Refusal to pay mortgages post-separation an alarming trend
The Centre for Women’s Economic Safety (CWES) is advocating for enhanced protections for victim-survivors of post-separation economic abuse, including reforms in mortgage and lending practices to support women and their families in keeping their homes.
Among the members of CWES’ advisory panel with lived experiences, 84% encountered financial and economic abuse post-separation, while 94% were burdened with the responsibility of paying shared financial liabilities or debts from their ex-partner.
Such scenarios were consistently witnessed by the organisation’s Money Clinic service, which offers personalised support for women enduring economic abuse.
Understanding post-separation economic abuse
Post-separation economic abuse manifests in various forms, such as concealing assets, depleting property pools, neglecting child support payments, imposing new costs and debts on partners, and crucially, by refusing to uphold mortgage repayments. This form of abuse spans across all regions, ethnic and religious backgrounds, as well as all education and income levels.
The fastest-growing cohort of homeless Australians comprises women over 55, with domestic abuse being the primary contributing factor. CWES stressed that assisting victims in maintaining housing can mitigate the impacts of abuse and aid in rebuilding lives without the looming threat of homelessness.
“All too often, we ask ‘why doesn’t she leave’, when our lived experience data shows that abuse doesn’t end at separation,” said Rebecca Glenn (pictured above), CWES CEO. “Even when there’s not the same physical proximity, perpetrators can still extend control and abuse through economic resources.”
Need for mortgage and lending reforms
Glenn highlighted a concerning trend where perpetrators refuse to contribute to mortgage repayments post-separation.
“In these cases, banks can, and often do, seek full repayments from the victim,” he said. “The concept of joint and severally liable is not well understood in Australia, but it means banks are entitled to chase one party on a joint mortgage for the whole amount owing.”
Research by FiftyFive5 for CWES found that a majority of Australians believe mortgage repayments should be split equally between partners.
Last year, CWES published a paper urging banks to reimagine banking products, including mortgages. It said many victim-survivors meet repayment obligations to retain assets or stay in their homes, even if it required making financial sacrifices. However, attempts to refinance independently are often thwarted by responsible lending guidelines and serviceability assessments, despite a proven history of successfully servicing the loan.
“This creates a ridiculous situation of victim-survivors being forced into the private rental market to pay rents that are similar to or more than their mortgage repayments, resulting in more costs to individuals, society, and the economy as well as contributing to the growing rate of older women who are experiencing homelessness,” Glenn said.
“We know this is a complex area where there isn’t one single lever we can pull to solve the problem. That’s why we are calling for banks and regulators to work together with the federal government to support survivors of economic abuse through innovation and reform.”
Key considerations should include redesigning joint mortgages to reduce their potential for misuse, providing regulatory relief for longer grace periods to maintain a mortgage, and implementing legal reforms to prevent abuse via Family Law processes.
“We know that secure housing and earlier intervention can save money in the long run, and often what is needed is two to three years’ relief while survivors rebuild their lives,” Glenn said.
“We all have a role to play in ending domestic and family abuse, including economic abuse, and we are looking forward to working with the banks, with regulators and with the federal government to support women’s economic safety.”
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