Explainer | What does Hong Kong’s move to cut out lawyers in mortgage transactions mean for property buyers
- The Hong Kong Monetary Authority has cut out lawyers’ role in mortgage transfers in a pilot plan to protect buyers from insolvent legal firms
- But property buyers still need law firms to assist them with other aspects of a transaction
The Hong Kong Monetary Authority has kicked off a pilot plan to cut out the role of law firms as middlemen in the transfer of residential mortgage payments to speed up the payment process and to protect property buyers.
Homeowners who want to refinance their mortgage loans can ask their banks to transfer approved mortgage loans directly, bypassing law firms.
The HKMA said it could expand the Payment Arrangements for Property Transactions plan to other types of secondary market property transactions or even first-hand sales after the end of the trial period in six months’ time.
While the scheme can help reduce the risk of funds getting frozen when the law firm handling the fund goes bust, it will hardly save homebuyers time and cost, according to lawyers and property agents.
What are the major differences between the new payment scheme and the current practice?