General manager of Advance Investment Securities Australia on getting the most for your trailbook
Over 10 years we’ve purchased plenty of trails & I can virtually guarantee every deal started with the excitement of “how much” and “how long” only to slow up when the mundane topic of customer information arises.
So, I’m not kidding when I make the claim that some boring pre-work can help brokers to extract the best value from a sale of their mortgage management rights.
The logic is that handover we try to contact all new customers and historically no matter how it starts, it will finish with that customer's blunt assessment that their interest rate has been way too high for way too long followed by the real or implied threat that unless we do something about it, refinance will follow.
So it means what starts as an effort to warm up an old relationship turns into a new credit application and whether it works out or not, we look a bit stupid without access to a credible customer file. If we’re looking at buying two books at the same time, the book with good quality customer information, whether paper or electronic, is probably more attractive than the other & we find some of the older books are more likely to have missing files than newer ones.
We have first-hand experience of files that were misplaced when they were called up in a former life by a mortgage insurer never returned. There are other cases where we bought trails from brokers operating from a number of different offices and files were misplaced in between. We had files held to ransom between warring partners and it meant a physical settlement where we turned up with a cheque in return for boxes of files. Right now we’re in the middle of a complaint dating from the GFC, the customer has a number of different loans, and, predictably, the very file we want is the one that’s missing. So whether old or new “books”, brokers selling trails could do worse than an early, inexpensive file reconciliation, at least to know where they stand.
Another allied topic is the cost of transportation of records on sale because we’ve been caught when a truck loaded with files arrived from interstate after a settlement on a “COD” basis.
They say lessons learned “hard” are usually learned “well”, so it’s something now appearing on our checklist & so far as cost’s concerned, while electronic records are certainly cheaper to transport they can cost more to format to enable data transfer on completion. Following another surprise, it’s also something appearing on our checklist.
You can bet that people will only think about customer records after all the exciting pieces of the puzzle get a flogging and even though files are boring, their positive influence on price usually only dawns when everyone has a big emotional investment in a deal that’s going pear-shaped because the customer end has been ignored.
Read more from Russell Murphy on how to price your trailbook
Russell Murphy is General Manager of Advance Investment Securities Australia Pty Ltd (AISA) and has been involved in property finance since March 1974. AISA involved in online distribution of home loans, the purchase of mortgage trail books, operation of commercial & residential securitisation warehouses, software development for the mortgage industry and operation of an offshore call centre.