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



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4. Mortgage Hardship Service: Consumer Credit Legal Centre (NSW)


This chapter reports on the MHS as operated by CCLC during the period of evaluation. In particular, it examines:
  • the number of mortgage-related advices 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 CCLC 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 CCLC program data for the MHS as well as more general CCLC corporate data. These datasets are described in detail in the 'Methodology' section of 'The evaluation' chapter.

CCLC is staffed by solicitors and financial counsellors. An MHS client may be assisted by a solicitor, a financial counsellor or both, although the matter is still counted and discussed in this chapter as an occasion of legal assistance. In broad terms, 62 per cent of CCLC MHS advices during the evaluation period were provided by a solicitor and 38 per cent by a financial counsellor. Casework undertaken by CCLC regularly involves work by both a solicitor and a financial counsellor.

Mortgage matters: first 16 months of the MHS

The MHS commenced operating at CCLC on 1 July 2009. CCLC recorded 2783 mortgage matters dealt with during the first 16 months of the MHS (Table 19), which included:
  • 162 mortgage matters dealt with by casework (an average of around 10 per month)
  • 2157 mortgage matters provided with advice (an average of around 164 per month)
  • an additional 464 advices relating to other mortgage-related matters (an average of around 29 per month).

Table 19. CCLC: type of legal assistance provided for mortgage matters in the first 16 months of the MHS (1 July 2009 to 31 October 2010)
CCLC MHS mortgage matters
July 2009 to Oct 2010
(16 months)
Type of assistance
N
Average per month
Caseworka
162
10.1
Advice
2621
163.8
Mortgage hardship matters
2157
134.8
Other mortgage mattersb
464
29.0
Total assistance
2783
173.9
Other casework for MHS clientsc
75
4.7
a 'Casework' includes minor assistance.

b Advice: 'other mortgage matters' includes a range of other mortgage matters, such as complaints about mortgage brokers; unsuitable loans and settlement issues; advice post-bankruptcy (e.g. negotiations with trustees over sale of home, purchase back of equity at end of bankruptcy); advice regarding a loan post-family/relationship breakdown; rights when a lender sold the loan; negotiating with lender/mortgage insurer about the shortfall post-sale; a borrower's rights in relation to a mortgagee sale; and advice regarding fees and charges.

c 'Other casework for MHS clients' includes casework files opened for MHS clients for legal matters in addition to their mortgage matters, such as those in which the client was not able to pay council rates, credit card, telephone and energy bills, or traffic fines.

Source: CCLC data (CLSIS and CDH databases, July 2009 to October 2010).

Number of mortgage matters prior to and since the MHS began

As discussed in detail in the 'Methodology' section in 'The evaluation' chapter, it is not possible to provide accurate data on CCLC mortgage hardship and other mortgage advices before December 2009 or to make comparisons between pre- and post-MHS mortgage hardship advices. On the other hand, CCLC records were able to be used to make valid comparisons of casework for mortgage hardship and other mortgage matters before and after the MHS commenced.41

Casework matters

CCLC defines 'casework' as legal assistance in which the solicitor takes carriage of the legal matter (in contrast to 'advice', in which the client retains carriage of the matter). Casework is the most intensive form of assistance provided by CCLC and regularly involves more than 20 hours of assistance.42 'Minor assistance' is casework which involves less than five hours of assistance by CCLC and is included in the casework data. In some cases, minor assistance may not involve the solicitor taking carriage of the matter (for instance, a solicitor drafting and lodging an ADR application but the client pursuing the matter from thereon). Casework (including minor assistance) may also involve additional work by a financial counsellor.

During the first 16 months of the CCLC MHS, the 162 mortgage casework files opened included both mortgage hardship matters and other mortgage matters. Figure 8 shows that the monthly number of new mortgage casework matters varied greatly across the 16-month period — from a low of three in January 2010 to a high of 14 recorded in four separate months (September 2009 and February, May and June 2010).

Figure 8. CCLC: caseworka for mortgage matters in the first 16 months of the MHS



a Casework includes minor assistance in mortgage hardship cases and other mortgage cases.

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

Source: CCLC data (CLSIS database only, July 2009 to October 2010).

In addition to their mortgage matters, clients often had other debt-related legal issues. When necessary, the CCLC MHS opened one or more separate casework files to deal with these other matters. The non-mortgage casework files opened for clients involved matters such as the inability to pay credit cards, other non-mortgage loans and council rates. CCLC opened 75 cases for MHS clients for issues other than, and in addition to, their mortgage hardship matter.

To provide an indication of possible changes in the amount of casework undertaken by CCLC after the MHS commenced, we have provided the pre- and post-MHS casework data based on the 12-month periods before and after CCLC started operating the program. Table 20 shows that there were 128 mortgage casework files opened by CCLC during the first 12 months of the MHS. This figure is 64 per cent higher than the 78 mortgage casework files opened in the 12 months prior to the commencement of the MHS. The average monthly number of mortgage casework files opened increased from 6.5 to 10.7 after the MHS commenced.

Table 20. CCLC: mortgage casework files opened in the 12-month periods before and
after the commencement of the MHS
CCLC mortgage matters
Pre-MHS
July 2008 to June 2009
(12 months)
Post-MHS
July 2009 to June 2010
(12 months)
Difference
Type of assistance
N
Average per month
N
Average per month
Caseworka
78
6.5
128
10.7
+64%
a 'Casework' includes minor assistance in mortgage hardship cases and other mortgage cases.

Source: CCLC data (CLSIS database only, July 2008 to June 2010).

Figure 9 shows the monthly number of mortgage casework files opened by CCLC during the 12-month period before the commencement of the MHS and during the first 12 months of the MHS. It indicates that prior to the MHS there were between three and eight new casework matters per month and (if anything) a general decline in the monthly number of files opened. However, after the MHS commenced, there was more variability in the monthly number of new casework matters.

Figure 9. CCLC: caseworka for mortgage matters in the 12-month periods before and after the commencement of the MHS



a Casework includes minor assistance in mortgage hardship and other mortgage cases.

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

Source: CCLC data (CLSIS database only, July 2008 to June 2010).

Across the periods before and during the operation of the MHS, there was an upward trend in mortgage casework matters that is statistically significant.43

Advice matters
CCLC defines 'advice' as legal assistance provided to a client by one of its solicitors or financial counsellors but in which the client retains carriage of the matter. As will be discussed in more detail later in this chapter, CCLC may advise a client on a number of occasions as their mortgage hardship matter progresses.

Ideally, we would present data to indicate whether there was any increase in the number of mortgage matters advices provided by CCLC after the introduction of the MHS as we did in the previous section on casework matters, by giving advices figures for the 12-month periods before and after the commencement. Unfortunately, as we have identified, during the period of this evaluation some important changes were made to the ways in which CCLC defined, categorised and recorded mortgage advices (see the 'Methodology' section in 'The evaluation' chapter). These changes had a major impact on the number of mortgage advices recorded between July 2008 and December 2009, which makes comparing the number of advices before and after the commencement of the MHS both difficult and problematic. This particularly applies to obtaining comparable counts of mortgage hardship advices. A further complication is that some of the changes occurred five months into the operation of the MHS. A graph showing the recorded number of mortgage advices for the whole pre- and post-MHS period (July 2008 to October 2010) is presented in Appendix B. It also flags the various points of administrative change with additional explanatory notes.

Therefore, we cannot with confidence present an accurate picture of the number of mortgage and mortgage hardship advices prior to December 2009, which includes the first five months of CCLC's MHS operations. Consequently, the following analyses examine only those mortgage advices for the 11 months from December 2009 to October 2010.

A total of 2029 mortgage matters advices were provided by CCLC in this period, including 1606 mortgage hardship advices and 423 advices for other mortgage matters. Figure 10 shows a small but not statistically significant upward trend in the monthly number of mortgage advices: advices increased from around 150 in December 2009 to around 200 by the end of the period examined.44 The monthly number of CCLC mortgage advices was at its highest in May and June 2010, at 205 advices.

Figure 10. CCLC: advices for mortgage matters in the 11-month period (December 2009 to October 2010) when advices were recorded consistently



Notes: Due to earlier systems and recording practices, mortgage advice data were not consistently or reliably recorded on CLSIS prior to this period of operation of the MHS.
The trend line is the Sen's estimate of slope. The trend is not statistically significant.

Source: CCLC data (CLSIS database, December 2009 to October 2010).

There was an average of 184 mortgage advices per month across the 11 months of the MHS when advice data were recorded consistently. The average number of mortgage hardship advices per month during this period was 146. In addition, CCLC provided an average of 38 advices each month for other mortgage-related matters.

Figure 11. CCLC: advices for mortgage hardship and other mortgage matters
(December 2009 to October 2010)




Notes: The graph shows numbers for months when advices were recorded consistently. Due to earlier systems and recording practices, mortgage advice data were not consistently or reliably recorded on CLSIS prior to this period of operation of the MHS.
The solid trend line is the Sen's estimate of slope for mortgage hardship advices; the dashed trend line is the Sen's estimate of slope for other mortgage advices. Neither trend is statistically significant.

Source: CCLC data (CLSIS and CDH databases, December 2009 to October 2010).


Figure 11 shows the trend in mortgage hardship advices separated from other mortgage advices. The number of mortgage hardship advices peaked at 173 in May 2010. In the last month of the period examined, CCLC provided 167 mortgage hardship advices, up from 117 in the first month. While there appears to be a general upward trend in the monthly number of mortgage hardship advices, the increase was found not to be statistically significant.45 The provision of advices in relation to other mortgage-related issues appears to have remained reasonably steady across this period.46

Clients

This section examines specifically those clients assisted by CCLC through advice and casework who had mortgage hardship problems. While the first 16 months of the MHS are covered, only information recorded on the current administrative system (CLSIS) and thus considered reliable was used for these analyses. 47

Each client has been counted only once, regardless of whether they received advice or casework assistance or a combination of both, or whether they received assistance on more than one occasion. This avoids over-counting, as would be the case if all instances of assistance provided by CCLC were examined.48 In addition, demographic characteristics, including the age of the individuals assisted, are examined at each client's first occasion of assistance.

Exactly 1000 individual MHS clients with a mortgage hardship matter received assistance from CCLC between 1 July 2009 and 31 October 2010. Table 21 shows that 891 (89%) clients received one or more occasions of advice only, and 109 (11%) received casework, of whom 84 (three-quarters of all casework clients) received a combination of advice (at least one advice) and casework49 and 25 (one-quarter of casework clients) received only casework (or minor assistance).

Table 21. CCLC MHS mortgage hardship clients:
type of assistance provided in the first 16 months of the MHS
(1 July 2009 to 31 October 2010)
CCLC MHS mortgage hardship clients
Type of assistance
N
%
Advice only
891
89.1
Caseworka
109
10.9
Casework and advice
84
-
Casework only
25
-
Total clients
1000
100.0
a 'Casework' includes minor assistance in mortgage hardship cases only.

Source: CCLC data (CLSIS database only, July 2009 to October 2010).

Advice clients

CCLC solicitors and financial counsellors provided advice to 975 mortgage hardship clients50 (Table 22), including the 84 individuals who received a combination of advice and casework. These 975 clients received 1817 separate advices, 51 an average of 1.9 separate advices each.

Table 22. CCLC MHS mortgage hardship advice clients: initial and subsequent advice (n=975)
CCLC MHS mortgage hardship advice clients
N
Number of clients
975
Number of advices
1817
Initial advice
975
Subsequent advice
842
Source: CCLC data (CLSIS database only, July 2009 to October 2010).

As can be seen in Table 23, over half (52%) of the advice clients received a single session of advice. However, almost one-third (31%) received two separate advices, while eight per cent received three advices and nine per cent received four or more. One client received 13 separate advices, the highest number of advices for an individual in the period examined.

Table 23. CCLC MHS mortgage hardship advice clients: count of advices per individual client (n=975)
CCLC MHS mortgage hardship advice clients
Number of advices per individual client
N
%
Cum. %
1
506
51.9
51.9
2
301
30.9
82.8
3
81
8.3
91.1
4
36
3.7
94.8
5
21
2.2
97.0
6
16
1.6
98.6
7
4
0.4
99.0
8
4
0.4
99.4
9
3
0.3
99.7
10
1
0.1
99.8
11
1
0.1
99.9
12
0
0.0
99.9
13
1
0.1
100.0
Total clients
975
100.0
 
Note: This table includes the 891 CCLC MHS clients who received only advice and 84 who received a combination of advice and casework (including minor assistance).

Source: CCLC data (CLSIS database only, July 2009 to October 2010).

Casework clients

As we have seen, for the period of the MHS examined in this study, there were 109 individual clients recorded on CLSIS who were assisted by way of casework (or minor assistance) specifically for mortgage hardship matters. This number includes the 84 casework clients who also received advice. The majority of the 109 casework clients had one mortgage hardship matter, although six had more than one mortgage hardship casework file opened (for example, when there were two mortgages on the same property).

Hours of assistance provided

CCLC solicitors recorded the total number of hours of assistance provided to MHS casework clients at the time each file was closed. This is another measure of the volume of work undertaken by CCLC staff, given that mortgage hardship casework matters may vary considerably in the resources required to deal with them. The hours of assistance were not recorded for 15 casework clients, as their files were still open when the evaluation period ended.

Table 24 shows that over one-third (37%) of casework clients were provided with less than five hours of casework (which is defined by CCLC as minor assistance). Twenty-one per cent were provided with between six and 20 hours, and around 41 per cent were recorded as receiving more than 20 hours of casework.52

Table 24. CCLC MHS mortgage hardship casework clients: hours of assistance
CCLC MHS mortgage hardship caseworka clients
Hours of assistanceb
N
%
Valid %
0 to 5 hours ('minor assistance')
35
32.1
37.2
6 to 20 hours
20
18.3
21.3
Over 20 hours
39
35.8
41.5
File still open: total hours not as yet recorded
15
13.8
-
Total clients
109
100.0
100.0
a Casework includes minor assistance. Clients who received a combination of advice and casework (including minor assistance) are also included in this table.

b These are default categories available to CCLC solicitors for recording hours of assistance. Other categories include 'over 20 hours of casework', 'over 100 hours of casework' and 'between 51 and 100 hours of casework'. Exact numbers of hours are not usually recorded.

Source: CCLC data (CLSIS database only, July 2009 to October 2010).

Figure 12. CCLC: caseworka for mortgage hardship matters in the first 16 months of the MHS



a Casework includes minor assistance in mortgage hardship cases only.

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

Source: CCLC data (CLSIS database, July 2009 to October 2010).

Mortgage hardship casework trends

Figure 12 shows that the monthly number of mortgage hardship cases opened between July 2009 and October 2010 fluctuated widely, from a low of one to a high of 12 cases in a month. The average monthly number of casework files opened across the 16-month period was 6.4.
The last six months of the period examined seemed to show that mortgage hardship cases had stabilised at around five cases per month. A trends test, however, indicated no significant upward or downward change across the 16-month period.53

Referrals to the MHS

Over one-third (36%) of all CCLC MHS client records did not contain information on the source of referral of mortgage clients to CCLC. For clients whose referral source was indicated (Table 25), the creditor or lender was the main source of referral (24%), followed by LawAccess NSW (18%) and the court or ADR (10%). Just under nine per cent of clients self-referred or were referred by a family member or friend. Seven per cent were referred by an independent financial counsellor. Five per cent indicated that they contacted CCLC after seeing publicity on the MHS, while Legal Aid NSW offices and other CLCs together were responsible for referring seven per cent of MHS clients to CCLC.

Table 25. CCLC MHS mortgage hardship clients: source of referral
CCLC MHS mortgage hardship clients
Source of referralN%
Creditor (lender)15223.8
LawAccess NSW11217.6
Court/ADRa619.6
Self/family/friend548.5
Financial counsellor477.4
Debt relief agenciesb335.2
Internet/phonebook335.2
Program/service publicity294.5
Legal Aid284.4
Community group243.8
CLC other162.5
Government other213.3
Otherc284.4
Total clients638100.0
a 'Court/ADR' includes 32 clients referred by FOS and 6 clients referred by COSL.

b 'Debt relief agencies' are commercial agencies that offer either Part IX agreements under the Bankruptcy Act 1996 (Cwlth), or debt consolidation.

c 'Other' includes clients referred from the following sources: Insolvency Trustee Service (5), Mortgage Assistance Scheme (2), the Sheriff's Office (2) and private lawyers (2).

Note: Source of referral was not recorded for 362 clients (36.2%).

Source: CCLC data (CLSIS database only, July 2009 to October 2010).

Of the 1000 CCLC MHS clients who received assistance during the evaluation period, only 26 first came to the attention of CCLC through the Supreme Court duty roster: eight advice only clients and 18 casework clients. Otherwise, the vast majority (97%) of clients first contacted CCLC by telephoning its office.

Client characteristics

This section provides a demographic profile of MHS clients assisted by CCLC. We report any differences in the characteristics of advice clients compared only to those assisted by casework when the data allowed such a breakdown and when such differences were found to exist.54

Gender

Men and women were equally represented (51% women and 49% men). The gender breakdown was similar for both casework and advice only clients.

Age

CCLC recorded a year of birth for 76 per cent of advice clients and 79 per cent of casework clients. The age data (Figure 13 and Table 26) show that no client was younger than 20 years of age and that 34 per cent of clients were in their 40s at time of first assistance. People below 50 years of age made up 58 per cent of clients. The 17 per cent of clients who were 60 years or older represented a higher than expected figure given the proportion of people in this age group in the Australian population who still have a mortgage on their property (Kryger 2009, Table 3;55 Australian Bureau of Statistics 2001).

Figure 13. CCLC mortgage hardship clients:a age profile (July 2009 to October 2010)



a Mortgage hardship clients includes individual clients for both mortgage hardship casework and advices. Casework includes minor assistance.

Note: Year of birth information was not recorded or disclosed for 23 MHS casework clients (21%) and 239 MHS advice clients (24%).

Source: CCLC data (CLSIS database, July 2009 to October 2010).

Table 26. CCLC MHS mortgage hardship clients: age profile
(July 2009 to October 2010)
CCLC MHS mortgage hardship clients
Age (grouped)
N
%
Cum. %
20 to 29
20
2.7
2.7
30 to 39
155
21.0
23.7
40 to 49
252
34.1
57.8
50 to 59
182
24.7
82.5
60 to 69
107
14.5
97.0
70 to 79
17
2.3
99.3
80 and over
5
0.7
100.0
Total clients
738
100.0
Note: Year of birth was not recorded or disclosed for 23 MHS casework clients (21%) and 239 MHS advice clients (24%).

Source: CCLC data (CLSIS database only, July 2009 to October 2010).

Country of birth (and main language spoken at home)

Country of birth was not recorded for almost 82 per cent of CCLC MHS advice and casework clients. Clients whose country of birth information was recorded were more likely to have been born in Australia (50%); seven per cent were born in the English-speaking countries of New Zealand, the UK and the USA, and 43 per cent were born in countries in which English is not the main language spoken.
Overall, almost 95 per cent of all clients whose country of birth information was recorded (including 95% of advice only clients) spoke English at home. Of the remainder, Arabic and Chinese dialects (for example, Cantonese and Mandarin) were relatively more common than other languages. Nine community languages were represented among the 12 casework clients who did not speak English at home, with three casework clients speaking Arabic at home.

Indigenous status

Aboriginal and Torres Strait Islander people made up 1.4 per cent of all CCLC MHS advice and casework clients. Less than one per cent of advice only clients identified themselves as Aboriginal Australian or Torres Strait Islander; on the other hand, over eight per cent of casework clients identified themselves as such — four times the expected number based on NSW population statistics from the 2006 Census. Indigenous status was not disclosed or was missing for a very small proportion (1.5%) of CCLC MHS clients.

Income source and income level

To capture client income and employment information, CCLC recorded 'income source' (earned, government benefits or other) and 'level of income' (high, medium, low or no income). This differs from the way in which Legal Aid NSW recorded similar information.56

The income source was not recorded for 24 per cent of CCLC MHS clients. Table 27 shows that 60 per cent of clients whose income source was recorded indicated that their income was earned (from salaried employment or self-employment), 36 per cent were receiving a government benefit and three per cent received income from rent, bank interest, share dividends, superannuation and/or workers' compensation payments. Proportionally fewer casework clients than advice clients were earning an income (54% compared to 61%) and proportionally more casework clients than advice clients were on government benefits (44% compared to 35%). However, it should be noted that these observed differences were found not to be statistically significant.57

Table 27. CCLC MHS mortgage hardship clients: source of income
CCLC MHS mortgage hardship clientsAdvice only clientsCasework clientsaAll clients
Source of income
N
%
N
%
N
%
Earned (includes salary and self-employed)
407
61.2
51
53.7
458
60.3
Government benefit
235
35.3
42
44.2
277
36.4
Other (includes rent, interest, dividends, superannuation and workers' compensation)
23
3.5
2
2.1
25
3.3
Total clients
665
100.0
95
100.0
760
100.0
a Casework includes minor assistance. Clients who received a combination of advice and casework (including minor assistance) are categorised in this table as casework clients.

Note: Income source was not recorded for 226 advice clients (25%) and 14 casework clients (13%).

Source: CCLC data (CLSIS database only, July 2009 to October 2010).

Income level was recorded for around three-quarters of all advice and casework clients (Table 28).
The results show that almost six per cent of clients whose income level was recorded had no substantive income, 52 per cent had a low income (defined as less than $26 000 per annum), 38 per cent had a medium income (between $26 000 and $52 000) and five per cent had a high income (more than $52 000).

Table 28. CCLC MHS mortgage hardship clients: level of income
CCLC MHS mortgage hardship clients
Advice only clients
Casework clientsa
All clients
Level of income
N
%
N
%
N
%
No income
41
6.3
1
1.1
42
5.7
Low (less than $26 000 p.a.)
330
50.3
55
62.1
385
51.8
Medium ($26 000 to $52 000 p.a.)
251
38.3
30
34.5
281
37.8
High (more than $52 000 p.a.)
34
5.2
2
2.3
36
4.8
Total clients
656
100.0
88
100.0
744
100.0
a Casework includes minor assistance. Clients who received a combination of advice and casework (including minor assistance) are categorised in this table as casework clients.

Note: Income level was not recorded for 235 advice clients (26%) and 21 casework clients (19%).

Source: CCLC data (CLSIS database only, July 2009 to October 2010).

There was no statistically significant difference between advice only clients and casework clients in terms of the proportion within each income scale category,58although a low level of income was recorded for 50 per cent of advice only clients compared to 62 per cent of casework clients.

Geographic distribution of clients

For reasons detailed in the 'Legal Aid' chapter, the two Legal Aid MHS solicitors were based at the Gosford and Parramatta offices, whereas CCLC is a statewide service that operates largely by way of telephone assistance from its Sydney office.59

CCLC MHS clients came from 116 different LGAs in NSW, 60 which represent around three-quarters of all LGAs in the state (Table 29). The largest number of clients lived in Blacktown (6%), with Wyong and Gosford each having four per cent and Campbelltown, Penrith and Liverpool with over three per cent each.

Table 29. CCLC MHS mortgage hardship clients: place of residence, 'top 25' LGAs
CCLC MHS mortgage hardship clients
Place of residence (LGA)
Rank
N
%
Cum. %
Blacktown
1
59
5.9
5.9
Gosford
2
41
4.1
10.0
Wyong
3
41
4.1
14.1
Campbelltown
4
35
3.5
17.6
Penrith
5
32
3.2
20.8
Liverpool
6
31
3.1
23.9
Bankstown
eq. 7
26
2.6
26.5
Tweed
eq. 7
26
2.6
29.1
Shoalhaven
9
23
2.3
31.4
Canterbury
eq. 10
22
2.2
33.6
Fairfield
eq. 10
22
2.2
35.8
Baulkham Hills
eq. 12
21
2.1
37.9
Wollongong
eq. 12
21
2.1
40.0
Sutherland Shire
14
20
2.0
42.0
Holroyd
eq. 15
19
1.9
43.9
Lake Macquarie
eq. 15
19
1.9
45.8
Hawkesbury
eq. 17
18
1.8
47.6
Rockdale
eq. 17
18
1.8
49.4
Camden
eq. 19
17
1.7
51.1
Sydney
eq. 19
17
1.7
52.8
Blue Mountains
eq. 21
16
1.6
54.4
Newcastle
eq. 21
16
1.6
56.0
Parramatta
23
16
1.6
57.6
Auburn
eq. 24
15
1.5
59.1
Hornsby
eq. 24
15
1.5
60.6
91 other LGAsa
21 to 116
394
39.4
100.0
Total clients
1000
100.0
a Each of these 91 other LGAs was the place of residence of between 1 and 14 MHS clients.

Note: Nine of the top 10 LGAs in the Legal Aid NSW MHS list appear in the above CCLC MHS list. Greater Taree was ranked 7 in the Legal Aid NSW top 10 list and 41 in the CCLC ranks.

Source: CCLC data (CLSIS database only, July 2009 to October 2010).

While CCLC provided assistance to mortgage hardship clients across NSW, it is interesting to note that:
  • Blacktown, Gosford and Wyong were the top three LGAs for both CCLC and Legal Aid MHS clients (although not ranked in the same order)
  • seven of the top 10 LGAs for Legal Aid MHS clients also appeared in the top 10 list for CCLC
  • nine of the top 10 LGAs for Legal Aid MHS clients also appeared in the top 25 for CCLC (the only exception being Greater Taree, which ranked at number 41 for CCLC).
Over 36 per cent of CCLC MHS clients lived in country areas (that is, outside the cities of Sydney, Newcastle and Wollongong). This is slightly higher than the 32 per cent of the general population that live in country NSW, according to the most recent Census of 2006.

Various reasons, as outlined below, may be posited for these observed patterns.
  • They provide further evidence of areas in NSW that really are 'worst performing' in terms of residents experiencing mortgage stress. High levels of mortgage defaults in these areas mean that there are simply more clients in these areas accessing the available mortgage hardship services.
  • The standing of these areas as mortgage stress hotspots vindicates the placement of the Legal Aid MHS in its Gosford office (to service the Gosford-Wyong area) and its Parramatta office (to service clients in Greater Western Sydney).
  • As other research has shown, the placement of a service in a new location can have a 'honey pot' effect, as the service becomes more accessible to people with legal problems living in close proximity to that service. This often leads to higher levels of 'expressed' legal need.61
  • Locating the Legal Aid MHS solicitors in Gosford and Parramatta may have resulted in referrals being made by Legal Aid NSW to CCLC. Local independent financial counsellors may have also made referrals to CCLC from these areas.
  • Whatever the reasons, the demand for MHS services in the Gosford-Wyong and Greater Western areas of Sydney consumed a large amount of the available legal services of both CCLC and Legal Aid NSW.
Clients with mortgage stress from the Gosford, Wyong, Blacktown and other areas may have sought legal assistance from both CCLC and Legal Aid NSW, and will therefore appear in the advice statistics of both agencies. For instance, a client may have telephoned CCLC and then been referred to the Legal Aid MHS in these localities for face-to-face advice. Alternatively, a client may have sought advice from both the CCLC and the Legal Aid MHS in their attempt to resolve their mortgage hardship issue. There is no easy way of establishing how many MHS clients appear in the advice data of both CCLC and Legal Aid NSW, although, if an overlap did occur, then we might expect that their geographic profiles would be different from those of CCLC casework clients. This is because, once CCLC is providing casework, there is less need to refer a client to Legal Aid NSW for additional assistance. Table 30 shows this to be the case, at least in part. There is far more 'spread' in terms of the place of residence of CCLC MHS clients who received assistance by way of casework. Blacktown still appears at number one on the list, but Gosford is displaced from the top three, while Wyong becomes equal third with two other LGAs. Shoalhaven, Hawkesbury, Shellharbour and Sutherland become more prominent. This broader regional distribution of CCLC MHS casework clients (in particular) is evidence of its operational status as a statewide service and of its role as a statewide arm of the MHS.

Table 30. CCLC MHS mortgage hardship casework clients: place of residence, 'top 10' LGAs
CCLC MHS mortgage hardship casework clients
Place of residence (LGA)
Rank
N
%
Cum. %
Blacktown
1
8
7.3
7.3
Campbelltown
2
7
6.4
13.8
Penrith
eq. 3
4
3.7
17.4
Shoalhaven
eq. 3
4
3.7
21.1
Wyong
eq. 3
4
3.7
24.8
Bankstown
eq. 6
3
2.8
27.5
Gosford
eq. 6
3
2.8
30.3
Hawkesbury
eq. 6
3
2.8
33.0
Liverpool
eq. 6
3
2.8
35.8
Shellharbour
eq. 6
3
2.8
38.5
Sutherland Shire
eq. 6
3
2.8
41.3
45 other LGAsa
12 to 56
64
58.7
100.0
Total clients
109
100.0
a Each of these 45 other LGAs was the place of residence for 1 or 2 MHS clients.

Source: CCLC data (CLSIS database only, July 2009 to October 2010).

Type of lender

In addition to information about the clients themselves, CCLC staff recorded details of their mortgage matter, including the lender type. Up to three lenders or 'other parties' (for example, a mortgage broker) were recorded for each client,62 and the type of lender data are based on this information.

Table 31. CCLC MHS mortgage hardship clients: type of lender
CCLC MHS mortgage hardship clients
Advice only
Casework
All clients
Type of lender
N
(%)
N
(%)
N
(%)
Banka
489
(64.7)
49
(45.4)
538
(62.3)
Non-bankb
267
(35.3)
59
(54.6)
326
(37.7)
Total clients
756
(100.0)
8
(100.0)
864
(100.0)
a 'Bank' includes a small number of clients (17) for whom the lender was a credit union or building society.
All are ADIs.

b 'Non-bank' includes the category 'mortgage originator'. All are non-ADIs.

Note: Type of lender was based on the variable 'party role'. Party role was missing for 11 advice only clients (1.2%). Records for 124 advice only clients (14.1%) and 1 casework client (0.9%) were not included in this table because the party role did not correspond to the lender type categories of 'bank', 'non-bank' or 'mortgage originator'. The party role values for such records include 'community/welfare agency', 'CLC (other)', 'company', etc. A second related field, the party type description (i.e. party name) was checked for all such records and, where appropriate, the party role was recoded to one of the three lender types (e.g. 'Company' — 'Perpetual Trustee' recoded as 'non-bank lender'). For 360 advice only clients where party role and party name identified an 'individual' (i.e. the mortgagee), their primary advice records were matched back to (any) secondary advice records in order to obtain additional party role information that could assist in identifying the type of lender.

Source: CCLC data (CLSIS database only, July 2009 to October 2010) based on 'party role' and 'party name'.

Over 62 per cent of CCLC mortgage hardship clients had a loan with a bank lender (that is, an ADI). 63 The remaining 38 per cent reported that their mortgage was with a non-bank lender (for example, GE Money or Perpetual Trustees). When advice only and casework clients were examined separately, significant differences in the type of lender for these two groups became apparent (Table 31). While almost two-thirds (65%) of advice only clients were recorded as having a bank as their lender, less than half (45%) of all casework clients had their loan with a bank. Fifty-five per cent of casework clients had their mortgage with a non-bank lender, compared to 35 per cent of advice only clients. These differences are statistically significant.64

Property value, loan size and amount in arrears

Information on the value of clients' mortgaged property, their loan balance and the amount by which they were in arrears was available only for a minority of CCLC MHS clients.

Advice only clients

The figures here are provided with reservations, because the information was available for only
16 per cent of advice only clients. The average value of advice only clients' mortgaged property was about $518 000 (median property value — the 'mid' value, with half of all values above it and half of all values below it — was $425 000). The average loan balance was around $404 000 (median: $330 000), and the average amount in arrears was $18 500 (median: $10 000).

Casework clients

Information was recorded for no more than 58 per cent of casework clients and again should be treated with caution. The average value of the mortgaged property (recorded for 44 of the 109 casework clients) was about $450 000 (median: $402 500), the average loan balance (recorded for 63 clients) was around $305 000 (median: $250 000) and the average amount by which casework clients were in arrears (recorded for 41 clients) was almost $14 000 (median: $11 000).

In summary, the average property value and average amount in arrears were similar for both advice only and casework clients. However, advice only clients, generally, had higher outstanding loan balances than casework clients (that is, a median of $330 000 compared to $250 000).

Main reason for hardship

CCLC reported the 'main reason for hardship' of each MHS client: 65 the basis of a mortgage hardship application to a lender, court or ADR process for special consideration. For all clients for whom a main reason for hardship was recorded, just under two-thirds (62%) reported it to be an employment- or income-related issue (Table 32). Illness or injury was the second most common reason (14%), business failure was reported by eight per cent, and a similar proportion listed family breakdown.

In separating advice only clients from casework clients, there appears to be a number of differences between the two groups.66 Just over half (53%) of the casework clients recorded an employment- or income-related issue as the main hardship reason, compared to almost two-thirds (64%) of advice only clients; in particular, reduced employment, reduced income from self-employment (for example, sub-contractors not getting as much work) and business failure were relatively more common for advice only clients than for casework clients. Double the proportion of advice only clients than of casework clients listed family breakdown as their main reason, while illness or injury was noted for 16 per cent of casework clients compared to 13 per cent of advice only clients. Finally, 17 per cent of casework clients listed 'other' as their main hardship reason, compared to 6.5 per cent of advice only clients. ('Other' reasons include being sent to prison and the death or imprisonment of a spouse or partner.) Of these identified differences, the higher proportion of casework clients giving 'other' hardship reasons was the main contributor to the statistical difference between the advice only and the casework client groups in terms of recorded main hardship reasons.

Table 32. CCLC MHS mortgage hardship clients: main reason for mortgage hardship
CCLC MHS mortgage hardship clientsAdvice only clientsCasework clientsAll clients
Main reason for mortgage hardship
N
%
N
%
N
%
Employment/income-related
362
63.8
56
52.8
418
62.1
Unemployment
147
25.9
34
32.1
181
26.9
Reduced employment
94
16.6
10
9.4
104
15.5
Reduced income from self-employment
70
12.3
9
8.5
79
11.7
Business failure
51
9.0
3
2.8
54
8.0
Family breakdown
53
9.3
6
5.7
59
8.8
Illness or injury (accident)
76
13.4
17
16.0
93
13.8
Pregnancy, child care or carer role
39
6.9
9
8.5
48
7.1
Other
37
6.5
18
17.0
55
8.2
Total clients
567
100.0
106
100.0
673
100.0
Note: CCLC recorded only the main reason for hardship. Main reason for hardship was not recorded or disclosed for 324 advice only clients (36.4%) and 3 casework clients (2.8%).

Source: CCLC data (CLSIS database only, July 2009 to October 2010).

For the whole pre- and post-MHS period examined (1 July 2008 to October 2010), CCLC casework matters were recorded on CLSIS in the same systematic and standardised way. By contrast, the recording of mortgage hardship and other mortgage advice matters was subject to a number of system changes. See the `Methodology` section in `The evaluation` chapter.
As will be discussed later in this chapter, 41 per cent of the mortgage hardship cases closed by CCLC in the first 16 months of the MHS involved more than 20 hours of assistance.
Sen`s slope estimate with Mann-Kendall statistic (test Z = 2.34, significant at 0.05 level) (Sen`s slope estimator 2011).
Sen`s slope estimate with Mann-Kendall statistic (test Z = 1.48, not significant at 0.05 level) (Sen`s slope estimator 2011).
Sen`s slope estimate with Mann-Kendall statistic (test Z = 1.33, not significant at 0.05 level) (Sen`s slope estimator 2011).
Sen`s slope estimate with Mann-Kendall statistic (test Z = 0.79, not significant at 0.05 level) (Sen`s slope estimator 2011).
Clients whose matters were recorded on the superseded administrative system (CDH) in the early part of the MHS are not included in these analyses.
Legal Aid NSW and the CCLC provided de-identified records. Therefore, there is still the possibility that some individuals who sought assistance from both agencies are counted in both agencies` statistics.
The advice could have been provided before a casework file was opened or after a casework file was closed.
Remembering that only 25 of the 1000 clients received casework or minor assistance without also receiving an advice session.
The CDH advices are missing, accounting for the difference between the 1817 advice matters reported here and the 2157 advice matters reported in Table 19.
Of the 39 clients with over 20 hours of casework, two clients were recorded as receiving over 100 hours, three received between 51 and 100 hours, and eight received between 21 and 50 hours of casework.
Sen`s slope estimate with Mann-Kendall statistic (test Z = –1.46, not significant at 0.05 level) (Sen`s slope estimator 2011).
Breakdowns by type of assistance are less meaningful or useful when there are many response categories, as is the case for recorded variables such as `country of birth` or `language spoken`, when there is a small recorded number for the majority of response categories, or when there is a large number of missing values.
In Kryger 2009, Table 3, the age categories used for comparison were 55–64, 65–74, and 75 and over. The proportion of Australian householder reference persons with a mortgage who were older than 54 years was estimated to be around 15.5 per cent.
Legal Aid NSW recorded `employment status` and Centrelink benefits received.
Pearson Chi-square=3.04, df=2, p=0.22 (not significant). One cell in the cross-tabulation (17%) had an expected count of less than five.
Pearson Chi-square=7.2, df=3, p=0.07 (not significant). Two cells in the cross-tabulation (25%) had expected counts of less than five.
While CCLC conducts its intake and the majority of its work by telephone, it offers face-to-face appointments where necessary and feasible for the client at its Sydney office or in another suitable location.
This information is based on the residential postcode of the MHS clients at the time assistance was first sought. In addition, four clients gave a Sydney PO box as their residential address. Interstate postcodes were recorded for 13 clients in Queensland (six), Australian Capital Territory (five) and Victoria (two). Under its broad funding agreement with the Commonwealth, CCLC provides mortgage hardship services to clients in the Australian Capital Territory. Interstate clients may have moved from NSW or simply telephoned for advice if there was no relevant service in their area.
A good example was the opening of the Far West CLC in 2000 (the most recently opened generalist CLC in NSW). In 1999, residents from this region recorded just 612 legal inquiries to Legal Aid NSW and CLCs for the year. In 2000, when the Far West CLC opened, the combined number of legal inquiries to these agencies rose to 1190 — an increase of 94 per cent. In the following year, the combined number of legal inquiries to these agencies was over 1600 — up by over 170 per cent from the 1999 (pre–Far West CLC) figure (Law and Justice Foundation 2009).
Where more than one party was recorded, identification of the main lender was made difficult.
`Bank` includes the lender type of building society and credit union, both of which are ADIs. There were 17 CCLC advice clients and no CCLC casework clients with a building society or credit union recorded as their lender.
A Pearson Chi-square test indicated that there was a statistically significant bi-variate relationship between the `type` of MHS client (i.e. advice only clients and casework clients) and the type of lender. Pearson Chi-square=15.0, df=1, p=0.001 (statistically significant).
By contrast, Legal Aid NSW recorded up to three hardship reasons per client.
A Pearson Chi-square test indicated that there was a statistically significant bi-variate relationship between the `type` of MHS client (i.e. advice only clients and casework clients) and the main reason for hardship. Pearson Chi-square=15.85, df=4, p=0.03 (statistically significant).

41  For the whole pre- and post-MHS period examined (1 July 2008 to October 2010), CCLC casework matters were recorded on CLSIS in the same systematic and standardised way. By contrast, the recording of mortgage hardship and other mortgage advice matters was subject to a number of system changes. See the `Methodology` section in `The evaluation` chapter.
42  As will be discussed later in this chapter, 41 per cent of the mortgage hardship cases closed by CCLC in the first 16 months of the MHS involved more than 20 hours of assistance.
43  Sen`s slope estimate with Mann-Kendall statistic (test Z = 2.34, significant at 0.05 level) (Sen`s slope estimator 2011).
44  Sen`s slope estimate with Mann-Kendall statistic (test Z = 1.48, not significant at 0.05 level) (Sen`s slope estimator 2011).
45  Sen`s slope estimate with Mann-Kendall statistic (test Z = 1.33, not significant at 0.05 level) (Sen`s slope estimator 2011).
46  Sen`s slope estimate with Mann-Kendall statistic (test Z = 0.79, not significant at 0.05 level) (Sen`s slope estimator 2011).
47  Clients whose matters were recorded on the superseded administrative system (CDH) in the early part of the MHS are not included in these analyses.
48  Legal Aid NSW and the CCLC provided de-identified records. Therefore, there is still the possibility that some individuals who sought assistance from both agencies are counted in both agencies` statistics.
49  The advice could have been provided before a casework file was opened or after a casework file was closed.
50  Remembering that only 25 of the 1000 clients received casework or minor assistance without also receiving an advice session.
51  The CDH advices are missing, accounting for the difference between the 1817 advice matters reported here and the 2157 advice matters reported in Table 19.
52  Of the 39 clients with over 20 hours of casework, two clients were recorded as receiving over 100 hours, three received between 51 and 100 hours, and eight received between 21 and 50 hours of casework.
53  Sen`s slope estimate with Mann-Kendall statistic (test Z = –1.46, not significant at 0.05 level) (Sen`s slope estimator 2011).
54  Breakdowns by type of assistance are less meaningful or useful when there are many response categories, as is the case for recorded variables such as `country of birth` or `language spoken`, when there is a small recorded number for the majority of response categories, or when there is a large number of missing values.
55  In Kryger 2009, Table 3, the age categories used for comparison were 55–64, 65–74, and 75 and over. The proportion of Australian householder reference persons with a mortgage who were older than 54 years was estimated to be around 15.5 per cent.
56  Legal Aid NSW recorded `employment status` and Centrelink benefits received.
57  Pearson Chi-square=3.04, df=2, p=0.22 (not significant). One cell in the cross-tabulation (17%) had an expected count of less than five.
58  Pearson Chi-square=7.2, df=3, p=0.07 (not significant). Two cells in the cross-tabulation (25%) had expected counts of less than five.
59  While CCLC conducts its intake and the majority of its work by telephone, it offers face-to-face appointments where necessary and feasible for the client at its Sydney office or in another suitable location.
60  This information is based on the residential postcode of the MHS clients at the time assistance was first sought. In addition, four clients gave a Sydney PO box as their residential address. Interstate postcodes were recorded for 13 clients in Queensland (six), Australian Capital Territory (five) and Victoria (two). Under its broad funding agreement with the Commonwealth, CCLC provides mortgage hardship services to clients in the Australian Capital Territory. Interstate clients may have moved from NSW or simply telephoned for advice if there was no relevant service in their area.
61  A good example was the opening of the Far West CLC in 2000 (the most recently opened generalist CLC in NSW). In 1999, residents from this region recorded just 612 legal inquiries to Legal Aid NSW and CLCs for the year. In 2000, when the Far West CLC opened, the combined number of legal inquiries to these agencies rose to 1190 — an increase of 94 per cent. In the following year, the combined number of legal inquiries to these agencies was over 1600 — up by over 170 per cent from the 1999 (pre–Far West CLC) figure (Law and Justice Foundation 2009).
62  Where more than one party was recorded, identification of the main lender was made difficult.
63  `Bank` includes the lender type of building society and credit union, both of which are ADIs. There were 17 CCLC advice clients and no CCLC casework clients with a building society or credit union recorded as their lender.
64  A Pearson Chi-square test indicated that there was a statistically significant bi-variate relationship between the `type` of MHS client (i.e. advice only clients and casework clients) and the type of lender. Pearson Chi-square=15.0, df=1, p=0.001 (statistically significant).
65  By contrast, Legal Aid NSW recorded up to three hardship reasons per client.
66  A Pearson Chi-square test indicated that there was a statistically significant bi-variate relationship between the `type` of MHS client (i.e. advice only clients and casework clients) and the main reason for hardship. Pearson Chi-square=15.85, df=4, p=0.03 (statistically significant).


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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