpful, thanks.

Do you think I should approach the broker with the information from the HSBC broker's website, and just ask them if they had this information, or enquired about it? I guess that way I could either then have the conversation about why they weren't aware, or I know who to direct my complaint to if it's this "BDM" you are referring to.

ACG

BDM is a business development manager/Account Manager, they work for the lender. 

Your contract so to speak is with the broker. Thats who you need to contact in the first instance. 
If you are not getting answers you need, then you probably need to make a formal complaint.