1. Lenders have such little appetite to lend that they are cherry-picking who they lend to: According to my personal reseach only one in 20 mortgage applications where the person applying has the 25% deposit are going through to completion. What does that mean for the NMD borrower?
2. Credit rating: Credit reports are now scrutinised more than ever before by lenders. Any missed payments and they will think twice about giving you a mortgage offer.
3. Source of deposit: Most lenders now ask for the source and proof of deposit. They are suspicious of where this is coming from and now check in more detail.
3. Demise of the deal packager: Many NMD deals used to be pushed through by packagers who oversaw the whole process and used a "friendly" valuer who they could "influence". There are no deal packagers left as far as I am aware.
4. Brokers no longer allowed to choose which valuer goes out: Brokers used to be able to select a valuer from a "panel" of approved valuers. This meant they could work with a "friendly" valuer. This practice has now largely stoppped and many lenders are using an in-house valuer who cannot be "influenced".
5. Property Valuation: RICS valuers have been briefed how to spot signs that someone is trying to get a false valuation. If in doubt, they will down-value. By law, they have to value the property at the purchase price, or market value, whichever is the lower. By lying to the valuer about the price, or not disclosing the net price or how the deal is being structured, you are committing mortgage fraud!
6. Rental Valuation: Rents are dropping, making it harder to get a deal to stack. A down-valuation on the rent will stop any deal in its tracks.
7. Contesting a down valuation: Until recently, you used to be able to contest a down valuation by supplying comparables. These are now no longer accepted. The decision of the valuer generally stands.
8. Solicitors and lenders require full disclosure to all parties: If there is any evidence of non-disclosure, or the lender gets wind of anything fishy, they will withdraw the mortgage offer. This happened to one person I know the day before completion, and that person has been left on a bridging loan of £2K per month. It is extremely risky to buy anything on a bridging loan for the above reason.
9. Seasoning of title: Lenders now require you to have proof of ownership of the property for a minimum of six months before remortgaging or re-financing. This means bridging loans are no longer a vehicle for purchasing NMD.
10. Education: The internet has now provided education and transparency to allow people to understand the truth about NMD deals. This can only be a positive thing for the property industry as NMD was simply not sustainable and was largely a factor in causing the first credit crunch.
Conclusion: No matter how positive a mental attitude, how many courses you go on, how many NMD mentoring programmes you join, how many times you pay for a valuation, if you don't have the 25% deposit, it is very unlikely that you will be able to buy a property. Sorry for the cold hard truth. Yes, sometimes life it tough and it hurts, but better find out now than waste your money and time on something that is defunct.
Do other tribe members agree that there is a definitive decrease in activity on the NMD deal front. Is the message that there are no legitimate ways of doing NMD deals finally sinking in? Are the reports of more and more people being jailed for mortgage fraud putting people off talking openly about how they are doing it? With the transparency of the web, only the most foolish person would post on a forum advertising their NMD scheme!
We also know that the CML and the FSA are using forsensic accountants to see which brokers are doing a lot of business in these challenging times, and doing audits on people buying a lot of property to establish the legitimacy of the money trail and where the deposits are coming from.
Are the purveyors of NMD schemes changing their business model or have they just gone underground? Will they all start talking about lease options as the "new NMD"?
I personally believe that the legitimate NMD deal was dead and buried in April 2008, when Mortgage Express withdrew their bridge/same day remortgage product. Is this finally having an impact on the NMD industry?
Join the on-going discussion at www.propertytribes.ning.com.
21st century business is about understanding open, random and supportive business practices and future-proofing your business against the next generation as they move from Social Networking to Social Business Networking. It's about sharing of friends and information, collaboration, and strategic partnerships. Nick and I think of it like this: Know me. Like me. Follow me.
There are new rules for this new economy and it is vital for all businesses to understand the new business game that is increasingly playing out on-line.
Know me: Business is entering a new era of the "network" or "linked" economy where the more connections added, the more powerful and far-reaching the network and the more it can influence the on-line world. In this new style of economy, small efforts can lead to surprisingly large results as they are amplified through the network. Social media allows individuals to harness the power of networks by tapping into shared-interest communities on-line and leveraging business exposure and business expertise of others through these many different connections. Those who ignore valuable information do so to the benefit of their competitors. Networks encourage and support the successful to be more successful and business can grow exponentially as a result.
Know Me - Social Media - Collecting and sharing knowledge. Becoming known and visible - The backbone of your on-line efforts will be your blog. Also: FriendFeed, Twitter, and Google Reader and contributing to forums.
Like me: In the network economy, business is becoming progressively up close and personal, which is to the advantage of the small business or individual trader, as large corporations and institutions cannot deliver such a personal customer interface. Social media engagement dictates the journey of "know me, like me, follow me" through delivering consistent and authentic value in all a company's social media output. This leads to trust, which in turn leads to increased business transactions. Once a business has built a community or tribe of followers who have chosen to receive messages, there is a fully engaged audience receptive to buying products and services. Additionally, there will be increased business transactions between the members of that community, which benefits the "tribe", so new people join and the value within the network and the benefits of being part of the network increase exponentially as a result.
Like Me - Social Networking Collecting and sharing people. Being liked and advocated. Ecademy, LinkedIn, Facebook, Twitter.
Follow me: With few exceptions, nature reacts in real time. With few exceptions, business must increasingly react in real time, or lose the advantage. Social media allows businesses to engage in transmissions, often in real time, which makes them more meaningful and relevant to the community. More people are communicating via social networks than by email! In business, everything starts with a conversation. Social media provides the tools and platforms to start those conversations, and then build deeper and meaningful business relationships as a result of that sustained and consistent interaction. Best of all, most of these tools are free to use giving you an infinite return on the investment of little more than your time.
Follow Me - Social Transactions - having friends and followers who you work with and like in some capacity, sharing time, people, knowledge and friendship. Ecademy clubs, LinkedIn clubs, Twitter replies and direct messaging, forum exchanges.
Business and the way people communicate is changing at a faster pace than ever before in history. Things are not the same as two years ago, let alone two weeks ago. We are living in an exponential world that is based on the law of increasing returns. And best of all, the web tools to engage with this new way of doing business are FREE.
Watch this incredibly thought provoking video to get a better understanding:
Some applications of this in property: Finding tenants (using free sites like Gumtree and linking from Twitter). Marketing (make a video tour of your property and upload it to YouTube. Link from your ad on Gumtree or from Twitter). Finding distressed sellers or leads (Forums) Creating awareness and visiblity of yourself/business (forums, Twitter, blogs) Marketing property events (Facebook, forums, Twitter etc) Lifelong learning (google reader, Twitter, forums, etc.) Creating your own forum (focal point for your business)
Who represents change in your industry? Who continues to talk about strategies that are completely out of date?
What are you doing to be part of this brave new world? How could you benefit from the "network" and the law of increasing returns?
How are you going to "release" yourself or your business on-line so that people can follow you?
Some members of Property Tribes are already on this journey, transitioning from Web 1.0 to Web 2.0. (e.g. transitioning from downloading to up-loading/self publication). What could you learn by following them, and how could following them increase your knowledge, your network, and therefore your success?
That is why tribes are so important. None of us is as smart as all of us.
The Power of belonging ... Why we started our own property tribe.
A few weeks ago, inspired by Seth Godin, and the fact that so many property forums are drowning in spam and commercial posts, we decided to form our own Property Tribe. We wanted to provide a focal point for our property community where people passionate about property could share knowledge and experience and engage in authentic and valuable discussion with other like-minded individuals.
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LinkedIn: nick tadd
Pownce: nick tadd
Skype: badgerproductions
