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



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3. Mortgage Hardship Service: Legal Aid NSW


This chapter reports on the operation of the MHS at Legal Aid NSW during the period of evaluation. In particular, it examines:
  • the number of mortgage-related advice, minor assistance and casework matters handled
  • whether there is any evidence of an increase in legal assistance provided for mortgage matters since the MHS commenced
  • the characteristics of MHS clients and their mortgage issues
  • whether the Legal Aid MHS was able to reach and assist clients at early stages of mortgage stress
  • the outcomes for clients (including whether they kept or lost their home).
The information in this chapter is based on the Legal Aid NSW program data for the MHS as well as more general Legal Aid NSW corporate data. These datasets are described in detail in the 'Methodology' section of 'The evaluation' chapter.

Mortgage matters: first 12 months of the MHS

The MHS commenced operating at Legal Aid NSW on 1 October 2009. Legal Aid NSW corporate data recorded 1069 mortgage matters dealt with during the first 12 months of the MHS (Table 2), which included:
  • 142 matters dealt with by casework (an average of around 12 per month)
  • 184 matters dealt with by minor assistance (an average of 15 per month)
  • 480 matters provided with advice (an average of 40 per month)
  • an additional 263 matters assisted by LawAccess NSW through the provision of telephone advice or information (an average of around 22 per month).16

Table 2. Legal Aid NSW: type of legal assistance provided for mortgage matters
in the first 12 months of the MHS (1 October 2009 to 30 September 2010)
Legal Aid NSW mortgage matters
Oct 2009 to Sept 2010
(12 months)
Type of assistance
N
Average per month
Casework
142
11.8
Minor assistancea
184
15.3
Advice
743
61.9
LawAccess NSW
263
21.9
Legal Aid NSW
480
40.0
Total assistance
1069
89.1
a Twenty-nine mortgage matters provided with minor assistance were recorded as also receiving
advice. Each of these matters was counted once as a minor assistance.


Note: Mortgage matters recorded as 'primary' or 'secondary' matters are included in this table.
There was no significant difference in the proportion of mortgage matters that were recorded as
'primary' or 'secondary' in the 12-month periods before and after the commencement of the MHS.


Source: Legal Aid NSW corporate data (October 2008 to September 2010).

Number of mortgage matters prior to and since the MHS began

Table 3 examines the number of mortgage-related matters by type of assistance provided by Legal Aid NSW (and LawAccess NSW) in the 12-month periods before and after the commencement of the MHS.

Table 3. Legal Aid NSW: type of legal assistance provided for mortgage matters in the 12-month periods
before and after the commencement of the MHS
Legal Aid NSW mortgage matters
Pre-MHS
Post-MHS
Oct 08 to Sept 09
(12 months)
Oct 09 to Sept 10
(12 months)
Type of assistance
N
N
Difference
Casework
193a
142 
–26%          
Minor assistance
85  
184 
+116%          
Advice
644  
743 
+15%          
LawAccess NSW
478  
263 
–45%          
Legal Aid NSW
166  
480 
+189%          
a See 'Casework matters' section for an explanation of why the number of mortgage matters assisted by way of casework was
higher in the pre-MHS period.


Note: Mortgage matters recorded as 'primary' or 'secondary' matters are included in this table. There was no significant difference
in the proportion of mortgage matters that were recorded as 'primary' or 'secondary' in the 12-month periods before and after the
commencement of the MHS.


Source: Legal Aid NSW corporate data (October 2008 to September 2010).

Regarding the 12 months following the commencement of the MHS, we note the following:
  • a 26 per cent reduction in mortgage casework matters (a possible explanation for this finding is given in the following section)
  • a 116 per cent increase in minor assistance for mortgage matters
  • a 15 per cent increase in mortgage advices provided by Legal Aid NSW and LawAccess NSW
  • a 45 per cent decrease in (telephone) advices for mortgage matters provided by LawAccess NSW
  • a 189 per cent increase in mortgage advices (telephone, general counter and face-to-face) provided by Legal Aid NSW.17
In terms of the different types of assistance provided by Legal Aid NSW (and LawAccess NSW) before and after the commencement of the MHS (Figure 1), it may be noted that advice continued to represent the most common type of assistance provided in relation to mortgage matters (that is, 70% of all assistance both before and after the MHS commenced). In the period following the commencement of the MHS:
  • 17 per cent of all mortgage matters received minor assistance — this was up from nine per cent in the pre-MHS period
  • the proportion of casework matters dropped from around 21 per cent to 13 per cent of all assistance.

Figure 1. Legal Aid NSW and LawAccess NSW: type of legal assistance for
mortgage matters in the 12-month periods before and after the commencement
of the MHS




Source: Legal Aid NSW corporate data (October 2008 to September 2010).

Mortgage matters as a proportion of civil law work

Mortgage matters are just one of many legal matter types dealt with under Legal Aid NSW's civil law practice.18 In broad terms, mortgage matters make up less than three per cent of all civil law matters for which Legal Aid NSW (and LawAccess NSW) provides legal advice or minor assistance and eight per cent of all Legal Aid NSW's civil law casework.19

Table 4 shows that the proportion of mortgage-related casework was slightly less in the 12-month period after the MHS commenced (see 'Casework matters' section below for possible reasons). On the other hand, mortgage matters made up a higher proportion of civil law matters aided by minor assistance following the introduction of the MHS; in fact, the percentage almost doubled, rising from around two to around four per cent. For the periods before and during the operation of the MHS, the proportion of advice work associated with mortgage matters remained roughly the same, at around three per cent of all civil law advice matters.20

Table 4. Legal Aid NSW: mortgage matters as a proportion of all civil law
matters, by type of legal assistance, in the 12-month periods before and after
the commencement of the MHS
Legal Aid NSW mortgage matters as a proportion of all civil law matters
Pre-MHS
Post-MHS
Oct 08 to Sept 09
(12 months)
Oct 09 to Sept 10
(12 months)
Type of assistance
%
%
Casework
9.5a
7.8  
Minor assistance
1.9  
3.9  
Advice
2.7  
3.0  
a See 'Casework matters' section for an explanation of why the proportion of mortgage matters
assisted by way of casework was higher in the pre-MHS period.


Source: Legal Aid NSW corporate data (October 2008 to September 2010).

Casework matters

Casework involves a grant of legal aid for a solicitor to run a legal matter for a client. Compared to minor assistance and advice, it involves the highest level of legal assistance provided by Legal Aid NSW.

Figure 2 shows the number of mortgage casework matters per month for the 12 months prior to the introduction of the MHS (left of the vertical dotted line) and for the first 12 months of the MHS (right of the vertical dotted line). Legal Aid NSW dealt with 142 mortgage casework matters in the first 12 months of the MHS, 51 matters fewer than in the preceding 12 months. However, Figure 2 also shows a large spike in the number of mortgage casework matters in December 2008 (67 matters), which skews the 12-month total and average monthly figures for the 12 months prior to the MHS. Nonetheless, even given the inordinate number of mortgage casework matters recorded for December 2008, there was no statistically significant change (up or down) in the monthly number of mortgage casework matters across the 24-month period.21

Figure 2. Legal Aid NSW: casework for mortgage matters in the 12-month periods before and
after the commencement of the MHS




Note: The trend line is the Sen's estimate of slope. The trend is not statistically significant.

Source: Legal Aid NSW corporate data (October 2008 to September 2010).

Information provided by Legal Aid NSW suggests that the aberrantly high number of mortgage casework matters in December 2008 was likely the result of a large consumer credit law project undertaken by Legal Aid NSW, introduced in response to a home loan scam affecting borrowers of one particular major bank. The bank helped to identify victims of the scam and referred them to Legal Aid NSW for legal assistance. Legal Aid NSW employed one additional solicitor plus an additional paralegal to attend to these matters. Most cases were recorded in the database in December 2008, as evidenced by the spike. However, as the project ran from late 2008 until April 2010, the number of casework matters recorded for other months in this period may also be elevated.22

Were it not for this spike, the figures suggest that the number of mortgage-related casework matters dealt with by Legal Aid NSW in the first 12 months of the MHS would have been similar to that of the 12 months preceding the MHS. In fact, an adjusted figure for the period prior to the MHS that attempts to correct for the aberrant December 2008 number (based on the remaining 11 months) gives an average of 11.5 casework matters per month, which is similar to the MHS average of 11.8. These figures suggest that there was no change (increase or decrease) in the number of mortgage casework matters handled by Legal Aid NSW after the MHS commenced.

Minor assistance matters

Minor assistance is additional assistance provided by a Legal Aid NSW solicitor during or following an advice session. It includes the solicitor drafting letters or other documents, or making telephone calls on behalf of clients. Unlike casework, minor assistance does not involve a grant of legal aid, is usually less time intensive and is a form of legal assistance that can aid early intervention.

Table 5 shows that there was a 116 per cent increase in the number of mortgage matters given minor assistance by Legal Aid NSW in the 12 months following the commencement of the MHS compared to the number for the 12 months pre-MHS. A new category of minor assistance was recorded by Legal Aid NSW after the MHS commenced: ADR assistance, which is minor assistance provided in ADR processes, including the preparation of hardship applications to FOS or COSL. Of the 23 instances of ADR assistance, most were provided in the months of July, August and September 2010. Even without counting ADR assistances, the number of mortgage matters given minor assistance by Legal Aid NSW increased by 89 per cent following the introduction of the MHS.

Table 5. Legal Aid NSW: minor assistance for mortgage matters in the 12-month periods
before and after the commencement of the MHS
Legal Aid NSW mortgage matters
Pre-MHS
Post-MHS
Oct 08 to Sept 09
(12 months)
Oct 09 to Sept 10
(12 months)
Type of minor assistance
N
N
Difference
Minor assistancea
85
161
+89%          
ADR assistance
0
23
n/a           
Total minor assistance
85
184
+116%          
a 'Minor assistance' includes 28 matters provided with minor assistance and advice, all in the pre-MHS period.

Source: Legal Aid NSW corporate data (October 2008 to September 2010).

Figure 3 shows the monthly pattern of mortgage matters dealt with by minor assistance for the 12-month periods before and after the introduction of the MHS. The trend line indicates a statistically significant increase across the 24-month period,23 particularly towards the end of the post-MHS period, in which five of the six highest monthly values are found.

Figure 3. Legal Aid NSW: minor assistance for mortgage matters in the 12-month
periods before and after the commencement of the MHS



Note: The trend line is the Sen's estimate of slope. The trend is statistically significant at the 0.05 level.

Source: Legal Aid NSW corporate data (October 2008 to September 2010).

Advice matters

An advice is legal advice provided to a client by a Legal Aid NSW solicitor (or by LawAccess NSW, as it forms part of this dataset). Advice is the least intensive level of legal assistance provided by Legal Aid NSW. Advices for mortgage matters include telephone and face-to-face advice, and a new category, ADR advice, which includes advice about preparing hardship applications to FOS or COSL.24 The information displayed in Figure 4 and Table 6 also includes instances of information and advice provided by LawAccess NSW to people with a mortgage problem.

Figure 4. Legal Aid NSW: advice for mortgage matters in the 12-month periods before and after
the commencement of the MHS




Note: The trend line is the Sen's estimate of slope. The trend is statistically significant at the 0.05 level.

Source: Legal Aid NSW corporate data (October 2008 to September 2010).

Table 6. Legal Aid NSW: advice for mortgage matters in the 12-month periods before and after
the commencement of the MHS
Legal Aid NSW mortgage matters
Pre-MHS
Post-MHS
Oct 08 to Sept 09
(12 months)
Oct 09 to Sept 10
(12 months)
Type of advice
N
N
Difference
Telephone advice
501
308
–38.5%         
LawAccess NSW
478
263
–45%         
Legal Aid NSW
23
45
+96%         
ADR advice
0
44
n/a         
Othera advice
143
391
+173%         
LawAccess NSW
n/a
n/a
n/a         
Legal Aid NSW
143
391
+173%         
Total advice
644
743
+15%          
a 'Other advice' includes general counter and face-to-face advice for Legal Aid NSW. LawAccess NSW does not
provide counter or face-to-face advice or information services.


Source: Legal Aid NSW corporate data (October 2008 to September 2010).

Figure 4 shows the number of advices by month for the 12 months prior to the MHS and for the first 12 months of the service. There was a statistically significant increase in the monthly number of mortgage advices across the 24-month period, as indicated by the upward aspect of the trend line.25

Table 6 indicates that there was an overall increase of 15 per cent in the number of mortgage advices provided by Legal Aid NSW (and LawAccess NSW) in the 12 months following the commencement of the MHS.26 It also provides a breakdown of the advice figures for the periods before and during the operation of the MHS by the type of advice provided. Analysed in this way, a number of changes in the provision of advice services under the MHS become evident, including a large decrease (39%) in the total number of telephone advices provided for mortgage matters. Specifically:
  • LawAccess NSW telephone advices dropped by close to a half (45%)
  • at the same time, Legal Aid NSW telephone advices almost doubled (up 96% to 45 matters)
  • there was a large increase (173%) in the number of face-to-face and general counter advices provided by Legal Aid NSW (LawAccess NSW does not provide face-to-face or general counter advice).
The prominent changes in the nature of mortgage advice services as a result of the introduction of the MHS are evident when the monthly advice figures are plotted, as in Figure 5. The 'scissor' pattern in this graph — more clearly seen in the estimated trend lines — reflects the progressive decrease in telephone advices and the corresponding increase in face-to-face (and other) advices under the MHS. In fact, the increase in the number of non-telephone (that is, other) advices was statistically significant over the 24-month period, whereas the decrease in the number of telephone advices over the same period just failed to reach statistical significance.27

Figure 5. Legal Aid NSW: advice for mortgage matters (telephone and other advice) in the 12-month periods before and after the commencement of the MHS



Note: The dashed trend line is the Sen's estimate of slope for telephone advices; the solid trend line is the Sen's estimate of slope for non-telephone (i.e. other) advices. The trend for telephone advices is not statistically significant; the trend for non-telephone advices is statistically significant at the 0.05 level.

Source: Legal Aid NSW corporate data (October 2008 to September 2010).

While there is evidence of this trend taking place even before the MHS began operating, the MHS does appear to have brought about an elevated rise in the monthly number of advices delivered by means other than telephone. In fact, these figures would suggest that, once the MHS was operating and formal referral protocols were in place, LawAccess NSW was providing fewer telephone advices but referring more people to the dedicated mortgage hardship services of Legal Aid NSW; and Legal Aid NSW was providing more face-to-face advices to clients with mortgage problems.

This picture becomes clearer when information concerning the office providing the advice is presented (Table 7). While LawAccess NSW continued to provide telephone information and advices on mortgage matters throughout the operation of the MHS, there was a substantial shift to advices provided by Legal Aid NSW, particularly at its Parramatta and Gosford offices.

Table 7. Legal Aid NSW: advices for mortgage matters, by office location, in the 12-month periods before and after the commencement of the MHS
Legal Aid NSW mortgage matters
Pre-MHS
Post-MHS
Oct 08 to Sept 09
(12 months)
Oct 09 to Sept 10
(12 months)
Office (advice provider)
N
(%)
N
(%)
LawAccess NSW
478
(74.2)
263
(35.4)
MHS Parramatta Legal Aid office
33
(5.1)
160
(21.5)
MHS Gosford Legal Aid office
9
(1.4)
128
(17.2)
All other Legal Aid offices/servicesa
124
(19.3)
192
(25.8)
Total advice
644
(100.0)
743
(100.0)
a 'All other Legal Aid offices/services' includes 21 mortgage matters whose location (office) was not recorded.

Source: Legal Aid NSW corporate data (October 2008 to September 2010).

As there were two dedicated MHS solicitors at Parramatta and Gosford, it is not surprising to see a considerable increase in the number of mortgage matters advices provided by these two offices across the evaluation period. The increase in mortgage advices was in the order of 400 per cent for the Parramatta office and 1300 per cent for the Gosford office.

An increased number of advices was also noted more generally for Legal Aid NSW across its offices after the MHS commenced. Leaving aside the Gosford and Parramatta offices, there was a 55 per cent increase in mortgage matters advices provided by all other Legal Aid NSW offices and services. In particular, both the Civil Litigation branch (located at head office, Sydney) and the Blacktown office recorded sizeable increases in the number of advices for mortgage matters provided after the commencement of the MHS.

For the full 13 months of the Legal Aid MHS evaluation, that agency`s corporate data show that 144 mortgage matters were dealt with by casework, 209 were provided with minor assistance and 810 were provided with legal advice.
No comment is made on any change in the quantum sum of legal services delivered by Legal Aid NSW and LawAccess NSW in relation to mortgage matters given that advice, minor assistance and casework differ in terms of the amount and intensity of legal assistance provided. These also differ in terms of work performed on a case-by-case basis.
Other civil law matter categories include: accidents, injury & compensation, consumer issues, debt & credit, employment, government matters, housing, human rights & discrimination, immigration & refugees, mental health, neighbours, wills, estates & guardianship.
Based on Legal Aid NSW corporate data for July 2008 to October 2010 (includes LawAccess NSW data).
The number of advices for all Legal Aid NSW civil law matters dropped by one per cent from the 12 month pre-MHS period to the 12-month post-MHS period.
Sen`s slope estimate with Mann-Kendall statistic (test Z = –0.45, not significant at 0.05 level) (Sen`s slope estimator 2011).
The project ran from late 2008 to April 2010. There were some 150 applications for grants of legal aid under this project (personal communication 14 February 2011, Legal Aid NSW).
Sen`s slope estimate with Mann-Kendall statistic (test Z = 4.06, significant at 0.05 level) (Sen`s slope estimator 2011).
The category `ADR advice` appears in the statistics only for the latter part of 2010. This may indicate a change in the way matters were recorded rather than a change in the nature of the advice given following the introduction of the MHS.)
Sen`s slope estimate with Mann-Kendall statistic (test Z = 1.96, significant at 0.05 level) (Sen`s slope estimator 2011).
It should be noted that if a client was assisted first by LawAccess NSW and then a second time by Legal Aid NSW they will be counted twice in these figures.
Sen`s slope estimate with Mann-Kendall statistic (non-telephone (other) advices: Z = 5.35, significant at 0.05 level telephone advices: Z = –1.64, not significant at 0.05 level) (Sen`s slope estimator 2011).

16  For the full 13 months of the Legal Aid MHS evaluation, that agency`s corporate data show that 144 mortgage matters were dealt with by casework, 209 were provided with minor assistance and 810 were provided with legal advice.
17  No comment is made on any change in the quantum sum of legal services delivered by Legal Aid NSW and LawAccess NSW in relation to mortgage matters given that advice, minor assistance and casework differ in terms of the amount and intensity of legal assistance provided. These also differ in terms of work performed on a case-by-case basis.
18  Other civil law matter categories include: accidents, injury & compensation, consumer issues, debt & credit, employment, government matters, housing, human rights & discrimination, immigration & refugees, mental health, neighbours, wills, estates & guardianship.
19  Based on Legal Aid NSW corporate data for July 2008 to October 2010 (includes LawAccess NSW data).
20  The number of advices for all Legal Aid NSW civil law matters dropped by one per cent from the 12 month pre-MHS period to the 12-month post-MHS period.
21  Sen`s slope estimate with Mann-Kendall statistic (test Z = –0.45, not significant at 0.05 level) (Sen`s slope estimator 2011).
22  The project ran from late 2008 to April 2010. There were some 150 applications for grants of legal aid under this project (personal communication 14 February 2011, Legal Aid NSW).
23  Sen`s slope estimate with Mann-Kendall statistic (test Z = 4.06, significant at 0.05 level) (Sen`s slope estimator 2011).
24  The category `ADR advice` appears in the statistics only for the latter part of 2010. This may indicate a change in the way matters were recorded rather than a change in the nature of the advice given following the introduction of the MHS.)
25  Sen`s slope estimate with Mann-Kendall statistic (test Z = 1.96, significant at 0.05 level) (Sen`s slope estimator 2011).
26  It should be noted that if a client was assisted first by LawAccess NSW and then a second time by Legal Aid NSW they will be counted twice in these figures.
27  Sen`s slope estimate with Mann-Kendall statistic (non-telephone (other) advices: Z = 5.35, significant at 0.05 level telephone advices: Z = –1.64, not significant at 0.05 level) (Sen`s slope estimator 2011).


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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