Jesse Dardha: the essential supporting document

BDM of business lawyers E C Legal on why solicitor’s certificates are becoming vital to brokers

Jesse Dardha: the essential supporting document
BDM of business lawyers E C Legal on why solicitor’s certificates are becoming vital to brokers

The mortgage lending industry has changed greatly over the last few years. 

Essentially, there is an increased reluctance within the big end of town to take on any lending that does not fit the model of a salary earning borrower financing residential property. The credit code imposes a responsibility on lenders to enquire about the capacity of the borrowers to service the loans. Businesses wanting to borrow to purchase real estate sometimes have difficulties demonstrating their servicing capacity.

If the borrowing is for business purposes and uses property owned by other family members to secure the loan, then getting approvals from the big banks can be very difficult.
This has led to an increase in the non-conforming or low doc loan area. These types of loans include all different types of security arrangements other than those that follow the cookie-cutter model preferred by the big banks. Nonconforming and low doc loans concentrate on the securities available if there is a default on the loan. A number of smaller lenders service this area. 
Each lender will have its own set of loan documents. Often, the loan documents are detailed and complex. There will be some nervousness on behalf of the lender about ensuring that the borrowers and security providers fully understand the agreements that they are signing up to.
Cases have been brought before the court where the borrowers have claimed ignorance of loan particulars and a lack of information at the time of the application. The usual excuse for a default is that the borrowers or security providers didn't understand what they were signing. This has placed a considerable onus on brokers and lenders to clearly outline loan particulars and obtain evidence of the understanding of borrowers and security providers by way of advice from a solicitor to the borrower or security provider at the time of the application.
With low doc and non-conforming loans, the lenders usually want a solicitor’s certificate signed regarding advice provided to the borrower. 
We see plenty of mortgage brokers who have the mistaken belief that this is incumbent on the lender to arrange. Most of the brokers we speak to have expressed their frustration at a loss of control of the documentation process, unnecessary delays whilst borrowers organise lawyers to sign the certificates and extra cost for their clients.
When your clients need to provide independent solicitor certificates and or personal guarantor forms, E C Legal can provide easy registration through our website, meet with the clients quickly – often on the same day and offer a flat fee with no surprises.
E C Legal works for both borrowers and lenders in preparing and advising about loan documentation. We have streamlined a process designed to make sure that the right advice is given and all documents are completed fast and with minimum cost. 
Whilst the borrower bears the responsibility in making an informed decision, sometimes those borrowers or security providers need some help in getting the right advice and the appropriate documents signed quickly. 

If this is not done, the broker or lender may find the client suffers an adverse customer experience which means a lack of repeat and or referrals, hitting your business.

Jesse Dardha is the business development manager for E C Legal and previously ran his own mortgage broking company, after a background in real estate. Contact Jesse if you have any queries about solicitor’s certificates and it how they impact your business and read more at