How does it work?
Each investor has a profile in which they choose the categories of loan they wish to offer and detail their loan criteria for the chosen categories. Loan criteria must be verified weekly or the category offering will be suspended. This is because for the platform to be of any use to brokers it is critical that the data be up-to-date.
The platform sends an email to active investors each week which shows their current loan criteria and requires that they verify or edit by clicking a button on the email. If they fail to do so their offerings are automatically suspended and they will become invisible to brokers.
When a broker finds a promising lending opportunity, they first perform preliminary due diligence, then issue an indicative letter of offer to the borrower setting out the parameters of the loan (i.e. principal, interest rate, term etc.). Once this is signed by the borrower it acts as a mandate for the broker to procure a lender willing to lend on those terms. It also contains the borrower’s agreement to pay brokerage should the loan proceed.
Next the borrower signs the letter of offer and pays a valuation fee to the broker who uses the money to commission a valuation. If the valuation is acceptable the broker uses Omicron to search their pool of investors for matches to the loan’s parameters. The search yields a list of investors to choose from. The investors with the lowest cost of funds appear at the top of the search results. The broker can see each investor’s track record. This includes both statistics and a chart of individual loans showing settlement date, principal, loan size, suburb, security, rating etc..
The broker can choose a maximum of 4 investors* to approach. Each submission creates an Enquiry on the platform. The Enquiry must include a copy of the executed indicative letter of offer to prove the broker is mandated. The investor must initially respond through Omicron. If the Investor ultimately rejects the Enquiry they must do so via Omicron, choosing from a list of standardized reasons.
Omicron uses the Enquiry data to compile statistics on both parties. If the broker receives 4 rejections the platform will allows Enquiries to an additional 4 investors. The Enquiry level is capped at 8 per loan* to ensure the broker does not hawk low quality deals to the annoyance of investors. If the investor does not respond to an Enquiry within 48 hours their profile is suspended until they do. The broker is allowed to contact an additional investor to replace an unresponsive investor. Late rejections do not count against the broker’s record.
Thereafter the parties (the investor and the broker) communicate by email, telephone or message through the platform. The investor seeks more information and the broker provides it. If the parameters of the loan are changed by negotiation the broker must issue an amended indicative letter of offer and get it signed by the borrower and upload it to the platform.
The investor performs due diligence. Usually this consists of Internet searches on the borrower and the security followed by an inspection of the security and comparable properties. Legal due diligence is carried out at a later stage by the investor’s Omicron-accredited solicitor.
Once the investor is ready to proceed they instruct their Omicron-accredited solicitor through the platform (by the click of a button). The loan terms are contained in the latest version of the indicative letter of offer which the broker will have uploaded to the platform.
The investor’s Omicron-accredited-solicitor performs company and title searches before issuing security documents. They then perform extensive legal due diligence and finally prepare a certification as to title. This document certifies that the investor will receive good title to the mortgage if they proceed. The certification as to title also serves as the retainer agreement between the investor and the Omicron-accredited solicitor.
When the investor is ready to proceed they transfer the loan principal to their Omicron-accredited solicitor’s trust account. Only at this point is the investor obliged to proceed. Upon receipt of the funds the Omicron-accredited-solicitor settles the loan using the electronic conveyancing system known as PEXA.
*If the broker is compiling a syndicate mortgage the system will allow enquiries to investors whose ideal loan amounts add up to 3 times the required principal sum.