Mandatory comparison rates extended for 1 year

The Uniform Consumer Credit Code Management Committee reports that the Ministerial Council of Consumer Affairs has agreed to extend the sunset date for comparison rates for a year until 30 June 2007. An extension of a year was agreed to accommodate the possibility that the Queensland Government may call an election in the interim.

A draft of the amendment to the Code has been formulated and will be introduced in the early part of 2006.

Consultation on the Preliminary Impact Statement has now closed however a copy of the paper is still available. Hawkless Consulting will consider the submissions which will inform the drafting of the Final Decision Making Preliminary Impact Statement to be provided to MCCA for consideration and decision.

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ASIC launches reverse mortgage calculator for seniors

ASIC has issued a reverse mortgage calculator for seniors.

A reverse mortgage allows an older person with assets but little income to borrow money secured against their home, without having to pay back either the amount they borrowed or the interest due until they leave their home or die. Instead, the debt and interest builds up
(or compounds) over time.

The calculator shows the effect on the equity in a borrower's home based on decisions they may make about:

* how much they borrow;
* whether they take an initial lump sum, or arrange regular payments or a combination of both;
* how long they borrow for;
* interest rates and various fees; and/or
* changes in home values.

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Verifying the mortgagor's identity: new Queensland requirements

From 6 February 2006 the Queensland Land Title Act 1994 (for freehold land) and the Queensland Land Act 1994 (for state leasehold land) will provide that a mortgagee intending to take a mortgage over land as security for a debt or liability, must, prior to lodging a mortgage instrument or a transferof mortgage instrument for registration in the land registry, take “reasonable steps” to ensure that the person who executed the instrument as mortgagor is identical with the person who is, or who is about to become, the registered proprietor of the lot or the interest in the lot.

Under the Act, a mortgagee takes “reasonable steps” if they comply with the practices included in the Land Title Practice Manual. In essence, these practices reflect the ‘100 points of identification’ provisions under Commonwealth legislation governing certain financial transactions, namely, the Financial Transaction Reports Act 1988 and the Financial Transaction Reports Regulations 1990 and to ensure that the mortgagor (whether the borrower or a third party) was in fact the registered owner (or entitled to be reghistered as owner) of the mortgaged property and therefore entitled to deal with the property.

However there may be circumstances where a lender should make further enquiries.

If a mortgagee fails to take "reasonable steps" and its mortgage was fraudulently executed, the mortgagee may lose its indefeasible title and its entitlement to compensation from the State.

The Registrar of Titles has issued an Alert containing Guidelines but he will not provide an exhaustive list of reasonable steps a lender must take.

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