Transfer Guidelines | Help Centre

[EmilyBilling]

Transfer Guidelines - Current as of May 2018

The PEXA guidelines have been developed to assist Subscribers with what they should be doing, and when, in order to ensure the timely and successful completion of a PEXA settlement. They have been developed through industry-wide collaboration with the intention to meet the needs of all PEXA Subscribers.

The guidelines are:

•  not intended to override existing obligations between parties to a transaction, such as those contained in the Contract of Sale.
• to be read sequentially therefore start at step 1 and work through the stages that are relevant to your role. 
• not intended to cover sub divisions.
• For any escalations relating to your transaction please contact the Financial Institution via their current settlement booking line. For members that are not Financial Institutions please use the Subscriber Search functionality in PEXA to obtain their contact details.  

NOTE: You can download a PDF of the Transfer Guidelines at the bottom of the article. 

UPDATE: May 2018 The Transfer Guidelines have been updated to align to changes proposed by the Industry Digital Transformation Working Group. Please refer to the post below the Guidelines for a summary of the changes. 

1. Workspace Preparation and invitations

Stage	Guidelines	Timing
1 -  Incoming Proprietor  or Proprietor on Title  or  Incoming Mortgagee  XXXXXXXXXXXXXXXX	Creates the Workspace with the settlement date and time, creates/edits the party (or parties) details and invites the other Parties as applicable.  Minimum recommended timeframes to ensure the Mortgagee has sufficient time to complete the transaction:  Invitation to be sent to Mortgagee on Title  at least 10 days prior to settlement Invitation to be sent to  Incoming Mortgagee  at least 10 days prior to settlement Note: Contract of Sale may specify which Party is to initiate the workspace. If a Workspace with the same Title already exists a message will alert the Party attempting to create the duplicate workspace. Please avoid creating duplicate workspaces. Invitations should be sent as soon as possible once the Workspace is opened to reduce possibility of duplicates	Send invitation when contract/s have been received.

2. ACCEPT/DECLINE INVITATIONS

Stage	Guidelines	Timing
2 -  All Roles  XXXXXXXXXXXXXXXX	All Roles should respond to invitations and create/edit the party (or parties) as soon as possible.  If accepting, Parties should note on the acceptance any conditions such as “subject to receipt of instructions from Client”. If declining, Parties should include a decline reason code and additional text to fully explain why the invitation has been declined. Note: Invitations should be sent as soon as possible to reduce possibility of duplicates	All invitation responses should be completed within 2 business days of receiving the invitation.

3. WITHDRAWING FROM PEXA

Stage	Guidelines	Timing
3 - Withdrawing from PEXA       0000000000000000	If a party cannot progress in PEXA, inform the other parties and advise reason for withdrawal (using the PEXA Conversation tool). Un-sign all documents, withdraw from and abandon the workspace. Note: if withdrawal occurs within 5 days of settlement, delays may be experienced when booking a paper settlement with the Mortgagee on Title  or Incoming Mortgagee. Any contractual obligations concerning changes to the format of settlement should also be observed. Please refer to state based contractual requirements as to timeframes that the matter can revert to paper.	As soon as possible once the party knows they cannot proceed in PEXA.

4. CONVERSATIONs IN PEXA

Stage	Guidelines	Timing
4 - Conversations in PEXA	A comprehensive understanding of and rigorous adherence to these Guidelines should reduce the need to communicate via the PEXA Conversation Tool such that it should only used to communicate information that is not already in the workspace or to escalate an issue. It is important that all participants: ›   Respond to conversations in a timely manner. ›   Send a conversation only if changes are made after either the Financial Settlement Schedule and or a document have been signed, detailing the changes. To minimise the number of messages each party receives: ›   Avoid conversations to all workspace participants, only send to your client’s lender or practitioner (or practitioner to practitioner) ›  the Incoming Proprietor  to the Incoming Mortgagee and vice versa, › Proprietor on Title to Mortgagee on Title and vice versa.  There is no need to respond to a conversation requesting completion of a task if the task is completed and visible in the Workspace.	Within 8 business hours after receiving the notification. OR Within 4 business hours after receiving notification, if settlement is in 2 business days or less.

5. DOCUMENT CREATION

Stage	Guideline	Timing
5 - Incoming Proprietor	Incoming Proprietor completes Transfer document.	When the workspace has been created or an invitation has been accepted.

6. DISCHARGE AUTHORITY SENT AND RECEIVED

Stage	Guideline	Timing
6a -   Proprietor on Title                      00000000000000000	Proprietor on Title checks the “Discharge Authority Sent” checkbox on the Workspace Summary.  Note: Refer to Banks’ Transfer Checklist on the eConveyancing Community to find the latest Discharge Authority form and where to send.	When the Discharge Authority has been sent to the Mortgagee on Title
6b -   Mortgagee on Title	Mortgagee on Title checks the “Discharge Authority Received” checkbox on the Workspace Summary. Note: Once received, the Discharge Authority will be verified. Refer to Banks’ Transfer Checklist for timeframes for verification. If a new Discharge Authority is required, this checkbox will be unchecked.	When the Discharge Authority has been received.

7. LOAN DOCUMENTS SENT AND RECEIVED

Stage	Guideline	Timing
7- Incoming Mortgagee  0000000000000000	Incoming Mortgagee Checks the “Loan Documents Sent” and “Loan Documents Received” checkboxes on the Workspace Summary.	When documents have been sent and received from  Customer.

8.SETTLEMENT DATE AND TIME

Stage	Guideline	Timing
8a -  Mortgagee on Title               00000000000000000	Mortgagee on Title should accept the proposed settlement date and time. If they are not yet able to, a conversation should be sent to the Proprietor on Title to advise of the reason for the delay If the Discharge Authority has not been received 5 business days before settlement, or security packet is not available, the Mortgagee on Title  should send a conversation to Proprietor on Title to advise of delay in acceptance	Once Discharge Authority and security packet has been received.
8b -  Incoming Mortgagee	Incoming Mortgagee accepts the proposed settlement date and time.	Once the mortgage document has been signed by the customer.
8c -  Incoming Proprietor	Incoming Proprietor accepts the proposed settlement date and time or proposes an alternative settlement date and time.	At the same time as accepting invitation.
8d -  Proprietor on Title	Proprietor on Title accepts the proposed settlement date and time (where the Incoming Proprietor has opened the workspace) or proposes an alternative settlement date and time.	At the same time as accepting invitation.

9. STAMP DUTY ASSESSMENT

Stage	Guideline	Timing
9 -  Incoming Proprietor     00000000000000000	Outside of PEXA, login to online revenue office system, and provide relevant transaction details for duty assessment If NSW › EDR requires the Lodgement Case ID not the transfer doc id. › Once record is completed user enters transaction id into PEXA.  If QLD: › OSR Online does not require any input as the record is automatically created against the Subscribers profile after they have Entered Duty Information in PEXA. › Once record is completed in OSR Online the user just needs to come into PEXA and click verify duty. If VIC: › Duties Online requires the user to claim the PEXA transaction by entering the Transfer Document ID and SRO Transaction ID together with the Form ID into Duties Online › Once record is completed in DOL user just needs to come into PEXA and click verify duty.  If WA: › Print duty certificate in Revenue Online.  › Enter Certificate number into PEXA workspace stamp duty tab. If SA: › Log into Revnet for duty assessment and select ‘e-conveyancing batch’ › Enter reference number into the PEXA workspace Stamp duty tab	In accordance with jurisdictional requirements. NSW/QLD: at least 2 weeks prior to settlement SA: no more than 9 calendar days before settlement VIC: at least 1 week before settlement WA: at least 2 days before settlement

10. DOCUMENT COMPLETION AND SIGNING

Stage	Guideline	Timing
10a -  Incoming Mortgagee 000000000000000000	The Incoming Mortgagee prepares and signs Mortgage document in PEXA	Prepare Mortgage: When accepting settlement date and time and mortgage documents have been verified by the Incoming Mortgagee and are deemed ready to settle. Signing Mortgage: When required information in Transfer Document is viewable.
10b - Mortgagee on Title  or  Proprietor on Title	Mortgagee on Title creates and signs the discharge of mortgage document.  If NSW: › Where there is a mortgage on the title, the Mortgagee on Title  also creates and signs the Consent document for both an electronic and paper Certificate of Title. › Where there is no Mortgage on the title, the Proprietor on Title creates and signs the Consent document. If VIC: › Where there is a mortgage on the title, and the certificate of title is paper, the Mortgagee on Title also creates, signs and lodges the Nomination document. › Where there is no mortgage on the title, and the certificate of title is paper, the Proprietor on Title creates, signs and lodges the Nomination document.  › Where the certificate of title is electronic and the CT Controller is also a party in the Workspace, no nomination is required › Where the certificate of title is electronic and the CT Controller is not a party in the Workspace, the CT Controller needs to be invited into the Workspace to create, sign and lodge the Nomination document.	Once the Discharge Authority has been received
10c -  Incoming Proprietor	The Incoming Proprietor signs the Transfer document, lodgement instructions and: If QLD: › Form 24 Part A&B If NSW: › NOS If VIC: › NoA	Once all documents in the Workspace have been created and lodgement verification has occurred.
10d -  Proprietor on Title	The Proprietor on Title should sign all documents and: If QLD: › Form 24 Part A&B If VIC: › NoA	Once all documents in the Workspace have been created and lodgement verification has occurred.

11. TOTAL FUND REQUIRED TO SETTLE

Stage	Guideline	Timing
11 -  Incoming Proprietor  and Proprietor on Title         0000	Incoming Proprietor and Proprietor on Title calculate the total funds required to settle and Incoming Proprietor enters amount into the Financial Settlement Schedule Summary.  Note: The total funds required to settle include the adjusted balance of the purchase price, all lodgement fees, stamp duty, PEXA fees and Practitioner professional fees if entered into the Destinations by the Practitioners.	5 business days before settlement. 0

12. LOAN PROCEEDS

Stage	Guideline	Timing
12 - Incoming Mortgagee     000000000000000000	Enters the Loan Proceeds into the Financial Settlement Schedule once Loan Documents have been received and verified. Note: This timeframe may be impacted by Customer’s unsecured debts and where the transaction is outsourced to a Panel Solicitor.	At least 5 business days before settlement.

13. AUTHORITY TO DEBIT AND DRAW DOWN AMOUNT

Stage	Guideline	Timing
13 - Incoming Mortgagee                 000000000000000000	Where Incoming Mortgagee holds an authority to debit the Customer’s account for Purchaser’s Equity (Shortfall) they answer “Yes” in the Financial Settlement Schedule Summary and enter the first four digits of the authorised account in the Financial Settlement Schedule Summary. If Incoming Mortgagee is not providing Purchaser’s Equity (Shortfall), they enter “No” on the Financial Settlement Schedule Summary.	At least 5 business days before settlement. 000000o00000000000

14. PURCHASER'S EQUITY

Stage	Guideline	Timing
14a -  Incoming Proprietor   000000000000000000	If the Incoming Proprietor is providing Purchaser’s Equity (Shortfall) they must create a source line item in the Financial Settlement Schedule and ensure funds are deposited in the relevant source account (either own trust account or PEXA Source Account). 000000000000000000000000000000000000000000000000000000	When using the PEXA source account, enter source line item at least 5 business days before settlement to generate account deposit details. Funds must be cleared and available in the PEXA Source Account no less than 3 business days prior to Scheduled Settlement.
14b - Incoming Mortgagee	If the Incoming Mortgagee is providing Purchaser’s Equity (Shortfall), they must create a line item in the Financial Settlement Schedule	2 business days from Settlement

15. COLLECTING VENDOR SURPLUS

Stage	Guideline	Timing
15a -  Mortgagee on Title	If applicable Mortgagee on Title  to confirm via conversation to Proprietor on Title that authority is held to collect any surplus funds. 000	At least 2 business days before settlement.
15b -  Proprietor on Title	If Mortgagee on Title is authorised to collect Vendor Surplus, Proprietor on Title is to notify Mortgagee on Title of the Net Vendor Amount (loan payout plus vendor surplus). Note: This is the amount due to Vendor after deducting outgoings, third party payments and professional fees.	At least 2 business days before settlement.
15c -  Proprietor on Title	If Mortgagee on Title is not collecting surplus funds, the Proprietor on Title should enter a destination line item into the Financial Settlement Schedule.	After indicative payout figure is entered and if required amended once the final payout figure is entered.

16. INDICATIVE PAYOUT FIGURES

Stage	Guideline	Timing
16 -  Mortgagee on Title	Where possible the Mortgagee on Title enters indicative payout figure into the Financial Settlement Schedule.	At least 2 business days before settlement.

17. PAYMENT DIRECTIONS

Stage	Guideline	Timing
17 -  Incoming Proprietor and  Proprietor on Title	The Incoming Proprietor and Proprietor on Title enter payment destination line items  into the Financial Settlement Schedule.	At least 1 business day before settlement. Note: If changes made within 2 hours of settlement time, a call is required to impacted parties.

18. SETTLEMENT PREPARATION

Stage	Guideline	Timing
18a -  Mortgagee on Title	Mortgagee on Title updates the indicative payout figure in the Financial Settlement Schedule to represent a final payout figure if required and enters a destination line item in the Financial Settlement Schedule for Surplus if it is authorised to collect and signs Financial Settlement Schedule.	No later than 10am day of settlement (in jurisdiction of the land where the property is situated).
18b-  Proprietor on Title	Proprietor on Title updates Vendor surplus if they are collecting and if final payout figure differs from indicative and signs Financial Settlement Schedule.	At least 2 hours prior to settlement or once balanced.
18c -  Incoming Mortgagee	Incoming Mortgagee confirms the source line item in the Financial Settlement Schedule for the loan proceeds and signs the Financial Settlement Schedule and the Lodgement Instructions.	Sign Financial Settlement Schedule and lodgement instructions once balanced
18d -  Incoming Proprietor	Incoming Proprietor completes and signs the Financial Settlement Schedule Note: Even if the Incoming Proprietor is not providing any source funds and does not need to complete the FSS, they still need to sign.	Sign Financial Settlement Schedule once balanced

18E. SETTLEMENT PREPARATION

Stage	Guidelines	Timing
18e. Settlement preparation -  Incoming Proprietor and  Incoming Mortgagee	Where there is a positive Title Activity Check (TAC) notification 1 hour before settlement, all incoming parties (Incoming Proprietor, Incoming Mortgagee and/or Incoming Caveator) respond to the notification by  permitting settlement to proceed, or send a conversation to advise the reason for delay.	Within 30 minutes of receiving notification.

19. DELAY IN SETTLEMENT

Stage	Guidelines	Timing
19. Delay in Settlement	If settlement is delayed for any reason, all parties must accept or decline the new time/date and re-sign if required.  If a party changes the settlement date they should send a conversation providing a clear reason as to why the settlement date has changed.	Within an hour of receiving notification.

[LawyersConveyancing]

Hmm, the Duties Online explanation reminds me of the Monty Python skit where Jacquie gives a lesson in how to play the flute:

Jacquie: "Well, you just blow in one end, and move your fingers up and down the outside."

Host: "Thanks Jacquie, that was great."

Duties Online is not just a matter of entering data, then moving across to PEXA. The SRO requires us to prepare a hard copy duties form for the client, send it to the client, answer the clilent's questions about it, have the client execute it, receive it from the client, check that it is properly executed and complete, transcribe the information from it into Duties Online, then provide filing and storage services for the SRO for the next 5 years just in case someone from the SRO wants to have a look at it.

Methinks there will be plenty more "flute lessons" to be discovered.

[Brooke]

How can we tell if these are the latest version of the Guidelines or if they have been superseded by another community post? It would be really helpful if PEXA had one page where all workbooks, guidelines etc could be found and downloaded in PDF rather than having to scroll through community posts.

[EmilyBilling]

Hi @Brooke, these are the latest version of the Guidelines. You'll notice there is a note at the top of the page "Transfer Guidelines - Current as of 15th November 2016". If there are changes, we'll always update with the latest date. All help content can be found in the Help Centre and is categorised by topic. We are continually improving the content on offer, and how it is displayed however, we do tend to avoid PDFs as these are much harder to maintain and keep current. May I ask what Workbooks/topics you are looking for and would like categorised together?

[Brooke]

Thanks Emily

Super speedy response! So this post won't be superseded by a separate post with updates to the Guidelines? Rather, this original post will just be updated? If so, I can see how that works the same as having a standalone page where we can download things from. I was just worried that I might pick up an old post instead of a new post on this forum.

We were looking for a workbook to do a mortgage discharge in South Australia and having trouble finding this online (but have since had our local contact email the 'Panel Lawyers - Mortgagee Processing' workbook to us). When this was emailed to us we found it had substantially changed from the workbooks provided to us in training a few years ago (which were WA specific). As I work with a national firm, it would be helpful to have 1 page where we can download all workbooks from as we will no doubt need them for other transaction types in other jurisdictions soon.

Thanks

[EmilyBilling]

@Brooke sometimes I'm a speed demon  

You are correct! This post will just be updated if anything changes, and we'll always make sure it has the last updated date. 

The main difference between the help topics and the forums, are that help topic information will always be updated with the most recent content (these are your "how to do something" type articles), and the forums are where community members can ask questions to the rest of the community. 

We do have the most recent and up to date "How to discharge a mortgage" article - which has both written how to and an interactive tutorial you can click through (as it's a help article this will always be updated with any changes, although again they are not downloadable). You'll also find additional information about Mortgages in this article. Hope that helps! 

[EmilyBilling]

@Brooke also we held a couple webinars in April which may be of interest to you! 

[JoellePEXA]

As more subscribers adhere to the guidelines (both Practitioners and Mortgagees) we should start to see a smoother transaction. When all parties know what to expect and, most importantly, when they are expected to complete their tasks, the transaction should progress smoothly to a timely and successful settlement. Hopefully, this will be the beginning of what could evolve into Industry Standards and Expectations. 

[LodgeX]

Yay @EmilyBilling ....there's a PDF version we can download. I have also bookmarked this page as its a great reference tool when we send conversations to the Mortgagee to poke them along. Thank you

[LodgeX]

I just saw my last post (and my photo) from my PEXA Direct Specialist days ... cannot emphasize enough how the guidelines help to shape expectations. 

[DMc]

Have a general question to the 'community at large'; when do most practitioners advise/inform their clients to confirm financial e-settlement as being booked?

[Aoife]

Hi Community,

The Transfer Guidelines are being updated!

Thanks to the Industry Digital Transformation Working Group – including representatives from across your network – 15 key changes have been proposed to drive efficiency, support transacting at volume, promote best practice and align to current system functionality.

Stay tuned to this page, soon we’ll be posting a summary of the changes and asking for your feedback.

If you have any questions, please don’t hesitate to ask us below.

Cheers

Aoife

[Saysa]

The Industry Digital Transformation Working Group, including Banking and Practitioner representatives from all PEXA active jurisdictions, has proposed a set of changes to the Industry Transfer Guidelines to ensure they meet the following objectives:

• Align with current system functionality
• Reflect current industry practices and processes
• Leverage the expertise and insights of network members
• Enable transacting at volume to meet mandates
• Identify and transition to desired end state

These changes will be reflected in a new Version 2 of the Industry Transfer Guidelines in the coming weeks. Version 2 will be posted here. Please post any questions or comments in regards to these proposed changes below.

Guideline
Invitation Acceptance	All roles accept within 2 Days of receiving an invitation and note any conditions that need to be met for the transaction to proceed. eg. Purchaser/Buyer confirming instructions with Practitioner. Change: Aligns timeframes for Practitioners and Banks.
Document Creation, Editing and Signing	Incoming  Proprietor creates Transfer Document after creating the Workspace or accepting Invite. Incoming Mortgagee creates the Mortgage document when information in the Transfer document is viewable and signs when Loan Documents have been received and verified. Note: Some Incoming Mortgagees may not create the Mortgage Document until the Loan Documents have been received and verified. Outgoing Mortgagee creates and signs Discharge Document when they have received and processed the DA. Change: Creating and signing Documents as early as possible Note: Some Participants may not sign documents until day of settlement.
Total Fund Required to Settle	Incoming Proprietor to enter Total Funds Required to Settle 5 days prior to Settlement. Note: Incoming Proprietor will endeavour to calculate this figure as accurately as possible but it should be considered as indicative. Change: Was 2 days and communicated via conversation
DA Sent	Proprietor on Title checks box on the Workspace Summary once they have sent the Discharge Authority or they have been advised by another party (Eg. their Client) that the DA has been completed and sent. Change: Replaces conversation.
DA Received	Mortgagee on Title checks box on Workspace Summary on receipt of the DA. Change: Replaces conversation. Note: Once received, the Discharge Authority still needs to be verified. Refer to Outgoing Mortgagee’s Transfer Checklist on Community for timeframes for verification. Also refer to this post for information on where to source the current DA form and where to send the completed form. If a new DA is required, this checkbox will be unchecked.
Loans Documents Sent	Incoming Mortgagee checks box on Workspace Summary when Loan Documents have been sent to the Customer. Change: Replaces conversation.
Loan Documents Received	Incoming Mortgagee checks box on Workspace Summary when Loan Documents have been received from the Customer. Change: Replaces conversation. Note: Once received, the Loan Documents still need to be verified. Refer to Incoming Mortgagee’s Transfer Checklist on Community for timeframes for verification. If a new or revised Loan Document is required, this checkbox will be unchecked.
Payment Directions – WA and SA Discharge of Mortgagee Lodgement Fee	Remove these instructions now that the process has been aligned nationally.
Conversations	Intended to be used only to communicate information not provided in the Workspace or to escalate an issue. Change: Replaces “use conversations as the primary form of communication”.
Loan Proceeds	Incoming Mortgagee enters Loan Proceeds in FSS atleast 5 days prior to Settlement and once Loan Documents have been received and verified. Note: This timeframe may be impacted by Customer’s unsecured debts. Change: Replaces conversation.
Lodgement Instructions	Only Responsible Subscriber required to sign Lodgement Instructions Change: Previously all parties required to sign
Indicative Payout Figure	Mortgage on Title to enter indicative Payout figure into FSS 2 days prior to Settlement Change: replaces sending a conversation with indicative Payout figure.
Authority to debit for Purchaser’s Equity (Shortfall)	Incoming Mortgagee to advise if “Authority to debit for Shortfall Held” on the FSS Summary 5 days prior to Settlement. Answering “Yes” commits the Incoming Mortgagee to provision of all funds, answering “No” prompts Incoming Mortgagee and Incoming Proprietor to discuss and agree arrangements for  provision of Shortfall via conversation at least 5 days prior to Settlement. Change:  5 day timeframe and use of fields instead of Conversation.
Entering Purchaser’s Equity (Shortfall)	Incoming Mortgagee enters Purchaser’s Equity in FSS 2 days prior to settlement based on the Total Funds Required to Settle. Change: the TFRS is referenced from the new field, not a conversation.
Workspace Preparation and Invitations	Add: Incoming Mortgagee can create workspace and issue invitations Minimum recommended timeframes to ensure the Financial Institution has sufficient time to complete the transaction: Role of Mortgagee on Title: Invite and DA to be sent atleast 10 days prior to Settlement. Role of Incoming Mortgagee: Invite to be sent atleast 10 days prior to Settlement. Note: Contract of Sale may specify which Party is to initiate the workspace. If a Workspace with the same Title already exists a message will alert the Participant, please ensure that duplicate Workspaces are not created. Invitations should be sent as soon as possible once the Workspace is opened to reduce possibility of duplicates.
Stamp Duty WA	Guideline for WA to be simplified to “at least two days before settlement”.  Change: Was at least 2 days before settlement unless the settlement is on 1st of the month then day of settlement.

[Karolidis_and_Co]

These are fantastic changes, hopefully this results in more efficiency and reduction in stress (assuming they are adhered to!)

[JonTeh]

Total Fund Required to Settle

Incoming Proprietor to enter Total Funds Required to Settle 5 days prior to Settlement. Note: Incoming Proprietor will endeavour to calculate this figure as accurately as possible but it should be considered as indicative. Change: Was 2 days and communicated via conversation

I think this needs a second part to it where the Incoming Proprietor confirms exact funds required to settle 1 day prior to settlement. As it currently stands, there may be some confusion from the IM on exact funds they are required to input into sources if this figure is left as indicative.

Thoughts?

[BGoodwin]

As a Panel Solicitor we can't easily obtain an indicative Payout figure however in most cases we have the actual payout loaded in 1-2 days prior to settlement. How do you show it's an indicative figure in any case?

Indicative Payout Figure

Mortgage on Title to enter indicative Payout figure into FSS 2 days prior to Settlement Change: replaces sending a conversation with indicative Payout figure.

We have been uploading the source Loan Proceeds figures as soon as we can, but with our new Source Funder client we don't think that will be possible as the Lender enters the figures based on our Certification. I suppose if we get to the point of confirmed "Total Funds Required to Settle"  as per @JonTeh 's comment , perhaps we can Certify for funding earlier.

Loan Proceeds

Incoming Mortgagee enters Loan Proceeds in FSS at least 5 days prior to Settlement and once Loan Documents have been received and verified. Note: This timeframe may be impacted by Customer’s unsecured debts. Change: Replaces conversation.

Entering Purchaser’s Equity (Shortfall)

Incoming Mortgagee enters Purchaser’s Equity in FSS 2 days prior to settlement based on the Total Funds Required to Settle. Change: the TFRS is referenced from the new field, not a conversation.

Cheers, Baz....

[jgusew]

While these are coined as guidelines right now, is PEXA working towards a view that these will be enforced? (I do hope one day that this is achieved, but I think we are still a couple years or more away) 

 @LawyersConveyancing Would you touch an invitation if you had not yet received instructions within that two day timeframe? 

Adding to the mix, from what I can tell, there is a lot of "your urgency is not my emergency" in the legal industry. So if the other side invited us to QUICKLY settle, we shouldn't have to rush in contacting the client and urge them to hurry things up if we are not required to do so. Measure twice cut once as they say, we cant afford silly little mistakes.  There is a lot more that happens on a matter/file then just PEXA and a CAF/VOI.

[LawyersConveyancing]

As a lawyer representing a client I can act only on instructions, and these can only come from a client. If I have not been engaged (i.e. I have no instructions) then on whose behalf would I be accepting an invitation? It follows that if I have no instructions from the client I have neither an obligation nor the authority to accept an invitation.

Having said this, if I have been engaged by the client and my instructions are to represent that client in a conveyancing transaction, then I can move on an implied instruction to accept a PEXA invitation subject to my receiving VOI and Client Authorisation.

The "your urgency is not my emergency" view of how things operate should not be seen as a form of "get stuffed" response to a party hoping to accelerate things. Rather, it's all about the clients. Sometimes its about racking up costs generated by the other side against one's own client. As an extreme example, if I have to pay my staff overtime in order to attend to something that is "urgent" for the other side, who should pay the overtime bill - my client? the other side's client? And should I stress my staff with such supposed urgency? I have a duty to provide a safe workplace and conveyancing is stressful enough without further stressors being added by way of "urgent" action required by other parties.

All of these have to go into the mix.

Part of the reason I am so vigorous in fending off the banks when they attempt to have my staff attend to their tasks (usually as matters of urgency accompanied by the threat of a deliberately delayed or crashed settlement) is this need to avoid and reduce unnecessary workplace stress.

Peter Mericka

Lawyers Conveyancing

[LawyersConveyancing]

When a bank tells us that it will accept all proceeds of the sale at settlement it makes things so easy. We don't need a payout figure, as this is a matter between the bank and the client.

We simply allow for adjustments, deduct our fee, and the rest of the money goes to the bank. The bank then deposits the proceeds into the clients nominated account after deducting the amount required to discharge the mortgage.

PEXA is an ideal vehicle for this, as the funds and disbursed as at settlement, which is the same result.

So, at the end of the PEXA settlement day, we should simply have all funds going to the mortgagee without our worrying about the payout figure - it would also be up to the lender to ensure that the mortgagor is aware that additional funds may have to be dumped into the loan account if the sale proceeds are insufficient.

Peter Mericka

Lawyers Conveyancing

[LawyersConveyancing]

@JonTeh and @Marty, when it comes to having the incoming proprietor providing details of the total funds required for settlement, it would be a huge help to have an integrated Statement of Adjustments that could populate PEXA so that the figures could be quickly and easily checked and approved by the vendor, and the lenders could see the figures they are to work from.

Peter Mericka

Lawyers Conveyancing

[BGoodwin]

I have an idea. How about in the Funds Confirmation under the "Total Funds required to settle", we add a "Total Loan Funds available for settlement" section. Then in the "Does the Incoming Mortgagee hold Client Authority to provide shortfall?" we could show the difference e.g. "...... provide shortfall of $9,542.45?"  That will get around the Source Funder situation I mentioned earlier, in providing an indication of loan proceeds available.

Funds Confirmation

Total funds required to settle Total funds required to settle $468,740.47

Last updated by:  LEGAL & CONVEYANCING LAWYERS PTY LTD 23/04/2018 14:34 AEST

Does the Incoming Mortgagee hold Client Authority to provide shortfall?Does the Incoming Mortgagee hold Client Authority to provide shortfall? Set

Cheers.

[nakatos]

There has been a lot of discussion recently at the WA Symposium around whether the total funds required to settle, should in fact be the total funds required specifically from the bank.  Currently there is confusion amongst practitioners and FI's in this space.

[LawyersConveyancing]

Hi @nakatos, my view is that the bank should be fully responsible for the delivery of settlement funds. After all, as far as the consumer is concerned, that's what a bank is all about - holding and distributing money.

It doesn't matter where the funds are coming from, whether some funds are coming from a loan provided by the bank, with some coming from the client's own savings account, with top-up funds coming from uncle George, ALL of the funds should be held by the bank.

When the bank holds ALL funds, the system will work well. It will be up to the bank, with assistance from the loan broker or bank manager (or whatever title the bank interface person holds) to ensure that there are sufficient funds to cover the purchaser's settlement liability (i.e. the purchase price, or balance of same + adjustments, the latter being covered by a "buffer" amount if not immediately known.

This arrangement obviates the need for a third party (i.e. the borrower's legal representative) from becoming involved.

Compare this with a situation where the purchaser has cash on demand, with no bank involved. The purchaser's legal rep has no interest in how the funds are being gathered or where they come from. So long as the amount required is dumped into the trust account and is sufficient to cover the purchaser's settlement day liability, all is good.

Peter Mericka

Lawyers Conveyancing

[nakatos]

Hi @LawyersConveyancing, we have no concerns with handling the outgoing disbursement as long as we are provided enough time to confirm all source funds are available via either loan proceeds or shortfall account.  The issue that we have come across, is that unfortunately not all practitioners have the same view and as a result the process is inconsistent.  We need to highlight the specific process that both the FI and Practitioner need to follow so that there are minimal conversations.

[LawyersConveyancing]

Hi @nakatos, I'm not sure that I understand how the bank's need to confirm source funds involves the practitioner. Is it not simply a matter of the bank's knowing how much the purchaser must pay at settlement? In other words, the bank knows:

1. The purchase price (as per the contract) or information from the borrower

2. The amount of deposit paid (as per the contract or information from the borrower

3. A buffer for adjustments

4. Allowance for stamp duty (calculated by the bank on information from the contract and the borrower)

It is then just a matter of the bank's checking to ensure that the borrower has borrowed sufficient to cover what's need for settlement, and ensuring that the borrower has enough in their loan account or savings account so that the bank can deliver all funds to settlement.

What role must the practitioner have in all of this?

Peter Mericka

Lawyers Conveyancing

[nakatos]

Hi @LawyersConveyancing, in an ideal world the bank would have all the details above to provide the source funds figure, however unfortunately it isn't that simple for an FI.  Stamp duty is calculated by the bank based on the information from the contract and borrower, however the information provided is often incorrect and needs to be revised.  In Victoria for example, it is quite often revised once the stamp duty certification is completed by the practitioner and this quite often happens on the day of settlement or the day prior.  In current process the exact adjustment amounts are required and this is an unknown figure for the bank.  Going forward if a buffer is the process agreed upon, this will make things easier from a data entry perspective into PEXA, however will add reconciliation steps post settlement for an FI.  The other variable in the current process is that given that the adjustments often change and the stamp duty often changes, the shortfall isn't always available in the customers account with the incoming bank.  It's really all about education to FI's, practitioners, third parties and customers that is going to solve for this.  Everyone needs to understand what is needed by whom and when in order for a transaction to run smoothly.

[LawyersConveyancing]

Hi @nakatos, I suppose what I am after is a firm reason as to why practitioners have to become involved in the bank's funding process.

From what you have said above, the only issue arising is the need for the FI to add reconciliation steps post settlement. The FI should not be relying on the practitioner's involvement to save it from having to add reconciliation steps - this is a bank matter for the bank to solve for itself.

With regard to adjustments changing or stamp duty changing, let the responsibility attach to the party causing the problem. The bank should work from the figures or estimates provided by the borrower, and if these change and the change causes a delay, then the bank can inform the borrower that the borrower's change has caused a delay and the practitioner can be similarly informed. However, if there is no change then there is no problem

It seems that the banks rely on practitioner involvement just in case an issue arises - this is unfair.

I still see no reason why a practitioner MUST be involved simply because a bank is a participant.

Peter Mericka

Lawyers Conveyancing

[nakatos]

Hi @LawyersConveyancing, I guess what we are all looking for as an FI is a process that best services the customer without moving funds unnecessarily.  For an FI that means knowing exactly what is required from loan proceeds and if applicable the shortfall account to complete the settlement.  Knowing the exact amount  is the preference. 

[BGoodwin]

 @nakatos & @LawyersConveyancing all of what you are discussing is in the Transfer Guidelines and available in the workspace (no allowances or buffers required). 

• Incoming Proprietor to enter Total Funds Required to Settle 5 days prior to Settlement.

  Note: Incoming Proprietor will endeavour to calculate this figure as accurately as possible but it should be considered as indicative.

• Incoming Mortgagee enters Loan Proceeds in FSS at least 5 days prior to Settlement and once Loan Documents have been received and verified.
• Incoming Mortgagee to advise if “Authority to debit for Shortfall Held” on the FSS Summary 5 days prior to Settlement. Answering “Yes” commits the Incoming Mortgagee to provision of all funds, answering “No” prompts Incoming Mortgagee and Incoming Proprietor to discuss and agree arrangements for  provision of Shortfall via conversation at least 5 days prior to Settlement.
• Incoming Mortgagee enters Purchaser’s Equity (if applicable) in FSS 2 days prior to settlement based on the Total Funds Required to Settle (I just question if this would still be indicative at that time!  Best to double check when destination funds are signed-off) 

So the conveyancer works out the settlement figures and the incoming mortgagee provides the loan funds and maybe the purchasers equity if they have authority to do so. Seems simple in my mind. Baz

[LawyersConveyancing]

Hi @nakatos, I understand what you want to achieve, but why does the practitioner have to be involved in your process of "...knowing exactly what is required from loan proceeds and if applicable the shortfall account to complete the settlement".

The only reason I can come up with is that by forcing the practitioner to become involved the bank is able to save time and effort for its staff.

I still need to know why the practitioner MUST become involved in the bank's providing a "process that best services the customer without moving funds unnecessarily". Surely the bank can address these needs without involving the practitioner.

Sorry to keep pressing you on this @nakatos, but I don't believe that the practitioner's involvement is at all necessary; I think it is just an easier option for the bank to press the practitioner into service in order to lessen the workload of the bank's staff. In other words, the banks' purported "need" for practitioner involvement is really no more than the banks' "preference" for practitioner involvement.

Peter Mericka

Lawyers Conveyancing

[nakatos]

Hi @BGoodwin, I agree the new transfer guidelines are simple.  I attended the working groups to finalise these, I just wanted to point out that in recent discussions in WA, there were still some differing opinions out there.

[LawyersConveyancing]

Hi @BGoodwin,

I agree with your process Bazz, although I disagree with your third dot-point. If the answer is "No" to the question as to whether a “Authority to debit for Shortfall Held” this is not an issue for discussion between the IM and the incoming proprietor via a PEXA conversation, as this would involve the practioner (who must then convey the content of the conversation to the borrower). Rather, it is a matter solely between the IM and the borrower. The IM would resolve this without involving the practitioner.

So, the practitioner uploads the indicative figures 5 days before settlement, having determined these from information available as at that time, and then it is up to the IM to check those figures, ensure that there are sufficient funds available to cover them, and to discuss the matter with the borrower if funds are not sufficient and a top-up is required.

Final amounts determined and entered 2 days before settlement - all done!

No need for the practitioner to be involved in any bank processes at all.

If the IM left holding any excess funds these can be deposited into the borrower's account post settlement.

If this procedure is followed it is indeed a simple process.

Peter Mericka

Lawyers Conveyancing

[BGoodwin]

@nakatos You're original post was a question of what "Total funds required to settle" means. I believe it means the final settlement amount  after adjustments to convey the property, and possibly needs to be clarified somewhere.

and @LawyersConveyancing unfortunately not all incoming mortgagees (read wholesale lenders) have access to purchasers own funds, hence the need to remain flexible on who will provide the purchasers equity.

[LawyersConveyancing]

Hi @BGoodwin,

Ah, now that's an interesting issue, and one that needs to be thoroughly investigated. If an IM does not have access to the purchaser's own funds then the IM needs to do something about that, not drag the practitioner into the role of "bank" by forcing the practitioner to hold funds on behalf of the borrower.

The bank is in the business of handling customer funds, and charges its customer a fee for doing so.

It is not up to the practitioner to step in and play "bank" just because the bank does not want to extend its service to include the adding of top-up funds to the its customer's account.

With regard to "the need to remain flexible on who will provide the purchaser's equity", that flexibility must remain on the IM's side of the transaction. It remains incumbent upon the IM to to build in sufficient flexibility for it to keep its promise to its customer when accepting the role of "bank" by ensuring that it has the capabilities, protocols and inter-bank relationships to deliver ALL funds to settlement.

Flexibility does not entail a right to force a practitioner to play the role of "bank" in the same transaction.

Peter Mericka

Lawyers Conveyancing

[TheDoctor]

G'day all,

IM's have discussions with their Customers, regarding settlement funds requirements, from initial loan discussion right through to settlement. It is not something that we leave to the last minute, almost as an afterthought.

IM's can only draw funds from Customer accounts held with them and only if we hold an authority to draw.

Just because an IM has had these discussions with their Customer, does not mean that the Customer actually does provide their equity funds to a nominated account.

This may sound strange, but it is very common for a Purchaser to wait until the morning of settlement to transfer equity funds to a nominated account.

Often the Customer wants to know the exact amount required (not an estimate incorporating a buffer) before they will initiate the funds transfer.

[TheDoctor]

Can I suggest that any further discussion on this be moved to a new thread, rather than continue this debate under what is essentially a PEXA Help thread?

thanks

Brett

[LawyersConveyancing]

Good idea Brett. I have continued this thread with a new one titled Lenders To Be Responsible For Delivery of All Funds At Settlement.

Peter Mericka

Lawyers Conveyancing

[DebbieCrawford]

Having guidelines is a great idea in theory and I commend the thought process behind them - the problem is that the banks especially are not meeting the guidelines.  Especially in WA everything is being left until literally the last minute - which just doesnt work.  With E-Conv we were promised certainty of settlement, but the rate banks seems to be forcing push backs (due to not signing off in time) there is very little certainty.   I am unsure of the point of guidelines when a lot of participants dont seem to be adhering to them even remotely at times.

[goolwaconveyancing]

 Love your work Emily, 

Can I suggest everybody create a link on their desktop to these guidelines and refer back to them often.  Hopefully these guidelines will reduce the conversations in the workplaces !  I will be referring people to this !!

[DebbieCrawford]

I didnt see any reference for Outgoing Mortgagee to send conversation to confirm if they have authority to collect shortfall.  Perhaps similar to "funds required" that the Incoming Purchasers agent completes - perhaps a "tab" where we can put in "full proceeds available" for the Outgoing Mortgagee so they know what funds are available for them to collect - and for the Outgoing Mortgagee to have a box to tick if they do or dont have authority for surplus

[DebbieCrawford]

Sorry that first line above should refer to "surplus" not "shortfall".  It is Saturday :-) 

[DebbieCrawford]

Total Funds Required at settlement - there seems to be some differing in opinions in WA/confusion as to what this relates to.  Whether it is total funds (including funds contributed by other parties) i.e. Total Source Funds on the FSS or whether it is the total funds required from the Incoming Mortgagee.  In the paper world we would normally advise the Incoming Mortgagee our cheque split - which advises the banks what funds we require from them.  I dont see why this should change.  Total Funds Required should be the figure we require from the bank - the bank doesnt need to worry themselves about other figures or even the balancing of the FSS - that is our job as the conveyancer.  Banks need to stop thinking about a Transfer deal the same way as they think about a refinance.

[DebbieCrawford]

Added to the above about "total funds required to settle"  - the guidelines say we need to put this in 5 days prior to settlement - the problem here is unfortunately we are lucky to get a statement from some other agents a day prior to settlement, let alone 5 days prior.  We can obviously give an indicative figure - which I dont have an issue with, but are the banks going to rely on this or will they realise it is indicative.  We can send a conversation saying it is an indicative figure - but everyone is trying to reduce conversations. I have found if the figure changes the banks may not look until the last minute and may enter the old figure, and then we have the "last minute fingers crossed" conversations hoping they will update properly and sign off a minute before the due time!

[DebbieCrawford]

If settlement is delayed by a day - for reasons outside the PEXA Platform - the banks need to move on without issue.  There have been numerous occasions when settlement date has been changed for contractual reasons, and then the banks (sorry but especially CBA lately) have then said that they wont be able to settle until a week plus later.  If a bank is ready to settle today, and settlement is delayed until tomorrow - there is NO reason why they reasonable cannot settle the next day.  I assume this may have something to do with time/work allocations within the banks - but this cant happen.  We cant expect clients to end up in "penalty interest" territory just because the banks can reallocate files a day!

Not sure if this comes under the topic of "transfer guidelines" but thought I would just put it out there anyway.

[DebbieCrawford]

Not sure if "2 days prior" for stamp duty is sufficient.  I would tend to suggest 5 days prior.  Reasoning is that I worry that 2 days prior will give banks and other parties sufficient time to finalise their figures.  If a settlement agent does it "2 days prior" at 5.00pm, that only really gives any other party, especially the banks, a day to process - which I question if that is sufficient in the banks defense.  If they dont do 2 days prior and go - oops forgot - then it leaves us with the day of to check figures!  If we put "5 days prior" as the standard - it gives sufficient leeway for any delays when we have a "bad day" and/or the banks are "swamped" on a certain day - so that all parties have sufficient time and are not doing everything "last minute".

[Kate_Camilleri]

@DebbieCrawford thanks for your posts, great questions and comments and we'll be addressing some of these in the upcoming Guidelines Webinars (Dates to be confirmed). I can't answer your posts individually, so here's a collective response, feel free to direct message me for further discussion/info: 

Post 1&2: I didnt see any reference for Outgoing Mortgagee to send conversation to confirm if they have authority to collect surplus.  Perhaps similar to "funds required" that the Incoming Purchasers agent completes - perhaps a "tab" where we can put in "full proceeds available" for the Outgoing Mortgagee so they know what funds are available for them to collect - and for the Outgoing Mortgagee to have a box to tick if they do or dont have authority for surplus

Response: Great suggestion to have the ability to communicate Surplus details via fields (or tab). In the meantime, see Guideline 15, this hasn’t changed from last version.

Post 3: Total Funds Required at settlement - there seems to be some differing in opinions in WA/confusion as to what this relates to.  Whether it is total funds (including funds contributed by other parties) i.e. Total Source Funds on the FSS or whether it is the total funds required from the Incoming Mortgagee.  In the paper world we would normally advise the Incoming Mortgagee our cheque split - which advises the banks what funds we require from them.  I dont see why this should change.  Total Funds Required should be the figure we require from the bank - the bank doesnt need to worry themselves about other figures or even the balancing of the FSS - that is our job as the conveyancer.  Banks need to stop thinking about a Transfer deal the same way as they think about a refinance.

Response:  The definition of Total Funds is: “the adjusted balance of the purchase price, all lodgement fees, stamp duty, PEXA fees and Practitioner professional fees if entered into the Destinations by the Practitioners. (as denoted by the information contained in the section by the “?”)

Which aligns to your definition above: “total funds (including funds contributed by other parties) i.e. Total Source Funds on the FSS”

This figure allows the Incoming Mortgagee to calculate any Shortfall they are providing.

Where in the paper world you advise the Incoming Mortgagee of the amount they are required to provide via the cheque split, in the electronic world, this is communicated via the Total Funds Required to Settle field. In addition, you also need to take into account the registration fees when advising of the amount to settle.

Thanks for your feedback on this Debbie. We will add some further clarification in the Guidelines to make this clearer for all parties

Post 4: Added to the above about "total funds required to settle"  - the guidelines say we need to put this in 5 days prior to settlement - the problem here is unfortunately we are lucky to get a statement from some other agents a day prior to settlement, let alone 5 days prior.  We can obviously give an indicative figure - which I dont have an issue with, but are the banks going to rely on this or will they realise it is indicative.  We can send a conversation saying it is an indicative figure - but everyone is trying to reduce conversations. I have found if the figure changes the banks may not look until the last minute and may enter the old figure, and then we have the "last minute fingers crossed" conversations hoping they will update properly and sign off a minute before the due time!

Response:  It's fine to enter an indicative figure and ensure it is updated 2 days prior to settlement when the Banks are entering Shortfall. The aim of this guideline is to assist the incoming Proprietor/Incoming Mortgagee to determine if there may be a shortfall earlier in the process. Where total funds can not be confirmed 2 days from settlement, or there is confusion over who is providing Shortfall and what the amount is, or there is a subsequent change to the actual amount within 2 days from Settlement, send a conversation or if on day of settlement, call the settlement booking line.

Post 5: If settlement is delayed by a day - for reasons outside the PEXA Platform - the banks need to move on without issue.  There have been numerous occasions when settlement date has been changed for contractual reasons, and then the banks (sorry but especially CBA lately) have then said that they wont be able to settle until a week plus later.  If a bank is ready to settle today, and settlement is delayed until tomorrow - there is NO reason why they reasonable cannot settle the next day.  I assume this may have something to do with time/work allocations within the banks - but this cant happen.  We cant expect clients to end up in "penalty interest" territory just because the banks can reallocate files a day!

Not sure if this comes under the topic of "transfer guidelines" but thought I would just put it out there anyway.

Response: The Banks have been made aware of this.

Post 6: Not sure if "2 days prior" for stamp duty is sufficient.  I would tend to suggest 5 days prior.  Reasoning is that I worry that 2 days prior will give banks and other parties sufficient time to finalise their figures.  If a settlement agent does it "2 days prior" at 5.00pm, that only really gives any other party, especially the banks, a day to process - which I question if that is sufficient in the banks defense.  If they dont do 2 days prior and go - oops forgot - then it leaves us with the day of to check figures!  If we put "5 days prior" as the standard - it gives sufficient leeway for any delays when we have a "bad day" and/or the banks are "swamped" on a certain day - so that all parties have sufficient time and are not doing everything "last minute".

Response:   The Guidelines state “at least 2 days prior”. Obviously as you rightly point out Debbie, earlier is better in order for all parties to progress the Workspace, but two days is the minimum requirement. Also, just to let you know, that as of Release 8 coming shortly, the banks will be able to view the details of the Transfer when it is at “In Preparation” status (ie: prior to stamp duty verification). This will also allow them to continue to progress on their end without the need to wait until the stamping is finalised in the Workspace.

Thanks, 

Kate. 

[DebbieCrawford]

Hi Kate

I appreciate all your comments.  I also appreciate that i have come onto this platform/subject towards the end of the Guidelines being developed - so likely to be a little late.

I would express that I am VERY concerned about the interpretation of the "funds required".  Banks need to STOP thinking like a refinance - it is not their business what the figures should add up to.  Like in the paper world they only need their payout - they dont ask us about other funds passing hands on the transaction.

If we start having to include other figures - I just see it as a total confusion and the bank DONT need to know.

There could be an issue that there is a shortfall for the funds due to the Outgoing Mortgagee - we have no idea about this as the Buyers agent - as banks put in payouts last minute, this could cause a huge problem if figures have to change.  BUT from the Incoming Mortgagee point of view it is irrelevant - it is not their job to balance the FSS - that is our job as Conveyancers - both sides.

The Seller could also be putting in funds - eg. deposit less commission, or funds from another settlement etc - that again has nothing to do with the Buyers side of things.  Again we may not know this figure until the last minute - and have no knowledge of it at all as an Incoming Proprietor.

Total Funds Required should merely relate to the funds we require the Incoming Mortgagee to provide - not all funds for the FSS - can the banks please do their job and leave us to do our job!!

As an Incoming Proprietor agent - we have no idea what the Seller may need to do or want to do - and to be honest it is not our business - if figures have to change last minute because of something outside the Buyers agents knowledge it could push back settlement - because we would have to change figures to the banks and the banks dont have to reply to conversations within 4 hours - in WA that could mean settlement the NEXT day!!!

I know I am harping on about it - but I am not sure why the wheel needs to be reinvented - Funds required should just be what the bank needs to put into the workspace, leave the rest up to us!

[TheDoctor]

Hi @DebbieCrawford,

I agree, as an Incoming Mortgage, I just want to know how much you need from me. I am not concerned how that figure is arrived at.

Unfortunately, the guidelines were developed before PEXA created the Funds Required field capability.

So, the guidelines are for the Incoming Mortgagee to be the last one to enter their figures (thereby balancing the FSS), and only once all other parties have signed the FSS to signify their figures are final.

The Banks have developed their own work processes with the PEXA guidelines in mind. We are measured on our compliance to those guidelines.

So, unless the guidelines are changed, I can't see the Banks changing their internal processes.

Also, in practice, the Funds Required amount has proven to be very unreliable for accuracy. For this reason many Banks treat it as an indicative figure and wait for the final figures before loading their Source funds.

This is an evolving process and the Funds Required feature is still fairly new. I am sure we will all get better at this and we may even reach a point where, as you have indicated, the Banks trust this figure and can load their funds much earlier. This doesn't solve the problem of the funds being available, but it will at least give confidence of the amount being sought.

[DebbieCrawford]

Hi

Please dont take the wrong way - as I have no intention of shooting the messenger - but the banks dont get to do our job.  We as the conveyancer finalise figures, not the bank.  We as the conveyancer should be the last to sign off (as the Guildelines indicate).  As you say the banks have developed their own work processes - which is great for refinances - but NOT Transfers.

There are many reasons why figures will be added by other parties, which has nothing to do with the Incoming mortgagee - and therefore the bank should stop trying to do everyones job and only concern them with their side of the process.

Funds required - should be the same as us sending through the cheque split i.e. funds the bank need to enter as source funds - we will sort out the rest - that is our job.

The banks have to stop thinking as it is a refinance and leave us to do what we do.

Hopefully as you say  it is a "work in progress" and the banks will come to see our way.

I also appreciate that each State is different -  but why is it that it seems that WA seems to have to fall in line with the other states.  Each state is different in the way things are processed - therefore the bank should work to each state.  We as conveyancers have to work to different banks and how they do things - why is it they cant do the same.

I thought the idea was to reduce conversations - if you want to advise a figure that includes figures that are not relevant to the bank - this is only going to create conversations no save them.

We also dont want the example of a payout figure being higher than the funds due to the seller, but because the Incoming Mortgagee has sufficient funds that that the bank increase the source lines to "make it match" and end up paying too much money at settlement.  

You might like to "match" the FSS in refinances - but that is not how we settle Transfers.

The mind set has to change - you cannot uniform two processes that are totally different.

[CatElliott]

Hi @Kate_Camilleri. I think this thread perfectly demonstrates the confusion with the Total Funds Require to Settle function.

Total Funds Required to Settle/Total Source Funds on FSS has been described as interchangeable with what would have previously been the Incoming Mortgagee’s cheque split (including stamp duty and registration fees), however they are two entirely different things/amounts, which is why this issue is arising.

Total Source Funds on the FSS very often also involves Proprietor on Title’s funds, to which an Incoming Proprietor is not privy. For example, the balance of a deposit held in a Trust Account is input by the Proprietor on Title to be disbursed by the Outgoing Mortgagee together with the settlement funds.

This is where confusion and misinterpretation are coming in.

Incoming Proprietors are utilising Total Funds Required in the same way as providing the Incoming Mortgagee with cheque directions - they are using this function to advise the Incoming Mortgagee of the amount they are required to Source from Loan Funds and/or Purchaser’s Equity.

Where problems are arising is if the Proprietor on Title has also input their own Source Funds.  The Incoming Mortgagee is then only inputting shortfall sufficient to make Source Funds up to the Funds Required, when the intention is that the Incoming Mortgagee should input the Total Funds Required amount in full (on top of any other Source Funds).

Total Funds Required is entered by the Incoming Proprietor, however they have no way of knowing the Total Source Funds required in the FSS, only what they require from the Incoming Mortgagee.  Even if the Total Source Funds Required in FSS were known by the Incoming Proprietor, it seems counterproductive, and causes a real issue with timing, to have a party input a shortfall or difference which would rely on whether or not other parties have or will be inputting their own funds, when they can simply be told an actual amount to enter.

Accordingly, Total Funds Required would better serve its purpose if it were specifically to advise the Incoming Mortgagee of their required Source Funds (from both Loan Funds and Purchaser’s Equity) - not the Total Source Funds being transacted in the FSS.

[Ames]

Hi @CatElliott and @Kate_Camilleri

Total Funds Required to Settle should not be equated with total sources in the FSS, for the reason Cat gave - the Vendor at times will add their own sources.

Total Funds Required to Settle should also not be equated with total funds required from the incoming mortgagee, as the purchaser may provide funds also.

Perhaps a simpler explanation is Total Funds Required to Settle is the total of funds required to be contributed by the incoming sides (e.g. by the purchaser, either by funds they have borrowed (loan proceeds) or funds they already hold). The purchaser's money could be contributed by either their lender, or their practitioner, or both.

Ames.