Welcome to the newsletter from HomeLoan Partnership, designed to keep you up to date with topical market news, sales ideas for your business and developments in the HomeLoan Partnership proposition.

The year that many mortgage brokers would refer to as their 'annus horribilis' is about to draw to a close and Santa is preparing a sled full of goodies for optimistic children everywhere. If only Santa delivered to Mortgage Brokers!

The original expectation of a softening of the credit crunch as the year progressed proved to be false hope as the spectre of recession compounded bad credit issues.

One interesting but disturbing fact mentioned in a Bloomberg financial report was that UK PLC now has a credit rating almost twice as risky as that of McDonalds!

Falls in the base rate have been very well received by those coming to the end of a fixed rate mortgage that can now look forward to a comparable or cheaper SVR. Tracker Rate customers must have thought that Christmas came early, especially if the FSA forces companies that did not specify collars in their KFIs to remove these.

The government also proposed a new scheme to help those with mortgage arrears, significantly improving previous arrangements. Eligible homeowners would be able to defer interest payments on their mortgages for up to 2 years. This recognises that repossessions could rise over the coming 12 months - not good for re-election prospects.

Many of the big high street lenders have signed up to this scheme, including HBOS, Nationwide, Abbey, Lloyds TSB, Northern Rock, Barclays, Royal Bank of Scotland and HSBC.

Another consequence of the climate has been the number of properties coming to the rental market, where homeowners cannot sell them and need to cover the mortgage. This could force down rents in some areas and thus place pressure on BTL criteria.

The flip side of the coin is that falls in prices are now bringing property into the reach of first time buyers and those that need to move and, with the lower interest rates, this should help the recovery of the market.

However you view this, we are entering a period where remortgage business will be hard to come by and new purchases are very much reduced. Brokers must reflect on their sales process and adapt to provide more cross selling products to their client banks, see our section later about changing your skills sets.

This will be a year to forget and we suggest that this is a wise thing to do. To carry bad memories forward to 2009 will stop you from focussing on what you can do about your situation rather than what you can't.

The Competition Commission recently provided a report to the government concerning the issue of distributors of loans pressurising applicants into buying expensive PPI contracts.

These concerns revolved largely around the issue of single premium PPI where the cost was disproportionate to the loan amount and usually added to the loan, thereby increasing interest repayments. It also arrives at the same time of the announcement of a £721,000 fine for Egg in respect of mis-selling of PPI against credit cards. Compensation could reach an additional £1.67 million.

The recommendation from the commission is that PPI can be advised at a first meeting but should not be sold by the provider for at least 14 days, whereas the customer can decide to purchase the product elsewhere after only 24 hours.

Unfortunately, an update from the commission has now suggested that mortgage brokers be included in these rules. This seems absurd to us, given that most brokers have access to a range of very competitive premiums, with a sales process regulated by the FSA.

You could also argue that it may further reduce sales of a product at the very time that consumers should be taking this out to properly protect their loans.

The Association of Mortgage Intermediaries (AMI) will be making representations about this recommendation and we hope to see sense prevail!

1^st December 2008 saw the introduction of The Home Report in Scotland; their considered response to the Home Information Pack in England & Wales.

As usual, you could argue that they have created a better job of this than the politicians in Westminster! The pack is more concise and aims to deal with the peculiarity of the Scottish home purchase process where the buyer makes an offer to buy that is binding if accepted.

Previously this could entail multiple surveys on the property in advance of an offer if there were several interested parties. The Home Report contains the Single Survey, a report on condition of the property together with a valuation, commissioned by the sellers agent but independently completed.

Interesting that this is essentially the equivalent of the Home Condition Report that was removed as a compulsory element of a HIP after political opposition. Solicitors in Scotland objected to the inclusion of this survey on several grounds to no avail.

The Home Report also contains the Energy Report, the equivalent of the Energy Performance Certificate in the HIP and a requirement under EEC regulation to monitor and improve the emissions from the housing stock.

The last component is the Property Questionnaire - a statement from the seller covering many of the common points about the property that a potential buyer would want to know.

All properties marketed for the first time from 1^st December 2008 will need to have a Home Report available for inspection and any pre-marketed property must have as a minimum an Energy Report from 4^th January 2009.

So that's The Home Report - what about HIPs? A year has passed since they were introduced for all property types in England and Wales. The Housing Minister, Margaret Beckett has just announced changes to the HIP rules to add a property questionnaire and make the HIP a pre-marketing requirement from April 2009.

The debate rumbles on but the opponents to HIPs claim that they have done little to help sales progression and may have further depressed sales registrations, especially from the speculative seller. The Conservatives still maintain that they will be scrapped (if and) when they come to power.

As anticipated, prices are very aggressive and advisers can give themselves an advantage with clients by offering advice on how best to obtain a HIP and providing a no sale, no fee option.

HomeLoan Partnership offers member firms a no sale no fee option HIP to pass on to clients that are concerned about selling their property in the current climate.

Be honest about your performance

Why do some advisers sell legal services, life cover, buildings and contents, wills, utility switches (etc) whilst others seem unable to do so?

There are many contributory factors to this puzzle but one of the basic reasons is that many advisers have never acquired the skill set needed to do so. The result is that they feel particularly uncomfortable when thinking about changing what they do, don't know where to start and find an appropriate excuse to account for the (lack of) results.

If you think back to the time where you first learned to drive you can start to appreciate the problem. There may have been a little embarrassment, certainly some nervousness and the thought of ever being able to cope with checking the mirror, indicating, changing gear, braking and steering all at the same time was daunting.

In the vast majority of cases we turned to a driving instructor to bring us to the point where we could take the test and be pronounced safe to drive unaccompanied. It was the desire to achieve the end result - a licence, the car and the freedom and 'street cred' that this delivered that motivated us to go through the process.

Learning any new skill can be just as daunting and it helps to understand the process that we have to go through to achieve a 'pass'.

The diagram here demonstrates a typical Learning Cycle that you can apply to just about any skills training.

When you consider the behaviour you need to change, you will often be in a state of Unconscious Incompetence - you don't know how to perform the task and may not even have appreciated that you had to! If you remain in this state it is likely that you will feel so awkward you will simply give up.

Once you actually appreciate your shortcomings and what you should be doing you can identify the knowledge and skills that are missing and the actions that you need to take to correct this. You reach the state of Conscious Incompetence - still uncomfortable and you need to take care about what you are doing!

Once you have improved your knowledge and practiced you will now be in the position of understanding what you are doing but will have to concentrate to keep on track. Conscious Competence allows you to practice your skill and get results until it is second nature. There is still a risk that you will drop your behaviours as you do have to remember to apply them.

Once you have practiced sufficiently you will realise that you have become Unconsciously Competent in what you are doing. This is the state in which you sit with your core skills, many mortgage brokers would act on 'automatic pilot' in this area and it is these skills that we tend to fall back on when we feel uncomfortable elsewhere.

So, that could be why you have every intention of selling the term, ASU and buildings & contents when you meet your next customer but end up with just the mortgage!

Learning Skills

There is another concept in learning skills best described as Matching. Simply the ability that we have to copy what other people do. This is the fastest way to move through the learning cycle but you will appreciate that you could learn bad habits as well as good ones! If you can work with someone that has mastered the skill that you need this should speed up your own development.

You have accepted the need to change - now find the motivation!

Changes to your sales performance will usually bring rewards in increased earnings but it is valuable to appreciate the benefit of not only recognition of success but also the desire not to fail and also to involve someone else in your objectives.

Write it down!

Most successful people set themselves clear objectives and write these down. The simple act of putting these to paper re-enforces the commitment. Sharing them with others demonstrates that you are serious about achieving them.

How do I do this if I work on my own?

Here is another dilemma for many sole trader mortgage brokers. No one to account to and no one to help to deliver the skills that you need. It is therefore up to you to find other brokers that already demonstrate the skills or to seek the training elsewhere.

Most of the providers offer BDM support and it is refreshing for them to receive a call from someone asking for help to sell more business. In addition they provide self learn material, statistics, sales aid, approach letters, DVD training etc from their websites. Trigold have also been promoting their skills workshops which can start the process, sponsored by Norwich Union and Paymentshield primarily.

If you are a member of a network then you should make it known to them that you want to develop yourself into new areas and ask them to help you to do this.

Throughout 2009, HomeLoan Partnership will be providing more access to knowledge and training to help member firms to feel a bit more unconsciously competent.

The FSA has commented recently that it expects the number of Directly Authorised firms to fall significantly as fees become due for the 2008/2009 year.

Firms commit to a full years authorisation simply by trading through the annual deadline of 31^st March 2009. Fees become payable in July 2009 whether or not the firm expects to trade for the full year, leaving many firms financially penalised if they decide to close the business or transfer to Appointed Representative status during the year.

How to balance their own books may be a concern to the FSA as, if the number of registered firms falls they only have two options, increase fees or cut costs. With the pressure to effectively monitor financial services increasing in the current climate, it seems likely that they may try to do both.

It used to be a good argument to maintain DA status on pure cost grounds but the last year has demonstrated that, if you skimp on compliance standards and are one of the firms audited, you pay later in fines or remedial action.

What can you do about your fees relative to your falling income?

You have the option to become an Appointed Representative and benefit from the support that this should provide, allowing you to focus on finding new customers and selling products. A good proposition (like our own) will allow you almost all of the freedoms you enjoy and reduce your overall administration and risk of sanction.

As HomeLoan Partnership operates with no fixed network fees (effectively pay as you go), the charging structure is always relative to your business levels.

So, if you have any doubts as to whether DA status is right for you for 2009, make sure that you check the alternative by clicking here - don't simply run out of time and trade through 31^st March!

HomeLoan Partnership have added Complete Mortgage & Loan Solutions to their packager panel, bringing more choice and options to member firms and ensuring that, as lenders return to the market, we are well placed to access these.

We have also announced special terms for experienced brokers joining HomeLoan from either a network or a directly authorised background. If you have been considering a move but have been adopting the “better the devil you know” approach, now is the time to do something positive for the New Year.

You will not only get reduced membership fees but we are so confident of our proposition we are prepared to offer a 'trial period' with reduced notice. If we fail to live up to our promises, we won't hold you from moving on.