The circular pointed out that in order to prevent mortgage transactions from being blocked due to the suspension of law firms, the Hong Kong Association of Banks, the Association of Depository Companies, and the Association of Licensed Money Lenders of Hong Kong have proposed new mortgage payment arrangements after research. The buyer’s mortgage bank will directly pay the money to the seller’s mortgage bank through the clearing house automatic transfer system (CHATS), and the balance (ie the first installment) paid by the buyer will also be directly paid to the seller through the bank’s cashier’s check. If the seller has paid off the mortgage, the buyer’s mortgage loan will also be transferred to the seller via CHATS.
The Hong Kong Monetary Authority pointed out that it strongly supports the above-mentioned new arrangements to provide better protection for the mortgage transactions of bank customers and reduce the bank’s operational risks.
The circular also pointed out that it is estimated that the new arrangement will be officially implemented in 3 to 6 months after the new arrangement is finalized. It is expected that the first stage will only be applicable to second-hand residential property transactions and remortgage transactions. In the initial stage, only licensed banks will adopt the new arrangement for first-hand transactions. Nor is it included in the new mechanism. After completing the consultation, the bank will have a preparation period of 3 to 6 months. In the future, depending on the results, it will be decided whether to expand to other types of transactions and other institutions.
On December 24 last year, Huang Fung Law Firm was taken over by the Hong Kong Lawyers Association because a former clerk suspected of dishonest misappropriation of client money, and the business ended immediately. Huang Fung Law Firm handled a large number of second-hand property transactions, but all accounts and client funds of the Law Firm were frozen, affecting client property transactions. The incident involved more than 150 clients.
According to information from the Legislative Council meeting, from 2011 to April 2021, a total of 23 law firms were taken over, and another two cases occurred in November this year. The amount involved frozen funds of 530 million yuan, and it took an average of 2 years and 7 months from the term of the lawyers’ association to unblocking, and it may not be possible to get all the funds back.
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