Terry Markham, specialist packager
10 questions with Terry Markham, specialist packager
Here at Bridging and Commercial we thought it was high time we had someone to clarify the ins-and-outs of the specialist packaging sector. So, to answer all your industry questions, we’ve pinned down Terry Markham, one half of Cardiff-based specialist packager, The Funding Operation.
So Terry, how exactly are specialist packagers different from the standard mortgage packager?
I think the days of the standard mortgage packager are behind us. However, many of the services that a traditional mortgage packager offered are exactly the same. Brokers entrust us to consider their clients' circumstances and place their case with one of our lending sources.
Are specialist packages becoming increasingly prominent in the economic downturn?
To answer this question you need to look back to 2006–2007. Back then lenders began to leave the market and centralised lending tightened up. Most traditional mortgage packagers had a very large income gap to fill and so began opening up commercial departments, but without really having the knowledge or resource to make them successful.
With lending still being restricted, many brokers find it more and more invaluable to talk to specialist packagers as they can draw on the strengths of our knowledge and relationships. I really do see that this will become more prominent throughout the coming months and years due to the lack of lenders being able to take a view on affordability and credit profiles. The one resounding feature with all our lenders is that decisions are made by people and not computers.
Isn’t this just another unnecessary layer?
Far from it! Thousands of new and existing borrowers would not be able to purchase or refinance if specialists were not around. This would result in borrowers losing out and brokers having their incomes hit even beyond what they have been. The majority of brokers do not have direct access to some of our lenders and this would have a huge impact on their business.
Who uses you? What sort of brokers?
The Funding Operation (TFO) deals with every different type of broker you could imagine – from traditional mortgage brokers, IFA's, commercial brokers and accountants. Every broker either has or will come across a deal they struggle to place. All we suggest is that a broker gives us a call as they will probably be very surprised by how we can help. This is what turns "no hope cases" into vital income.
A very small percentage of our business comes directly from long standing clients, mainly portfolio landlords. We do not actively encourage direct business as we recognise that this is taking business away from our introducing brokers.
What brought you to the business? Was it an evolution from something else?
This is my 24th year in this business. I started out as a mortgage broker back in the mid 80's and so I can empathise with the vast majority of brokers out there now. It’s certainly a hard place to be in right now and I know many of my broker friends have seen their incomes decrease beyond belief!
I believe that being a broker myself for so many years has allowed me to tune into the needs of brokers and their clients.
Who’s on your lending panel?
Our main lenders have been Masthaven, Mayfair, MT Finance, Tiuta, Lowry Capital, and the Blemain group. However, we are very proud to announce that we have just been accepted as a Key Partner of Drawbridge Finance and they are set to turn the specialist lending world on its head!
What recent trends, if any, have you noticed in the last 12 months?
A very large part of our business is portfolio landlords. It has become very apparent that many of these landlords have built their portfolios in the last ten years or so. During this time they have relied very heavily on their properties increasing in value and have continuously been able to take more and more equity from the increasing assets to buy further properties. With the decline in property prices, and many properties lying empty for long periods of time, we are seeing people who are millionaires on paper, struggling because they have no access to cash.
What do you see as the future of specialist packaging?
As I mentioned earlier, brokers clients' have a huge need for access to lenders who will take a view on affordability and credit profiles. Self certification has now disappeared and more and more people are seeing their previously unblemished credit files being spoilt by late and missed payments. Also, traditional second charge lenders generally do not have much of an appetite for loans in excess of £50,000 but we recently completed one for over £200,000. It is on these points that our lenders score very highly.
Can you give an example of a particularly interesting case study?
One particular case we have just completed was for an Iranian gentleman who was actually resident in Iran. Over two years ago he agreed to purchase a property off plan in Canary Wharf and exchanged contracts with a £150,000 deposit. Obviously prices were much firmer then than they are now and his broker approached a number of lenders who declined to lend at the level he required. We approached one of our lenders who not only agreed the deal immediately, but actually completed the deal within 10 days.
What advice would you give to anyone thinking of setting up a specialist packaging firm?
I’d suggest that they stick to the main principles of selling – i.e. know your product and know your customer. The majority of lenders we deal with are privately owned and funded. So the business that you give them has to be quality because – if it isn’t – then you could have a huge negative effect on the lender’s business and that won’t bode well for the packager's reputation in the long term…
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