Mortgage and homeowner loan brokers are becoming increasingly frustrated by the attitude of certain banks and building societies with regard to their changing criteria on homeowner loans, once a client’s application has been approved in principle.

Intermediaries and loan brokers are able to source a suitable loan for their clients on line and then also obtain an agreement in principle for the loan through the lender’s website. But in an increasing number of cases, the lender has then rejected the application further down the line, once an underwriter gets hold of the case, thereby wrecking the hopes of the potential borrower who thought they had been approved for a loan and also the credibility of the loan broker who advised on the case.

One homeowner loan broker, Email mortgages, claims that it now has evidence that banks and building societies are accepting in principle loan offers through their on line system and then passing the case to an underwriter who will scrutinise the application looking for a reason to reject it, by altering the criteria once the application has been made. Email mortgages have said that this attitude is stifling the homeowner loan market and stopping credit worthy individual’s from getting the loan they require.

Michael White of email mortgages said “We have been aware for some time that lenders are risk averse however this has been taken to a new level in recent weeks with the action of some underwriting departments beggaring belief.

We certainly do not suggest that a lender should not have tightened  credit policy in the current environment yet we would request that if the original criterion is not sufficient it should not be changed transparently, for example, by lowering the loan to value, increasing the rates or reducing the income multiples. At least this would provide an up front set of criteria to work from, rather than the present clandestine situation where it has become the norm for some underwriters to impose random status checks on already agreed cases in order to decline a borrower’s application at all costs.”