ACTING FOR LENDERS
When you are obtaining a mortgage to fund your property purchase we are also instructed to undertake the legal work for your lender. Not only are we required to advise you in relation to the mortgage, its legal effect and your obligations, we are also required on behalf of the lender to represent them in checking that the legal title to the property is “good and marketable” and follow their detailed requirements.
WHAT IS GOOD AND MARKETABLE LEGAL TITLE?
Good and marketable title is not necessarily perfect title. It may have flaws which will deter a mortgage lender from lending on the property or a cash buyer from purchasing. These flaws may be addressed by way of title indemnity insurance or you may take a view on them and decide to proceed despite the flaws. Where you have a lender, they must agree to certain matters, whether or not the matter doesn’t affect your decision to proceed.
WHAT SORT OF MATTERS NEED REFERRING TO THE LENDER?
Lenders have 61 pages of requirements that we must comply with in addition to matters that can be included in the mortgage offer. Whilst we are familiar with most requirements these are often changing and being updated. Where matters are unclear or do not comply with the lender’s requirements, we are obligated to refer to the lender and request their further instruction and / or authorisation to proceed.
WHAT TIMESCALES DO THE LENDERS WORK TOWARDS?
Every lender has different timescales. Unfortunately, we have seen an increase in the time taken for lender response times following the increase in demand for mortgage borrowing. We will not always be advised of lender response times and where we are not advised of timescales, you will need to enquire directly with the lender.
WHAT CAN I DO TO SPEED UP A LENDER’S RESPONSE?
Lenders work to their own timescales. As Solicitors, we are required to adhere to timescales laid down by the lenders and they do not accept us chasing by telephone or email within their stipulated timescales. We do not have the same influence you have as the borrower and customer. Where you have used a mortgage broker or bank relationship manager, they may be able to assist you in receiving a response to the matters, sometimes having access to lender’s specialist teams or contacts.
MY BROKER HAS ALREADY DEALT WITH THE MATTER
Mortgage brokers will often submit specific matters as part of a mortgage application. This can include information relating to your finances and wealth, alterations and extensions to the property, deposits being gifted by family members amongst many other matters. Unfortunately, banks and building societies are inconsistent in making specific references to matters within their mortgage offer. Separately, and in addition, we are obligated to follow the lender’s 61 pages of instructions which often require us to refer to matters you may have already dealt with in your application, back to the lender. We must re-confirm details or provide more specifics relating to the matter, depending on the lender’s rules and the matter in question.
WHY IS THIS NECESSARY?
As noted above it is necessary because your lender becomes our client in the same way as you are our client. It is also necessary because of the inconsistency between lenders, what they do or do not record in the mortgage offer and the rules they require us to follow. As already stated but worth repeating, lenders often do not record within mortgage offers matters specifically dealt with as part of your application. We appreciate that this can appear to be doubling work but it isn’t. If we are seeking clarification, it is because we are obligated to in accordance with the lender’s detailed rules.
MATTERS WHICH RELATE TO PROPERTY VALUE
Some matters may have an impact on a property valuation. These can include where additional garden land was expected to be part of the property, but our title investigations reveal the land is not owned by the seller. Another common matter which may affect value is loft conversions without the relevant planning permission and building regulations. Some historic loft conversions may not meet current regulations and this can determine whether or not lenders will treat the space as part of their valuation. As solicitors we are unable to comment on value as this requires a valuer or surveyor. As lenders are inconsistent in their approach, it may be necessary to refer to the lender who may refer the matter for consideration by their valuer.
TRUST US
Like we trust financial advisors and mortgage brokers to advise you on the best mortgage product available to you and your circumstances, please trust us to act in ensuring you get good and marketable title and in accordance with detailed lender requirements.
We won’t report matters unnecessarily. Reporting of matters to lenders and misunderstandings between clients, brokers and solicitors can lead to frustration. The purpose of this information page is to give an understanding of why it is necessary and to reassure you that this is a standard part of the conveyancing process. It can be just as frustrating for us that because the mortgage offer is silent on a matter, we have to report matters to them and get their further instructions or authority to proceed.
CONSENT TO REPORTING THE MATTER
We are required to obtain your consent to report matters to your lender. We trust you will have no objection to us doing so, assuming that the instructions you give us are consistent with the information given to your lender. If you do not consent to us reporting a matter to a lender this would result in a conflict of interest due to our duty to act both on behalf of you and your lender. In the circumstances we would be required to return the instructions to the lender which would ultimately prevent us from continuing to act in your purchase.
If you have any questions in relation to this information, please do not hesitate to contact us on 01253 362500.