The Australian Federal Government's decision to extend the first home owner grant for six months is expected to boost mortgage workflows for law firms.
The extended grant allows first-home owners entering contracts between 1 July and 30 September to receive A$7,000 for existing homes and A$14,000 for new dwellings, but the boost will be halved for contracts signed between 1 October and 31 December.
At present residential lending valued at less than A$1m is more popular than other form of borrowing, including commercial property (A$1m to A$100m) and corporate (above A$100m), according to Gadens chief operating officer Jon Denovan. "We have observed a 70% increase in front-end mortgage work since the grant was introduced last October. Residential mortgage work for banks and non-bank lenders has brought big business. It's exciting to see work volumes improve again," he said.
Julie Barkla, a partner at Melbourne property and mortgage firm Wisewoulds Lawyers, has noticed an upsurge in applications to set aside fraudulent loan agreements and mortgages. "Financial pressures caused by an ailing economy could contribute to people's willingness to use illegal means to raise funds, for example, a husband may forge his wife's signature on loan documents. Lawyers are going to great lengths to ensure that identities of potential borrowers are verified," she said.
Barkla has also received a significant increase in work volume due to a surge in non-conforming low-documentation sector-related delinquencies.
The Federal Government's proposed National Consumer Protection Bill 2009 could similarly bring a "huge influx" of work to lawyers seeking to assist borrowers that are saddled with unsuitable loan contracts. Lawyers in community legal centres are expected to bear the brunt of it. However, few private practice lawyers are willing to work for such centres. "Some of my community legal centre contacts are dreadfully understaffed and have difficulty in staffing...They work very long hours and get pitiful pay," said Denovan.
Denovan has announced his intention to step down from his role.