HSBC rejected mortgage due to subjective reason but lending criteria passed

[bloodymortgage]

As the title says, my broker tells me I passed all tests during underwriting , including affordability which was tested first (5 weeks ago). However, at the very end the underwriter has "subjectively" rejected it citing future potential interest rate increases.

My broker tells me that I already passed the usual stress test so it's more than that and there is no good reason why I've been rejected. Even the HSBC business relationship manager is stumped and told my broker that he must have read the decision wrong! That manager has tried for 3 days to get an explanation from the underwriter but she is ignoring all internal emails on the matter.

I've now had to apply with NatWest and have that application escalated as well down the legal line now with completion in less than 6 weeks. Of course now I'm stressing that that application will fail too! (And the arsehole estate agent is now aware due to the second valuer and isn't best pleased to say the least!!).

Mortgage requested was £215k (LTV 73%). My salary is c£90k and I get annual bonus of £7.5k. No credit card debt but monthly loan repayments of £1240. Application in my name as my DH is self employed with variable income and his SA302s show nil due to carried forward tax losses.

What a bloody nightmare!

Anyone had similar happen?

😣😩😣

EAs work for the seller, not the buyer.

How big is your loan?

Who will look after your baby on your return to work, a relative? People get sick, I know of someone whose DM had a heart attack and so they had to place the baby in nursery at extra cost. I would expect the bank to be alert to issues such as that.

Also, if the bank are looking at the financial relationship between you and your DH they may wonder why someone on circa 90k needs so much money from someone tackling business debt.

Sorry OP. This is sounds really stressful for you.

But you can't blame any bank refusing to lend to you. Not with your circumstances and loan repayments being so high.

I used to work for a high street bank and isn't a case of "computer says no" - There's a person behind the scenes who has looked through your application and despite the computer saying yes - they've identified your application as being high risk.

It may be subjective to you but it isn't for them.

Are you sure now is a good time to buy?

Perhaps you need to pay your loans down first?

They're working to get the sale through, which won't be helped by rudeness to anyone involved. Too many agents take on a bullying tone with buyers when things start going wrong.

@MrsAladdin I didn't think it was a case of computer says no, I'm aware a person has looked through it. I also didn't say it was subjective to me. My broker said it's what they call a "subjective decision" I.e the underwriter has the ability to say either yes or no but they've said no. My broker has complained and appealed in line with what @Kittykelly123 has said. It seems like an error given the background.

@MissLucyEyelesbarrow I'm the buyer but I'm also the seller so they act for me in terms of selling this house. @Whenwillglorioussummercome - Yes, bullying tactics is exactly what's happening!

How does that make rudeness and a bullying tone acceptable? They should be positive and diplomatic in order to achieve a sale. In any case, the OP is also selling her property via the agent!

Aaaaand can you point out where I said that it made rudeness and bullying acceptable?

I didn't defend him, or comment in any way on his behaviour. Why would you assume that I thought it was OK for him to be rude, just because he doesn't work for the OP on this sale? How does that follow in any way? Is it generally OK to be rude to people if they are not paying you?

Go and argue with someone about what they actually said, not what they didn't say.

We had similar but not identical circumstances - both in full time work and high earners but quite a bit of unsecured debt, much of which related to (sadly unsuccessful) fertility treatments. We got computer says no from both of our own banks which shocked us!

We went via John Charcol brokers in the end who were EXCELLENT and placed the mortgage with Accord (they’re not a sub prime lender, just underwrite everything manually rather than computer says no - I think they are part of Yorkshire Building society). It was such a relief. I’d recommend you check them out - but you can only access via a broker

@MissLucyEyelesbarrow we are using the same EA for our sale and purchase so we are paying them.

@Youngatheart00 Thank you. I'm aware of Accord. The computer didn't say no, it said yes. First manual underwriter also said yes but second manual underwriter said no quoting future potential interest rate increases , which I understand they cannot do as the stress test is already built into the affordability test, which I passed.

I see. I kind of got the sense that the dialogue between the brokers and the underwriters was a little more close at Accord, which is helpful if you know the specific reasons they’ve said no, so you can work to reassure them or even reach a compromise.

HSBC are notoriously bad and stubborn though. They do things their own way and won’t be told otherwise.

@Youngatheart00 I definitely get the sense that you're right about HSBC. It's seems very pig headed. I will keep Accord in mind should NatWest be a no go arguing I will need to bypass EA for valuation in that event to arrange the valuation (I would just tell the builder selling the new house and go direct to him. Fingers crossed NatWest are sensible though. The waiting is killing me. I've a permanent butterfly feeling in my belly!

Accord will only work with solicitors on their pre approved list. I knew someone who had to change their solicitor halfway through a purchase to accommodate this when their initial application with a different provider was rejected and they changed to Accord.

Is there evidence a self employed person is considered a dependent because that sounds totally bizarre.

My DP is self employed and has been for nearly two decades. I'm not aware of me having to effectively sub him for mortgage calculations.

That's the case for all lenders. It's called their lender's panel. Most conveyancing firms are on most panels though.

Hopefully your second application will go through but if not I second the John Charcol recommendation. They got us a mortgage in a situation I would never have thought possible!

LTV is 73% and you're buying a new build, is that right?

Just pure speculation but perhaps when they said interest rate rises as a reason, it was more loosely connect that just your mortgage going up. Is it possible that given its a new build, depreciation of the property coupled with a potential decrease in house prices for the next few years will potentially push the property into negative equity. That might be their thinking in terms of recovering their money should they need to repossess the property.

Also, new builds generally attract a service charge for communal areas (assuming it's on an estate). This cost is likely to rise in line with inflation. Plus the government are looking to bring in new legislation around these kind of charges because they can badly impact the owner if the maintenance company goes under or misappropriated funds or drives the charges to high. Its an area of contention at the moment.

Could be wrong but those are also swirling issues at the moment the underwriters may consider.

Why do you need to get so defensive @MissLucyEyelesbarrow ?
I think you might realise that it's you who is being argumentative if you read what you have just written.
I can't see the purpose of your initial comment at all and you seem to have missed the fact that the OP is also selling via the same agent.

@Darkandstormynite The new house isn't in an estate. It's in the countryside (4 bed detached with c0.7 acre garden).

If your current broker is part of a Network, get him to get the network on side. I can use my senior contacts within my network to put pressure on the lender which can help sometimes. If he hasn't already, get him to raise a complaint and mention that he will be charging HSBC for his time plus any additional costs due to you if you have to take a more expensive deal elsewhere. Might not work but it sometimes does the trick. Good luck.

Well in that case, I've got nothing. It's a mystery.

Hopefully your new application will go through okay 🤞

Eh - it is their money (well, their depositors' money) and they don't have to lend it to you, even if you pass the objective criteria.

Well that's helpful, not. Maybe so but shouldn't they at least have a valid reason 🤷‍♀️

I don’t think calling HSBC pig headed or bad and stubborn is particularly helpful. They are allowed to decline. They are protecting themselves and ultimately their depositors.

HSBC might have a reputation for being a conservative lender but they also didn’t need a government bail out after the 2008 crisis so perhaps they do have the right approach.

Hey OP, I was an Underwriting Manager for several years, but not in mortgages, although we did do financial underwriting too.

If the process requires a manual underwriting decision, there's always going to be some variance. It sounds like your case was assessed by an underwriter who's maybe more cautious.

Across our underwriting team we would have some underwriters who were more relaxed and others who were more cautious, all while working within certain parameters. It is a subjective process and there will always be some variability.

So I think your first question would be - when they cited future affordability, what did they mean? Because it sounds as if they're stress-testing your application twice, which is clearly wrong. If that's what they've done, then it's clearly an error by the underwriter and needs to be re-underwritten.

However, if the concern is future affordability based on various risk factors then they probably have a point. It's not about your affordability now, it's about whether there's likely to be a problem in the future. And you've ticked off each of the potential problems but what you're not doing is looking at them as accumulative factors. Each of the things individually wouldn't be an issue but when you put them together, all of a sudden the risk jumps up. It's the combination of factors which could be the problem, and that's impossible to quantify in an AIP.

Hopefully it's just a rookie underwriter who cocked up by stress-testing your income twice - if that's the case NatWest should give you the green light even if HSBC don't review their decision. Fingers crossed for you - all sounds extremely stressful.

Sorry but it's their business. It's not "pig headed" it's their business decision.

@SpidersAreShitheads

Yes, thank you for this. You're correct that it's been stress tested twice and that is the issue. That's why my broker has put in a complaint and appealed but the underwriter won't now respond to any emails - hence my "pig headed" comment which seems to have offended some. There HAS been a mistake but the underwriter doesn't seem willing to rectify and so is, IMO, being pig headed.

Thank you for reading my comments properly.

Ps love the username.