Marketplace

Personal Finance > Personal Loans > Settlement 'crisis' for homebuyers

Settlement 'crisis' for homebuyers

Home borrowers with the major banks are facing costly settlement delays when they buy a property, according to the Law Society of NSW. It has written to the chief executives of all the major banks requesting they attend a summit to discuss a 'mortgage settlement crisis' which has enveloped the conveyancing industry.

The Society believes the centralising of property conveyancing processes, at the Commonwealth Bank in particular, is preventing swift settlement of home loans. This has led to long delays for home buyers causing them to miss the normal six-week deadline for property settlement transactions, with the buyer wearing the cost of the delays.

Property transactions often require the discharge of a mortgage so that titles on properties can be transferred to new owners. Borrowers and their legal representatives are very reliant on the institutions for timely and efficient processing of property settlements and any delay is a source of frustration and worry. For the banks, such a situation can leave a long-lasting negative impression of the service they provide.

Particular problems identified by the Law Society include:

The consequences are:

BankChoice believes this has also led to mortgage brokers favouring smaller lenders in their loan recommendations to borrowers to avoid the hassle of dealing with the slow-moving bureacracy of major banks. This could often be in spite of the fact that the loan products recommended don't have the competitive rates or repayment flexibility that the majors can offer.

Few complaints have been directed at smaller institutions such as credit unions and building societies who tend to have more flexible processes and procedures. This is complemented by greater depth of staff knowledge and initiative that allows them to handle any potential problems quickly and effectively.

Smaller institutions are now employing brokers in a much more aggressive manner to complement traditional distribution methods and some are paying quite high commission fees to brokers. When using a broker be sure you understand who is responsible for the conveyancing process for the institution.

Borrowers can take some comfort that satisfactory recourse is available through the Banking Industry Ombudsman


Copyright © 2009 Yahoo! Pty Limited. All rights reserved.
Advertise with Us - Privacy Policy - Terms of Service - Help