A coalition of banking and real estate associations are calling for the removal of “red tape” in the property sector to streamline lending processes by digitising a range of banking, mortgage and finance services.
Banking and real estate institutions are urging the government to make temporary electronic transacting of mortgages permanent to allow for more efficient and streamlined processes in the industry. The sector was quick to implement changes in line with coronavirus social distancing that included digitising many traditionally paper-based processes, but without changes to legislation these aren’t set to stay.
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According to the Australian Banking Association allowing lending institutions to offer more digital and paperless mortgages as a normal business practice will make them more economically efficient, as well as more efficient for the businesses and people involved. With the real estate sector hit hard by coronavirus restrictions, the streamlining of traditionally time-consuming processes could help promote growth and activity for the industry.
A range of temporary digitised processes that included electronic mortgage applications, video call document witnessing and electronically signed documents were introduced through emergency government regulations and implemented by lenders in response to the coronavirus lockdown. These measures served to streamline access to banking, mortgage and finance services, and lending institutions are keen for these more efficient processes to become the new norm.
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Who is calling for digital reform?
An established coalition that includes the Australian Banking Association, the Business Council of Australia, the Australian Institute of Company Directors, Council of Small Business Organisations, the Financial Services Council, the Real Estate Institute of NSW and the Australian Property Institute have suggested that the temporary measures introduced during the coronavirus pandemic should be made more permanent.
Australian Banking Association CEO Anna Bligh says that while both state and federal governments were to be commended on their response to the coronavirus pandemic, and for facilitating temporary electronic transactions, the changes needed to be permanent to lower costs and reduce hassle associated with the transacting and mortgage processes.
“Today we’re calling on both Federal and State Governments to make these changes permanent in order to keep the ease, keep the lower cost and reduce the hassle of transactions which rely on wet signatures and paper documents,” Ms Bligh said.
What does the future of mortgages look like?
The proposal from the coalition has suggested a range of permanent changes to increase efficiency and digitisation.
Some of these suggested changes are related to electronic transactions, avoiding the need for paper signatures and for documents to be witnessed in person. The key changes suggested in relation to electronic transactions are:
- Allowing deeds to be created and signed electronically.
- Accepting electronic signatures for a wider range of legal and business documents, that includes guarantees, statutory declarations and trust deeds.
- Allowing the remote witnessing of documents to occur using video call software and electronic signatures and removing the requirement for witnessing when signing deeds.
Other changes relate to the processing of mortgage applications electronically, again by removing the need for paper signatures and for documents to be witnessed in person. The key changes suggested in relation to digital, paperless mortgages are:
- Forgoing the requirement for the counter-mortgage to be signed by both mortgagor and mortgagee.
- Forgoing the requirement for signatures on mortgage documents to be witnessed.
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What changes have already been made?
In some state’s changes are already being implemented to move towards more digitisation of transactions and mortgages, largely in response to the coronavirus pandemic.
In New South Wales emergency regulations have been passed allowing the witnessing of documents to occur remotely and they have passed legislation enabling broader reforms including the introduction of electronic deeds.
Both Victoria and Queensland have also passed emergency regulations that allow for the electronic signing of documents and remote witnessing of all documents, including deeds and mortgages.
South Australia and Tasmania have similarly passed emergency legislation relating to electronic transactions but are yet to implement any changes to regulations.
Despite this, all states are yet to make any permanent changes and all temporary measures are set to expire between October and November 2020. Many states do have versions of an Electronic Transactions Act, which generally states that transactions are not invalid simply because they are conducted electronically, but common state law often also stipulates that deeds and mortgages must be made in writing, on paper.
Land registrars have also been temporarily been allowed electronic signing and lodgement of mortgage documents in New South Wales, Queensland, South Australia and Western Australia.
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Words by Danielle Austin
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