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



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2. The evaluation


Key research questions

The aim of the MHS is to assist people to achieve the best possible legal outcome in their circumstances, including, where appropriate, to save people's home. A key strategy of the MHS is to target people at the earliest stages of mortgage hardship.

This evaluation of the MHS focused on the following:
  • how far mortgage matters had progressed before clients sought assistance from the MHS
  • the characteristics of people assisted under the program
  • the nature of clients' mortgage issues
  • the types of assistance provided by the MHS
  • any differences in assistance provided before and after the MHS commenced
  • the outcomes for MHS casework clients (including whether they kept or lost their home).
This study did not evaluate the strategies used to market the MHS or their effectiveness.

Methodology

This evaluation was based on three broad sets of information: Legal Aid NSW MHS program data and more general Legal Aid NSW corporate data (including LawAccess NSW statistics); CCLC MHS program data and more general CCLC corporate data; and a small survey of a selected sample of MHS clients assisted by Legal Aid NSW and CCLC. All data used in this study were de-identified records.

There are key differences in the ways in which CCLC and Legal Aid NSW define and record mortgage matters and in their operational activities. Consequently, Legal Aid NSW and CCLC data are reported separately and are detailed below.

Legal Aid NSW data

Program data

The Legal Aid MHS program data are based on information collected using an evaluation form specially designed to mirror the information routinely collected and reported by CCLC, so that MHS records from both organisations could be as similar as possible. The evaluation forms were completed by Legal Aid NSW solicitors for each MHS client assisted between 1 October 2009 and 31 October 2010 (a period of 13 months) regardless of whether the client had received advice, minor assistance or casework.

Among other things, the program data recorded:
  • the demographic characteristics of clients (age, gender, country of birth, Indigenous status, postcode, and employment status)
  • the source of referral for the mortgage matter
  • details of the mortgage matter (including reasons for hardship and lender type)
  • the point in the legal process to which the matter had progressed (called the 'stage of enforcement') at the time when the file was first opened
  • the type of assistance provided (advice, minor assistance or casework).
For minor assistance and casework clients, the program data also recorded:
  • the legal processes pursued (for example, defence and cross-claim)
  • the non-legal (non-court) processes pursued (for example, hardship application to the lender)
  • the outcome at the time the file was closed.
Data recorded was provided to the Law and Justice Foundation of NSW as an Excel file and included all mortgage matters dealt with between 1 October 2009 and 31 October 2010.12

Corporate data

To assess whether there had been changes in the number and type of mortgage-related matters dealt with by Legal Aid NSW since the MHS commenced, the Legal Aid NSW program data were considered in the broader context of Legal Aid NSW corporate data. The latter come from two different administrative systems: one for recording advice and minor assistance matters (for all legal matters, not just mortgage matters) and one for casework matters (again, for all legal matters, not just mortgage matters). From both systems, the Foundation obtained mortgage data for the 12 months prior to the commencement of the MHS (1 October 2008 to 30 September 2009) and for the first 12 months of the MHS (1 October 2009 to 30 September 2010).

The advice and minor assistance dataset contains records of every civil law advice and minor assistance provided by Legal Aid NSW in relation to mortgage matters for the period from 1 October 2008 to 30 September 2010. Legal Aid 'advice' and 'minor assistance' are defined in Table 1.

Table 1. Definitions of work types for Legal Aid NSW and CCLC
Legal Aid NSWCCLC Examples
AdviceLegal advice provided to clients by Legal Aid NSW solicitors. The client retains carriage of the matter.Advice provided to clients by CCLC solicitors or financial counsellors. Includes advice given over the telephone. The client retains carriage of the matter.Advice to a client regarding how to make a hardship application to the lender in order to vary their mortgage repayments.
Minor assistanceWork done following or during an advice session but without a formal legal aid application being submitted.Casework of less than five hours. Minor assistance differs from advice as CCLC may review documents, draft written advice, complete forms, applications or pleadings and/or may take carriage of the matter.Following advice to a client that they can make a hardship application to the lender to vary their mortgage repayments, the solicitor drafts the letter/application to the lender.
CaseworkLegal matters for which legal representation is provided through a grant of legal aid.Legal assistance in which CCLC takes carriage of the matter and in which the assistance in total involves more than five hours' work. CCLC may open multiple cases for one client (e.g. if they are in default of a mortgage and a credit card and action is required in relation to both debts).Drafting a defence and cross-claim for a mortgage repossession matter; applying for a stay of proceedings pending determination of a hardship application; or representing the client in Supreme Court proceedings.
Source: Definitions provided by Legal Aid NSW and CCLC.

As mentioned earlier, the Legal Aid NSW advice data include advices provided by LawAccess NSW, whose operational statistics form part of the Legal Aid NSW corporate dataset. It is appropriate to include LawAccess NSW data on mortgage matters in the evaluation, as the agency has been established as the 'first port of call' for legal information and advice in NSW and also makes many direct referrals of potential MHS clients to Legal Aid NSW and CCLC. Furthermore, LawAccess NSW is listed as a principal point of contact on promotional materials for the MHS.

The casework dataset contains records for every Legal Aid NSW civil law casework matter recorded between 1 October 2008 and 30 September 2010. Legal Aid NSW defines 'casework' as matters for which legal representation is provided through a grant of legal aid.

CCLC data

Advice data

MHS program information is routinely collected and reported by CCLC in the CLCs' administrative system, called the Community Legal Service Information System (CLSIS). One major difference between CCLC and Legal Aid NSW data is that minor assistance is recorded with the casework data in the CCLC program data, whereas it is recorded with the advice data in the Legal Aid NSW program data. (Table 1 details how advice, minor assistance and casework are defined by CCLC.)

The CCLC advice dataset examined is the record of mortgage hardship advices for the period of the MHS from 1 July 2009 to 31 October 2010 (a period of 16 months). Among other things, the CCLC advice data recorded:
  • the demographic characteristics of clients (age, gender, country of birth, Indigenous status, postcode, and source and level of income13)
  • the source of referral for the mortgage matter
  • details of the mortgage matter (including reasons for hardship and lender type)
  • the stage of enforcement at the time that the file was first opened.
CCLC used two different administrative systems for recording mortgage advices up to December 2009. After that, and for the remaining period under examination in this study, all relevant mortgage data were recorded on the one current system, CLSIS (see Box 1). This affects the total count of mortgage advice matters and clients in the program data for the first five months of the CCLC MHS (1 July 2009 to 30 November 2009), the total count of mortgage advice matters and, more importantly, the total count of mortgage hardship advice matters in the year prior to the MHS.

CCLC provided summarised monthly counts of mortgage-related advices for the 12 months prior to the MHS (1 July 2008 to 30 June 2009) and for the first 16 months of the MHS (1 July 2009 to 31 October 2010). However, the aforementioned changes to the ways in which mortgage advices were recorded mean that we cannot confidently use the pre-MHS mortgage advice data in our analyses or, for that matter, compare the number of mortgage hardship advices before and after the CCLC MHS commenced.

Box 1. Changes to recording of CCLC advice data during the evaluation period

Prior to December 2009, CCLC staff could record mortgage-related advices on one of two electronic administrative systems/databases: CCLC's Credit-Debt Hotline (CDH) system and the CLSIS, which is the computerised system currently used by the majority of CLCs across Australia to record operational activities. CLSIS eventually replaced the CDH system; however, before July 2009 (when the MHS commenced), most CCLC mortgage advices were recorded on CDH. During October and November 2009, CCLC solicitors began recording most mortgage matters on CLSIS and, from December 2009, all mortgage matters were recorded on CLSIS.

Prior to May 2009, mortgage hardship matters were recorded on CDH in a general category with all other pre-court hardship matters rather than as mortgage matters. Therefore, mortgage advices, including mortgage hardship advices, are under-counted in the CCLC statistics for the period before May 2009, that is, in the year prior to the MHS.

In order to obtain a total count of the mortgage matters handled by CCLC in the MHS evaluation period, the overall count of CCLC matters was formed from both CDH and CLSIS records. However, CLSIS provides more detailed CCLC program information than CDH.

Casework data

CCLC defines 'casework' as legal assistance in which the agency takes carriage of the matter and provides five or more hours of assistance. 'Minor assistance' is a subcategory of casework in which less than five hours of assistance is provided (see Table 1).

CCLC provided data for each casework (and minor assistance) file opened for a mortgage hardship matter during the period of the MHS evaluation (1 July 2009 to 31 October 2010).

The CCLC casework data recorded:
  • the demographic characteristics of clients (age, gender, country of birth, Indigenous status, postcode, and source and level of income14)
  • the source of referral for the mortgage matter
  • details of the mortgage matter (including reasons for hardship and lender type)
  • the stage of enforcement at the time that the file was first opened
  • the number of hours spent working on the case
  • the legal processes pursued (for example, defence and cross-claim)
  • the non-legal (non-court) processes pursued (for example, hardship application to the lender)
  • the outcome at the time the file was closed.
CCLC also provided counts of the total number of mortgage cases opened each month in the 12 months prior to the MHS (1 July 2008 to 30 June 2009) and the first 16 months of the MHS (1 July 2009 to 31 October 2010).

Differences between the Legal Aid NSW and CCLC datasets

CCLC and Legal Aid MHS data are reported separately due to:
  • differences in reporting periods
  • differences in the ways in which mortgage matters and work types are defined by each agency
  • differences in the data available from each agency
  • factors that affected the recording of mortgage matters and, in particular, system changes that occurred within CCLC.
Reporting periods

The CCLC MHS commenced in July 2009, four months before it commenced at Legal Aid NSW, in October 2009.

Definition of matters
Mortgage hardship matters dealt with by Legal Aid NSW are categorised under the matter type 'mortgage' in its administrative data. This matter type may also include mortgage matters that are not 'hardship'-related, such as advice on loan exit fees. By contrast, CCLC has a separate matter category called 'mortgage hardship', which includes only those matters that relate to a client defaulting on a home loan and the legal process that follows. This is a 'tighter' category than that used by Legal Aid NSW.

Definition of work types

Both CCLC and Legal Aid NSW provide advice, minor assistance and casework support to clients. For both organisations, advice is the least intensive form of legal assistance, minor assistance is more intensive and casework is the most intensive. However, as detailed in Table 1, advice, minor assistance and casework are each defined somewhat differently by CCLC and Legal Aid NSW. In addition, assistance provided by one agency may not directly equate (in terms of work) to similarly labelled work of the other agency, and the level of assistance provided also will differ from one minor assistance to the next, or from one casework matter to the next, irrespective of which agency assisted the client. There is even greater scope for variation in work provided for casework matters. CCLC MHS assistance also differs from that of Legal Aid NSW in that the work of in-house financial counsellors forms part of the CCLC advice data.15

Data available from each agency

The data provided by Legal Aid NSW and CCLC for this study were comprehensive and detailed; however, identical information was not available from each agency. For this reason, treatment of the data and the subsequent analyses varied depending upon the agency examined. While the presentation of material follows a similar order in both the Legal Aid NSW and the CCLC chapters, there are differences in the information reported.

Historical recording of mortgage matters

As detailed in Box 1, there were wholesale changes in the administrative systems of CCLC that impacted upon the recorded counts of mortgage matters and, in particular, the recorded counts of mortgage hardship matters. These differences also need to be kept in mind in attempting to compare the MHS data of the two agencies.

Follow-up interviews with MHS clients

Due to limited resources and time, only a small number of follow-up telephone interviews were conducted with MHS clients. A total of 38 MHS clients agreed to be interviewed: 15 assisted by Legal Aid NSW and 23 assisted by CCLC. The views of this small sample of clients assisted by the MHS, while interesting and perhaps informative, cannot necessarily be taken to be representative. People who could be contacted and agreed to be interviewed may differ in their views and experiences from people who did not. The method used for selecting the sample of MHS clients for interview is described in the chapter 'Client follow-up survey'.

The interview questions were designed by the Foundation with input from MHS staff. The interview tool was pilot-tested by solicitors at CCLC before it was finalised (Appendix A). Respondents were asked:
  • whether they still owned their home and, if so, about current mortgage repayments and any other debts or borrowings
  • about their current circumstances, including where they were living
  • whether they now felt 'more in control' or 'less in control' of their financial situation
  • their views of the assistance provided by the MHS, including if and how it may have assisted them
  • what they would now do if they faced further mortgage difficulties.
Each agency (Legal Aid NSW and CCLC) conducted the follow-up interviews with its own clients. However, the interviews were conducted by a solicitor other than the one who had provided the original assistance.

The interview questions were made available on Survey Monkey, a secure, password-enabled web-based survey tool. Interviewers were able to record responses directly onto Survey Monkey. Completed surveys were accessed and analysed by the Foundation.

For minor assistance and casework, matters that were still open as at 31 October 2010 were also provided.
`Source of income` and `level of income` are recorded in the CCLC program data, whereas Legal Aid NSW record `employment status`.
`Source of income` and `level of income` are recorded in the CCLC program data, whereas Legal Aid NSW record `employment status`.)
While CCLC financial counsellors also conducted extensive casework, only the main mortgage file conducted by the solicitor with the carriage of the matter was counted for the purposes of this evaluation. The work performed by the financial counsellors may, however, have contributed to the number of case hours recorded for particular clients.

12  For minor assistance and casework, matters that were still open as at 31 October 2010 were also provided.
13  `Source of income` and `level of income` are recorded in the CCLC program data, whereas Legal Aid NSW record `employment status`.
14  `Source of income` and `level of income` are recorded in the CCLC program data, whereas Legal Aid NSW record `employment status`.)
15  While CCLC financial counsellors also conducted extensive casework, only the main mortgage file conducted by the solicitor with the carriage of the matter was counted for the purposes of this evaluation. The work performed by the financial counsellors may, however, have contributed to the number of case hours recorded for particular clients.


CLOSE
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