Best Practice: Appeals & Business Cases
Building a business case
Underwriters assessing applications, even when in policy, will be meticulous in their approach. They will want to see that the issues are old, isolated, for good reason, and not likely to reoccur.
They want to lend, you just need to give them the reasons why. Speak to your customer and understand the journey. If its because of a life event such as divorce/separation, bereavement, redundancy, illness – these are perfectly understandable reasons no right minded human being or lender will overlook.
If however they just racked up too much debt being silly at uni or whatever, then you might want to revisit the reasons behind this before going to the lender so you have something justifiable – would you really want to lend to these people?
Lenders need to appear to be lending responsibly, and that means if they can’t justify something without more info, they will decline it.
If all they have to go on is the fact the customer has a credit issue / income problem etc. its just another application to them, until you step in and give them the context.
Don't take no for an answer.
If you have a great business case for the customer, then they’ll listen and it gives a chance of approval on appeal – all you have to do is give the info and ask for them to reconsider because you disagree with the decision.
Give them the story of what happened to the customer at the time, what they did about it, how well they have recovered since, and how clear it is that they wont ever do it again (as proved by their conduct). You’ll be surprised of the impact not taking no for an answer has with some lenders.
Don’t take yes for an answer.
Not everyone working for the lender your dealing with understands policy inside out. in fact when you become the expert, its rare to come across someone who understands their own criteria as well as you do, and mistakes do happen.
There's nothing worse than getting the go ahead from a call centre, submitting an app, and then getting declined at the 11th hour, so make sure you're 100% happy with the info you're given. If you call a lenders’ service centre be clear on exactly what you want to clarify, ask them to check with their manager and verify their answers with the BDM.
It's also a great idea make a case note of the time, date and name of the person you spoke to, in case there are any issues down the line and the lender can revisit the call recording - even if this doesn't help an out of policy case get overturned (which i have seen in the past), it will mean the lender should redress the customer for any losses, rather than costs being incurred by them or you.
Steps to building the case
Build the business case to the following structure in the order as outlined below:
Identify the positives
List as much info as you can as to what is strong about the case, covering the following:
Loan Requested
Point out the LTV if low.
The fact they have saved their own deposit if appropriate.
The loan to income if low.
The debt to income ratio if low.
Their past mortgage payment conduct if always paid on time.
The property they are securing the loan on if extremely saleable etc.
Adverse
The reasons for adverse if a life event they have now recovered fully from;
The reasons as to why this is highly unlikely to occur again.
The recent account conduct if immaculate.
The fact they paid all their defaulted debts back if relevant.
The fact they now have active credit being paid on time etc.
Income
The good loan to income ratio if relevant; the reliability of the income if a long time in position and a secure business sector.
The senior position.
The regular pay rise.
The consistency of bonus and overtime.
The profitable accounts.
The growing turnover etc.
The alternative income stream not keyed on the application for lending purposes.
The help with childcare and expenses they receive from parents.
The change of spending habits they can evidence in bank statements etc.
Other Collateral
The amount of savings they have to back them up in the event of an issue.
The assets they have elsewhere in property or investment.
The expensive car they own outright.
The parental or spousal support.
The future inheritance or pension lump sum on its way.
The plan to repay the loan early when investments mature etc.
Address the negatives
Every case is going to have an issue - this is why you are making the appeal and building the case in the first place, so its important to present a balance argument where possible.
Underwriters know what these issues are, and its your job to address them and negate their impact on the case. If its because of adverse credit issues, explain that you understand it may be outside of policy, but that it was a one-off caused by "X", which won't happen again because of "Y", and the customer has already done "Z" to prove this recovery is the case.
If the business case is based on issues with reliability of income, explain that you understand the concerns and how it might look based on the info provided on app, but send them the customers extensive CV and last 3 years p60's to show their income has consistency.
If the decline is due to being high LTV, show that the customer has savings they are choosing not to put into the property because they are sensible with money and want to retain a rainy day fund.
Summarise why the application is a good one despite the issues
In all, factoring in the negatives identified, it is clear that the customer presents as a solid business case overall, the negatives were in isolation, explainable, and justified by X,Y, and Z, they have proven recovery, and are now in more than a strong position to afford and service the loan as applied for because of the positives outlined above, especially X, Y and Z, and I feel it sensible to consider this loan for approval".
Positioning
Be professional, concise and clear, bullet point your reasons, and don't waffle. Make it easy for the underwriters to see your points and don't argue or complain - be matter of fact and emotionless.
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