Obtaining a letter to support a Section 27 Deposit Release Statement can be difficult. Most bank employees are professional and helpful, but unfortunately some regard mortgage discharges as cumbersome and less lucrative than new home loans. To ensure that you are not dismissed by bank staff when you seek information for your Section 27 Deposit Release Statement, or for a letter confirming the information you have entered into your Section 27 Deposit Release Statement, use the letter samples provided in this article to show your bank manager what you want.
What is a Section 27 Bank Confirmation Letter?
If you are a vendor selling real estate in Victoria you may be entitled to have the deposit released prior to settlement. However the procedure (see our article “Section 27 Deposit Release – How to Understand the Deposit Release Process”) is cumbersome, and there is no guarantee that the deposit will be released at all.
To have the best chance of early deposit release a vendor whose property is mortgaged will require a letter from their mortgagee (lender/bank), on the mortgagee’s letterhead, confirming the information that the vendor is providing in the Section 27 Deposit Release Statement.
Do all banks provide a Section 27 Bank Confirmation Letter?
The short answer is YES! While all of the major banks have a specific form of bank confirmation letter (see the examples below), other lenders are able to generate a letter of confirmation by calling up a customer’s mortgage loan details and instantly generating the required letter.
Why are some bank managers reluctant to provide a Bank Confirmation Letter?
A number of our clients have reported that their bank manager or loan broker has never heard of a Bank Confirmation Letter. It is only when the client provides the bank manager/loan broker with an example of a Section 27 Bank Confirmation Letter that the manager/broker concedes that it is possible for the lender to provide one.
It is becoming more common for bank managers and loan brokers to create difficulties for their vendor customers by telling them that their lawyer or conveyancer is required to contact the bank about the discharge of their mortgage. A client who has been advised to commence the mortgage discharge process with their lender may contact us with a complaint along the following lines:
“My bank manager says that I can’t apply for the discharge of my mortgage because this is something my conveyancer has to do. She says that she needs you to write her a letter requesting a Discharge Form, and then you fill in the form and send it to her and she will send it to the bank’s head office.”
In our experience, the true purpose behind this approach is to allow the bank to eliminate the bank customer from the mortgage discharge process, so that the customer cannot complain about the bank or obtain compensation if the bank causes settlement to fail. Here’s what often happens:
- The bank tells the customer to ask their lawyer/conveyancer to deal with the mortgage discharge process.
- The lawyer/conveyancer obtains the bank’s Discharge Authority form, and has the client complete it with information from the client’s own records.
- The lawyer/conveyancer submits the form to the bank and waits for the bank to reply.
- The bank fails to reply, and as settlement approaches the lawyer/conveyancer follows up.
- The bank tells the lawyer/conveyancer that the form was never received, or the form was not completed properly, or the form was not signed etc.
- The bank reveals that the loan discharge process has not commenced because of problems with the form, and settlement will have to be delayed.
- When the client complains about the delay in settlement and seeks reimbursement or compensation from the bank, the bank blames the lawyer/conveyancer.
When the bank’s customer is the person who has prepared and submitted the Mortgage Discharge Application it is very difficult for the bank to blame the customer, particularly if the customer has submitted the application to the bank personally.
How to get past a reluctant or unco-operative bank manager/broker
To prevent the above scenario from developing, we advise our clients to adopt the following approach:
- Obtain a copy of the bank’s Mortgage Discharge Application form. The more common forms are available from this link: Gadens NMS.
- Print a copy of one of the sample Section 27 Bank Confirmation Letters we have provided (see the samples below).
- Take the Mortgage Discharge Application form and the sample Section 27 Bank Confirmation Letter to your bank manager/loan broker.
- Have your bank manager/loan broker assist you in completing the Mortgage Discharge Application, so that you can ask questions and obtain immediate answers.
- Instruct your bank manager to submit the Mortgage Discharge Application for you, and to provide you with a photocopy with the date and time of submission endorsed on it.
- Instruct your bank manager to provide you with a Section 27 Bank Confirmation Letter similar to the sample you have provided to him/her, as soon as possible.
- Provide us with a copy of the Mortgage Discharge Application, so that we have confirmation that you have applied for the discharge of your mortgage.
- Send us a copy of the Section 27 Bank Confirmation Letter as soon as you receive it, so that we can send it to the purchaser’s legal representative in support of the Section 27 Deposit Release Statement.
How to respond to common “fobb offs” from a bank manager/loan broker
Here’s how some clients have dealt with spurious arguments advanced by some bank managers/loan brokers:
“Sorry, we can’t help with your mortgage discharge because we need a letter from your lawyer/conveyancer first.”
“I am your customer, so I am the person in charge of my finances. I am entitled to personal service without having to pay my lawyer to deal with you.”
“Your lawyer or conveyancer will help you to prepare your mortgage discharge application.”
“How can my lawyer/conveyancer help me when they don’t have access to any of my loan or financial records. You have all of that information in your computer systems.”
“We prefer to deal with a customer’s lawyer or conveyancer in mortgage discharge matters”
I want to be in a position to monitor the progress of my mortgage discharge and to deal with any problems that might arise. I want the bank to be answerable to me, and not want to have to go through my lawyer/conveyancer for answers regarding bank matters.
“We don’t provide Section 27 confirmation letters, and we have never heard of a confirmation letter.”
All banks have the information needed to confirm the information in a Section 27 Deposit Release Statement, and I have a few examples from different banks that I downloaded by my lawyer’s website (see examples below that can be downloaded). I just want a letter on the bank’s letterhead in a similar format to that used by most of the other banks.
Examples of the Section 27 Bank Confirmation Letter
The following are examples of the more common Section 27 Bank Confirmation Letters provided by the major lenders in Victoria. Click on any of the images below to access a PDF version of the document which you can then print and give to your bank manager or mortgage broker as an example of the type of letter you require to support your Section 27 Deposit Release application.