As the industry moves towards a 100% digital mortgage process, one legal specialist says resistance by banks to change has resulted in brokers squeezing lawyers to meet the individual bank’s demands.
Peter Mericka, property lawyer at Melbourne-based Lawyers Conveyancing, told Australian Broker
he had been “inundated” with emails from brokers requesting paperwork for the banks which no longer exist.
While in the past, bank customers had to fill in multiple different paper forms, including concession forms and transfers of land, the Property Exchange of Australia (PEXA) has now combined 17 of these documents into a single digital duties form.
“The banks want copies of these as it makes their life a bit easier. They can see what concessions are being applied for through our office and that sort of thing so they ask for copies of these documents at the start of the transaction,” he said.
“What they don’t seem to understand is that there’s a massive upheaval in the industry at the moment. We’re moving to electronic conveyancing. There is no hard copy of documents like the transfer of land.”
Despite these forms no longer being in place, banks are following up with lawyers and conveyancers via brokers to request these obsolete documents, Mericka said.
“They pretend that the old system is still in place. We’re now getting brokers who are ill-informed and uneducated about the new process sending us requests for documents that were superseded as of 1 July. As of this date, there are no State Revenue Office hard copy forms to be filled in.”
Mericka accused some brokers of being aggressive. He expressed frustration that brokers were also cc’ing clients in these bank-led requests with certain brokers laying the blame on the law firm rather than the banks.
“They cc the client because they expect them to ring me up all upset and worried. This is the broker misinforming my client and effectively turning the client against me so I can be forced to do what the broker wants. But what the broker wants is something out of the past. It doesn’t exist anymore.”
Lawyers and conveyancers have no control over supplying these documents now, he added, saying that new digital process instead relied on both the vendor and purchaser.
After being initiated by the vendor, the duties form has to be signed by both purchaser and vendor before completion. However, banks typically ask for this older paperwork prior to digitally signing the form and can even hold off on settlement until they receive these hard copy forms, Mericka said.
“They equate this document with the old forms that they used to get upfront. Well, that was easy when I was the one who prepared them and I was the one who could send them off. But I don’t initiate them. They’re having the client pressure me into providing the bank with a document over which I have zero control.”
He asked brokers to instead respond back to the bank, telling them not to request documents before commencing the loan process.
“What should be happening is when the bank says to the broker, ‘We need this or we need that,’ the broker should say, ‘No, you can’t get that this early. Start the loan process now or we’ll go to another lender’.”
Banks and brokers should be asking the right questions at the start of the loan process, Mericka said.
“In an ideal world, as soon as the person applies for the loan, the broker will sit down with them with a template that includes the same questions as on that duties form. The broker would ask all those questions. When they’re answered, they’d give the client a copy of that to send to their solicitor who can then complete the online duties form. That would be perfect.”
“What’s wrong with this whole system is they’re forcing more responsibility down to the street level lawyer or conveyancer, especially with these online duties forms. We’re now acting as SRO clerks and bank staff doing a lot of things that the banks used to do. Let’s return responsibility to the banks and the brokers.”
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