MMR will cost mortgage servicers £14m

Preparing for the Mortgage Market Review could cost the mortgage industry more than £14 million, according to Phoebus Software.

The feedback and final policy statement on Arrears and Approved Persons in the MMR update (PS10/9) provided by the Financial Services Authority, said: “One TPA stated one-off costs for following this guidance of £1.6 million for system development, implementation resource and reporting costs.”

If similar costs were incurred across the industry, the MMR would cost UK mortgage servicers almost £21 million collectively. However, Phoebus Software says at least five of the thirteen companies currently providing lenders with servicing support - including CapQuest Group, Crown Mortgage Management, Exact, and Oakwood Global Finance - will not need to develop systems any further to follow the guidance. But the combined cost of updating the remaining eight servicers will be around £14.4 million.

Paul Hunt, managing director of Phoebus Software, said: “The good news is that systems developed by Phoebus Software are up to date and able to cope with these changes. The bad news is that still leaves eight servicers facing substantial bills to update their systems.

“This means the MMR is going to have an even bigger impact on mortgage lenders than we realised. Collectively, unprepared servicers are going to need substantial development that will have to be paid for. Lenders will end up footing the bill – ultimately it’s customers who will suffer.”

The 13 third party mortgage administration companies are: Bluestone Group; Capstone Mortgage Services; CapQuest Mortgage Servicing; Crown Mortgage Management; Exact; Homeloan Management; Kensington Mortgages; Morgan Stanley Mortgage Servicing; Oakwood Global Finance; Scarborough Mortgage Services; Target Loan Servicing; Vertex Mortgage Services; Westcot Credit Services.