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Research Report: Managing mortgage stress
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Managing mortgage stress  ( 2011 )  Cite this report



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5. Client follow-up survey


In this chapter we examine what happened to a small group of people interviewed after they were provided with assistance from the MHS. We particularly focused on clients who had retained their homes at the time their MHS file was closed, to assess whether they were able to sustain repayments under any new arrangements. An outcome to be avoided is one in which the home is saved in the short term but it remains at risk because repayments cannot be sustained in the medium to long term. However, we also interviewed some clients who did not keep their homes. Both groups were asked for their views about the assistance provided by the MHS.

The results provided some valuable observations about the MHS and about client outcomes. However, we cannot, on the basis of these interviews, necessarily attribute any client's legal or other outcomes to the MHS over and above any other factors. Factors such as clients' willingness and capacity to seek assistance, the stage of the legal process at which clients first sought assistance, the decisions of the court or ADR body, and other aspects of clients' lives may all have affected the outcomes described here.

The interviews

Interviews were conducted by telephone. Each agency (Legal Aid NSW and CCLC) conducted the follow-up survey with their own clients, though interviews were not carried out by the solicitor who had provided the original assistance. In broad terms, the clients were asked about their current circumstances, including whether they still own the mortgaged property, whether they now felt 'more in control' or 'less in control' of their financial situations, their views of the assistance provided to them by the MHS and what they would now do if they faced further mortgage difficulties. A full copy of the interview schedule is provided at Appendix A.

Sample selection
The criteria used for selecting clients to be contacted for follow-up were that they had been assisted with minor assistance or casework by an MHS solicitor, that their files had been closed before 30 June 2010 (preferably more than six months prior to the interview) and that they had agreed to be contacted for follow-up at the time their file was closed. We also aimed to make two-thirds of the sample comprise clients who had retained their homes at file closure, to examine whether they were able to sustain new repayment arrangements that arose from the assistance provided by the MHS.

In the end, 38 people took part in the survey. Twenty of the 70 Legal Aid NSW clients who were eligible for the follow-up survey72 had, at time of file closure, agreed to a follow-up interview but of these, only 11 could be contacted even after multiple attempts. The final group of Legal Aid NSW clients interviewed was supplemented with four people who had been assisted with advice only.

Of the 80 CCLC MHS clients eligible for a follow-up interview,73 five could not be contacted because their telephone was disconnected, four did not answer calls and two refused to participate. One client was excluded due to serious mental health issues. The remaining clients were sorted into two groups: those whose homes had been retained when their file was closed, and those whose homes had been lost. Two-thirds of the sample were randomly selected from the first group and one-third from the second.

Several features of the interviewee selection process mean that the views and experiences of the 38 MHS clients interviewed should not be taken as representative of the views and experiences of all MHS clients. This is because the people who participated may systematically differ from those who could not be contacted for, or did not consent to, an interview. Further, the fact that the homes of two-thirds of the interviewed clients had been saved may also affect the representativeness of the responses given, because this group, in general, had a favourable outcome, which was not the experience of all MHS clients. The following information should be considered with these caveats in mind. As this is a qualitative survey of a small number of clients, percentages are not reported.

Interviewees
As Table 38 shows, the final sample included 38 MHS clients, 15 who were assisted by Legal Aid NSW and 23 who were assisted by CCLC. The original intention was to interview clients 12 months after their file had been closed. However, due to the small number of clients who agreed to be followed up and the timeframe in which the evaluation report was required, most were interviewed between three and 12 months after their file was closed. Of the 38 respondents, 22 were followed up less than six months after their files were closed, 12 at between six and 12 months, and four more than a year after. Most (34) respondents had received casework or minor assistance. Four Legal Aid NSW clients had received advice only.

Table 38. Sample of follow-up clients: MHS service provider, by type of assistance (n=38)
Sample of follow-up clients
Advice
Minor assistance
Casework
All clients
MHS service provider
N
N
N
N
Legal Aid NSW
4
7
4
15
CCLC
0
5
18
23
Total clients
4
12
22
38
Source: Follow-up survey of sample of Legal Aid NSW and CCLC MHS clients (November 2010).

As shown in Table 39, of the clients who were interviewed, 25 had retained their home at the time their file was closed, although six of these still had ongoing legal processes. Seven clients had sold their home or had their home repossessed, and the outcome at the time of file closure was unknown for six clients.

Table 39. Sample of follow-up clients: outcome
when file closed (n=38)
Sample of follow-up clients
Outcome when file closed
N
Client sold home
5
Home repossessed
2
Retained home: negotiation
14
Retained home: ADR/court
5
Retained home: other/matter ongoing
6
Unknown
6
Total clients
38
Source: Follow-up survey of sample of Legal Aid NSW and CCLC MHS clients (November 2010).

It is important to note that the number of homes retained at the time the files were closed among the follow-up sample does not reflect the overall proportion of homes that were saved under the MHS. Those clients whose homes were saved were deliberately over-sampled in the follow-up survey, to explore whether they were able to sustain the new repayment arrangements and keep their homes.

Results

The follow-up interviews examined a diverse range of issues, including whether or not the client was still in possession of their home, whether the client now felt more or less in control of their financial situation, and whether the assistance they received through the MHS had made a difference or not. The following sections detail the results of these areas of inquiry.

Homeownership status
Nineteen of the 25 survey respondents who had retained their home when their file was closed still owned the property at the time of the follow-up interview. Three were in the process of selling their home, and three no longer owned the property (Table 40). Of the six for whom an outcome was unknown at the time that their file was closed, three still owned the property, one was currently selling and two no longer owned the property.

Table 40. Sample of follow-up clients: homeownership status at follow-up, by outcome when file closed (n=38)
Sample of follow-up clients
Homeownership status at follow-up
Outcome when file closed
Still own
home
N
Selling
home
N
No longer
own home
N
All
outcomes
N
Client sold homea
-
-
(5)
5
Home repossessed
-
-
(2)
2
Retained home: negotiation
12
1
1
14
Retained home: ADR/court
3
-
2
5
Retained home: other/matter ongoing
4
2
-
6
Unknown
3
1
2
6
Total clients
22
4
5b
38
a 'Client sold home' includes 1 client whose dispute related to mortgage exit fees when they sold their home.

b Five clients who had retained their home at the time when the file was closed or whose outcome was not recorded, and who no longer owned the property.

Note: Shaded cells indicate that currently 'selling (their) home' or 'no longer (owning their) home' are not possible options for clients who had already sold their home or had their home repossesed.

Source: Follow-up survey of sample of Legal Aid NSW and CCLC MHS clients (November 2010).

Other circumstances
Twenty of the 22 respondents who still owned their home at the time of the follow-up interview still lived in the property. Most of those who no longer owned their home were living in private rental accommodation, although one had moved to a retirement village and one (whose home had been repossessed) was homeless.

Respondents were asked if there had been any major changes in their circumstances since they had been assisted by the MHS. Ten had increased their hours of employment or had found employment, three had lost their job, three had experienced a relationship breakdown, one had been subject to rent increases, one's health had deteriorated and one had a new baby in the family. These various life events are among the many variables (apart from the legal assistance provided) that may have positively or negatively affected the capacity of clients to maintain their mortgages under new arrangements negotiated through the MHS.

How in control clients felt of their financial situation
Given the variety of circumstances that clients face and the varying stage of enforcement at which clients first seek assistance, not every client can be assisted to save their home. For some, the best outcome is to sell their property and gain greater control of their financial situation. Respondents were asked whether they now felt that they were more in control of their financial situation, less in control or about the same, compared to when their MHS file was closed. Twenty-seven respondents said that they felt more in control of their finances, five said that they felt about the same and six said that they felt less in control (including one who went bankrupt). The following comments made by respondents illustrate their views.

More in control
    It has taken the pressure off, [now I] don't have the house. Much happier as no threat or pressure (Interviewee no. 12).


    Legal Aid gave me more insight about the whole financing process and provided more information on how to manage money (no. 11).


    Financial counsellor was very good. Went through everything very thoroughly and gave me options and advice (no. 18).

About the same
    I'm still trying to pay all my bills but at least I have a break [of three months]. I'm hoping to get back to work (no. 15).

Less in control
    [Interviewer notes:] Has given up on everything, just pays the mortgage. Relying on daughter to work and pay a higher share of the mortgage (no. 8).


    Due to the lack of work in the building trade, it is still a struggle (no. 13).


    I don't know. I need a financial manager to manage my affairs. I have never managed my finances by myself (no. 25).

Clients who still owned or were selling their home
Those surveyed clients who still owned or were in the process of selling their home when they were followed up were asked a further series of questions to ascertain how they were coping financially. These questions reflect previous research that identifies common responses to managing accumulating debt and the threat of mortgage default, including taking on more debt by borrowing from family and friends, and borrowing on credit cards (Berry et al. 2010).

Eighteen of the 26 respondents in this group said they were up to date with their mortgage repayments, and two further clients were selling their home and were therefore no longer making payments.

Two respondents who were still behind in their payments said they had a moratorium on them and had just started or were due to start making repayments again. Of the four who were behind in their mortgage payments, two had missed one payment and two had missed three or more.

We also asked respondents about any other debts they currently had. Fourteen of the 26 respondents who still owned their home said that they were not up to date with their other debts, including three of the four who were currently selling their home. Respondents reported being behind in paying council rates, and water and electricity bills, and several had hardship arrangements in place for these debts. Two reported considerable credit card debts.

Nineteen of 25 respondents said that they had not borrowed any more money since being assisted by the MHS. Four said that they had borrowed money from family or friends, and two that they had arranged a loan from a non-bank lender. Only one respondent (who was selling their property) said they had used their credit card to pay the mortgage since their file was closed by the MHS.

The responses above suggest that, although clients may be assisted to retain their homes, it remains a struggle for some to keep up with other financial obligations.

Assistance provided by the MHS
Respondents were asked about the type of help that they had hoped to receive from the MHS, the types of assistance that they did receive, whether they felt that the assistance had helped them with their mortgage situation and how it had helped.

Expected assistance
    I was almost caught up with all my other debt repayments and wanted some help dealing with my mortgage problems. I wanted some room to breathe. It was very difficult for me to deal with the lender on my own and I wanted some help (no. 7).
Most respondents indicated in general terms that they wanted 'advice' and 'help to save their house'. More specifically, they were looking for help in negotiating with the lender (20 clients), drafting letters and other documents (12 clients) and assistance or representation in a court process (nine clients). 74

Actual assistance
When asked what type of help they actually received, again many responded only in general terms.
    [CCLC] helped me to write letters to the lender to freeze the mortgage repayments giving us time to get back on our feet (no. 17).


    [The solicitor] … helped draft our defence, and told us what to do and what not to do. [The solicitor] pulled it all together and got us through. She let me know once the Statement of Claim had been dismissed six months later (no. 22).


    Got legal advice. Found out our avenues. Was informed about hardship options. Received a mortgage book which I still use (no. 29).


    Was advised to sell my house ASAP, before the bank foreclosed, so that I could get a better price (no. 26).

Impact of assistance
When asked whether they felt that the assistance given by the MHS had helped them to resolve their mortgage issues, 30 respondents said that it had and eight said that it had made no difference. No respondents said that it had made the issues worse. The comments below further illustrate the respondents' views.

Helped to resolve the situation
    The lenders gave us a hardship variation. I wouldn't have known what to say or how to ask if you hadn't helped us (no. 20).


    I still have an outcome where I am in control of my property. Thank you for that (no. 28).


    Legal Aid helped a bit. I was given a path to follow that was in line with what I was personally considering. The advice gave me the assurance needed to take a clear approach in relation to my mortgage (no. 30).


    Definitely. Without [the solicitor] and CCLC we would have lost the house (no. 37).
Notably, 'resolving the situation' did not necessarily mean that the house was saved.
    Everything you did helped, it took a load off our shoulders during a stressful time. The realistic advice that we could not afford the mortgage no matter what variations were done was helpful (no. 2).


    The assistance was successful in buying me time, which was what I was looking for. The home was repossessed, but I had the time to arrange my affairs (no. 10).

Made little or no difference
Some clients felt that the assistance provided made no difference to their mortgage issues. In these cases, as their comments suggest, there may have been little in the way of legal assistance that could have helped them at the point at which they sought help.
    I got to you too late. And since then I was made bankrupt by one of the other loans I had that I couldn't pay (no. 18).


    It helped a little but I still don't have any money and my husband has left me in a huge mess (no. 21).
One client was frustrated that they could not receive assistance from the MHS with legal issues not related to the mortgage problem, including bankruptcy.
    Didn't help at all. [The solicitor] told me what I could and couldn't do. He could only offer mortgage assistance. Could not tell me about how I could do anything else, as he wasn't qualified to give that advice and could only help me with the house (no. 31).

Other benefits
Respondents were asked whether the assistance provided helped them in any other ways. Twenty-five of the 38 respondents described a positive impact on their stress level; this outcome was also repeatedly raised in response to other questions.
    [We] were going through hell, couldn't sleep. Trying to be positive for the kids. CCLC helped reduce the stress (no. 23).


    Having someone to discuss my situation with reduced stress, especially dealing with experienced people who knew what I could do (no. 9).


    It was amazing the amount of relief; could sleep at night and not be absolutely out of [my] head wondering what to do and being scared of being kicked out of the house (no. 17).
Respondents also reported having increased confidence and capacity to deal with their mortgage and other financial issues.
    The assistance gave us options to go on with (no. 33).


    The assistance put me at a better place and gave me an understanding of what to do … The help provided settled me down and allowed me to focus. I was not stressing as much as a result (no. 12).


    It also taught me a really good lesson. I also learnt about how to keep other things in control. The whole situation was in many ways life changing. We had nowhere to go and [the solicitor] helped pick us up (no. 26).


    I am now opening my bank statements and seeing where all my money goes. I am also trying to save a bit (no. 18).


    [Now] prioritising debts and spending (no. 2).

What clients would do in the future
Finally, respondents were asked, 'If you were to experience any further difficulties with your mortgage now, what do you think you would do about it?' In response, none of the respondents said that they would do nothing (although it should be kept in mind that clients were speaking with representatives from the legal service that assisted them and therefore may have been more inclined to give positive responses). Of the 34 respondents who answered this question, 31 said they would seek help — usually by returning to the person or service who provided the original assistance.
    I would run to [the financial counsellor] (no. 22).


    Phone and ask for help (no. 16).


    I would speak to Legal Aid, but if I couldn't find someone like [the solicitor], I would be discouraged with the service and wouldn't stay. She was on top of everything. She did all the research and spoke to everyone, including the other solicitors. It was very helpful (no. 14).
Ten respondents said they would take action themselves, such as negotiating with the lender.75
One response was summarised as follows:
    Definitely contact the lender and if I could not solve it, I would seek help. But realise that through the advice CCLC gave the best way is to get in touch with lender as soon as any issues come up and not let it drag on or avoid the issue. If problems with the lender, [then I'd] get advice (no. 17).
The idea of seeking help earlier was also indicated by some respondents.
    I would try to resolve it straight away, instead of sitting on the issue. I would also speak to Legal Aid or a legal advice service to make sure I was okay with the law (no. 12).


    [Interviewer notes:] Seek the right help. Last time client 'buried my head in the sand' then got wrong and ineffectual help (no. 4).


    I would make sure I got things in writing from the bank rather than take someone's word for it. If it got to a point where I could not handle it I would seek help straight away from CCLC. I would not be embarrassed about it like I was previously (no. 26).

Other client observations
Respondents were given an open opportunity to make comments about the MHS and the assistance that they received. An analysis was undertaken of the types of features and attributes that clients valued in the MHS. Valued qualities in the MHS were that it was 'effective', 'practical', 'professional', 'free', 'helpful', 'reassuring' and dealt with matters quickly. Respondents also appreciated the availability and regular contact of the solicitors and financial counsellors, their compassion and their lack of judgment.

Comments included:
    There is not enough I could say for someone to understand how fantastic [the solicitor] was. She knew what she was doing, she knew how to handle people who were emotional. CCLC was fantastic. [The solicitor] was always available and compassionate. She was professional and really cared … [The solicitor] backed us up: she wasn't afraid to take on the other solicitors acting for the bank (no. 26).


    Legal Aid staff were extremely professional. They did exactly what I was hoping for. Very grateful. I couldn't afford the legal help and had nowhere else to turn. At one stage I was paying for legal advice and the help I received was not as good as the specialist advice provided by Legal Aid (no. 10).


    … effective, sympathetic without being judgmental. [They were] torrid times and the advice was practical and timely and what I needed (no. 4).
In other comments, one CCLC client said they would have preferred face-to-face rather than telephone contact.
    [I] would have liked to have come in and gotten a bit more advice about what to do, would have preferred to have come in face to face rather than over the phone is the only criticism (no. 14).
Others said they would have liked more assistance and more options. Comments included:
    [Solicitor notes:] He found CCLC a little restricted [limited representation] in being able to take his matter on in terms of the centre's guidelines as to what they are there to do and who they are there to help (no. 23).
The Legal Aid NSW respondents who said that they wanted more assistance had been advice only clients.
    Legal Aid could have done more … I would like Legal Aid to do more follow-up with the client. To consider more options, especially out of the box thinking. I would also like them to do more collaborative working with clients (no. 22).


    [The solicitor] was very helpful. He did everything he could, there just weren't many options in my situation … Legal Aid did not do a bad job; the system prevented the Legal Aid service from being available to us. I think Legal Aid needs to factor realities into account. We are a family of four children, who do not receive government payments and would have been on the street if we could not find some help. The system needs to factor realities into account (no. 29).
Two clients suggested greater marketing of the program.
    You need to advertise your services more so that people know who they can turn to when they are in trouble. We were in a big mess and you helped us get out of it (no. 20).

Conclusion

A small sample of clients was followed up, most between three and 12 months after their mortgage file was closed by the MHS. We cannot claim that the experiences and views of these respondents are representative of, or may be generalised as, the views of all clients who were offered assistance by the MHS. These are clients who agreed to be followed up and who were able to be contacted some months after their file had been closed. We also over-sampled people who retained their home. However, some valuable themes have emerged from the analysis of the survey.

A key question was whether people whose home was retained following assistance by the MHS were able to sustain this outcome — to keep their home in the longer term. Three-quarters of the respondents whose home had been retained when their file was closed still owned their home at the time of follow-up. This group had been able to sustain the repayment scheme that had been agreed through the negotiation or ADR/court process. However, it is also evident that for some respondents who retained their homes it remained a struggle to keep up with other financial obligations while servicing their mortgage. Six respondents who had retained their home when their file was closed had sold or were in the process of selling their home at the time of interview. Of these six, two still had matters ongoing at the time their file was closed.

Whether their home was retained or lost, respondents generally reported feeling that the legal assistance and financial counselling provided by the MHS had helped them to achieve more financial control of their situation. Indeed, some clients had to lose their home in order to achieve this financial stability. This goes to the heart of what the MHS aims to achieve: to save homes or attain the best possible outcome in the circumstances. It may be that saving a home is not the best possible outcome if it means that a client is left in an unstable financial situation. This point is considered in more detail in the 'Discussion' chapter.

While this information is not conclusive, the interviews suggested some additional benefits to some clients arising from the assistance provided by the MHS. To begin with, a strong theme throughout the interviews was that the assistance provided by the MHS, together with the resolution of mortgage issues, had helped to ease the considerable stress that respondents had been under prior to seeking assistance. Furthermore, some clients spoke of their increased confidence and capacity to manage their financial issues, attributing this to the assistance that was provided to them by the MHS.

Finally, respondents indicated that if they faced mortgage difficulties in the future, they would be prepared to take action about it. Some said that they would negotiate directly with the lender, while others felt confident to contact the MHS again, or another legal service provider. Notably, some respondents also spoke of the need to deal with their mortgage issues early, rather than 'burying their head in the sand'. This represents a positive attitudinal change, although what people say in an interview may differ from the action they eventually take. But this attitude may challenge one of the considerable barriers to seeking legal assistance identified in earlier Foundation research (for example, Coumarelos et al. 2006): the feeling that nothing can be done about one's legal problems and that consequently there is no point in seeking help.

It was apparent from the interviews that certain features of the MHS were particularly valued by clients, in particular, the timely, active, practical, professional, compassionate and reassuring nature of the services provided by the MHS solicitors and financial counsellors. If there was a criticism of the service, it concerned the desire for more assistance from the MHS, particularly in dealing with other debt-related issues.

This small-scale follow-up survey highlights possibilities for capturing information on client outcomes over the longer term. To overcome the limitations of selection biases, agencies could conduct follow-up interviews with a small but random selection of clients on a regular basis, six to 12 months after their file is closed. Over time, this would provide the MHS with a larger, more representative sample of client-centred outcomes, to more reliably assess the impact of the assistance provided by the MHS through Legal Aid NSW and CCLC.

That is, casework or minor assistance clients whose file was recorded as closed before 30 June 2010.
That is, casework or minor assistance clients whose file was recorded as closed before 30 June 2010.
Respondents could give more than one answer.
Respondents could give more than one answer.

72  That is, casework or minor assistance clients whose file was recorded as closed before 30 June 2010.
73  That is, casework or minor assistance clients whose file was recorded as closed before 30 June 2010.
74  Respondents could give more than one answer.
75  Respondents could give more than one answer.


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Forell, S & Cain, M 2011, Managing mortgage stress: evaluation of the Legal Aid NSW and Consumer Credit Legal Centre Mortgage Hardship Service, Law and Justice Foundation of NSW, Sydney