B&C recently got in touch with Gaynor McCormick of Mint Bridging to discuss the benefits of employing an in-house legal team….
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div>B&C recently got in touch with Gaynor McCormick of Mint Bridging to discuss the benefits of employing an in-house legal team and to ask why fixed fee legal panels should be banned…
1. What is your role and what does it consist of?
As the In House Legal Director for Mint Bridging, my role is to conduct the legal process from start to finish.
This includes reviewing the title to the property being offered (as security) and report to our Managing Director (Andrew Lazare) with a clear picture of the deal. Once we agree to fund the borrower, I prepare all funding documents. This saves us a tremendous amount of hours when working within tight timescales and allows us to make in-house quick decisions where necessary.
2. What is your past experience and did you always want to be in finance?
With over 15 years’ expertise in the corporate and commercial property industry, I’ve headed teams that manage restructuring (insolvency), disposing and/or transferring assets alongside bridging finance and development finance.
This is a passion of mine: helping structure the legal end of bridging loans so they can finance property investments. Past employers have included Hammonds, Eversheds and Bridge Bank Capital, working with sub-clients from David Mclean Homes and Lovell Partnerships to Urban Splash.
As Mint is the UK’s only family-run business offering short term bridging and re-bridging bridging loans, I have unique insights as to the industry’s future direction by working in Mint’s exceptionally fast-paced environment and there being an accelerated demand for HMOs and sought after re-bridging bridging loans. Mint is one of the country’s very few short term bridging/re-bridging lenders that employs an in-house legal team.
3. Why do you think very few bridging lenders employ an in-house legal team and what are the pros and cons?
Most lenders don’t employ an in-house legal team primarily due to costs and size of their loan books being too small in justifying the salary(ies). A major pro of in-house is that we work faster so our speed, efficiency and effective relationships with brokers provide added value.
We spot problems quickly, address issues more accurately and protect the lender and our funders. I don’t perceive any cons or negatives about employing in-house legal.
4. Why is there a huge recruitment shortage for this type of role?
The majority of lawyers aim to be the lead on transactions yet this takes a certain type of person of expertise who’s acting as the conduit between borrowers’ lawyers and lenders’ lawyers.
It also takes a specific type of panel solicitor that accepts Mint’s in-house legal expertise, working together with them as opposed to their prior perception that we’re looking over their shoulder.
5. What are the intricacies of re-bridging bridging loans?
It’s critical that we understand why the loan has passed its expiration and not been repaid on time. Therefore we assess the exit strategy thoroughly.
At Mint, we see many of these types of cases that purely require a simple common sense approach to filter through the issues presented. This industry sees many lenders with a loan-to-own mentality so who aren’t remotely interested if the borrower repays or their property is repossessed.
We care about our clients and have a different mindset. We want to work with and assist borrowers achieve their goals and aspirations – it’s important to Mint’s ethics and the client’s assurance. Obviously we can’t fund all cases but a high percentage are approved. Then it’s a case of generating a rapid process to ensure we complete the loan on time before the incumbent lenders decline.
6. What would you ban from the bridging market?
I would ban fixed-fee legal panels. These are dangerous for lenders since inexperienced, low level paralegals will be used in a "sausage factory" set-up, leaving lenders exposed.
Transactions are slow with such low level legals due to volume and lack of experience. Ultimately, this does the bridging industry's general perception no favours. Bridging finance is primarily a professional product for the experienced property market and should be maintained as such with expertise and respect for the industry and its growth.
7. When will Mint be moving into its London office and how will this affect its business?
We’re excited to be near towards lease signing and will be operational from mid-September. With rapid growth underway, we’re also looking to recruit a London-based BDM alongside key staff at the new office as part of expansion for our ‘large loan’ team.
Increasing volume and size of deals within the M25 area will help Mint to accelerate towards focusing on loans from £1m-5m.
8. What exciting developments can we expect to see from Mint over the rest of the year?
Mint’s actively recruiting a Head of Underwriting and once this employee is in place, they will be supported by a Head of Sales to manage our national DBM teams.
With our London office opening in around six weeks, we’ll be launching new products, new enhanced LTVs and aggressively accelerating our re-bridging loan division – a division of which Mint’s at the UK forefront.
9. How do you think the short term lending market will change over the next 12 months?
Regulations are having an effect on the market and will continue to do so over the coming months and years.
The impending increase in base rates should also have an effect on industry rates. That said, currently, we are seeing a number of lenders writing (in our opinion) silly, naive business loans at astonishingly high & dangerous LTVs with very low monthly rates.
We were approached with one loan last week, where a new lender had offered 90% LTV at 0.79% pm and the broker was wondering if we could offer better terms. Loans like this are unstable. I believe that some of these lenders/loans will come unstuck and the market will revert to a level of normality, where the loans are written at sensible loan to values.
10. Mint has completed on some very unique deals this year such as on a lock-up garage - what is the most interesting case you have dealt with at Mint?
Yes, the lock-up garage deal was interesting. Alongside this, we funded a part build development site in Wales close to the University. The loan was over £1m, drawn down in stages. It was a unique, complicated title with elements carved out previously, and various planning applications over several titles. It honestly took me a while to get my head around this issue so I could sensibly address these with our lawyers. We then discussed the ways in which we could get the loan completed within five days so the new contractor could start on site immediately.
The loan was further complicated as we had to ensure that the project would be completed and signed off ready for occupation in time for the start of the new academic year otherwise the borrower would lose a whole year’s rental income. Time was of the essence and new agreements had to be entered into with a new contractor, to finish the development.
When you previously asked why I wanted to work in finance, examples like this show exactly why I love my job: working on intricate, multi-layered loans that require exceptional in-depth analysis.
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