Not many mortgage brokers specialize in this realm, as it requires skills and experience not only in mortgage brokering, but specifically with alternative and private lenders. And it also requires a solid understanding of the world of trustees in bankruptcy, administrators of consumer proposals, and debt settlement in general.
Rather than turn tail and hide when someone approaches us with bad credit together with a current consumer proposal or even a past bankruptcy, we get excited, as this plays right into our strengths. We totally nerd out about helping someone pay off their consumer proposal early. Really!
And it truly is a pleasure to help people who have become used to rejection by their bank and other traditional “A lenders”.
We explain they are about to take the first step in a journey back to respectable credit and “A lenders”. As such, it’s best if we all like each other as we plan to be by their side for the next few years at least, as the journey breaks down into a series of key steps.
WE ASSESS: we do a thorough assessment of the current situation. Review the current mortgage financing and develop at least two approaches towards taking equity out of the home to pay off the proposal.
This will either entail a brand new first mortgage, larger than the one they have now, with a new lender – an “alternative lender”, or…
It might be best to leave the current mortgage in place and approach a totally different lender to borrow new money – in the form a new mortgage, called a second mortgage because it sits behind the first mortgage in terms of priority.
We do a sophisticated spreadsheet analysis for each client – looking at both approaches, factoring in all costs and benefits. In most cases, the correct solution jumps off the page.
For example, if the current first mortgage is fresh and would have a very large prepayment penalty if we break it, then chances are a new second mortgage will be the right approach.
WE PRESENT: we prepare a packaged presentation to one or two hand-picked lenders we know best suited for this particular applicant. Every lender has their “sweet spot”.
We understand which lenders will price best for different credit scores, or which lenders are more favorably disposed towards consumer proposal payouts, and which lenders are open to looking at non- conventional sources of income. We also know who to avoid and who to approach when the overall loan to value ratio is relatively high.
WE REVIEW: we secure the best result possible and review with our clients. Assuming they are on board, we then quarterback the entire process – easy for us because we do this all the time. We are in touch with the trustee who administers the proposal; the real estate lawyers, the lenders and loan administrators, and the credit bureau reporting agencies, to make sure this all goes smoothly.
WE UPDATE: once the mortgage funds we are already planning the next stage of the process. We will update the credit bureaus to ensure they are aware the proposal has been paid off and to ensure they are reporting each trade line accurately.
WE ADVISE: we will advise or arrange new credit facilities, if necessary, for our clients, to ensure they are re-establishing their credit history and rebuilding their credibility. We guarantee their credit scores will increase, and in many cases the increase is dramatic!
WE FOLLOW UP: we will touch base with our clients six months after, give or take, to ensure all is going according to plan; that any questions and new developments are addressed, and to confirm the credit scores are going up, up and up!
WE MOVE FORWARD: typically after one year, but it can be more or less, depending on the clients’ unique circumstances, we are ready to take a bigger step forward.
This could be combining the new second mortgage and old first mortgage into one single mortgage at a decent rate of interest, or it could be renewing the existing single mortgage into better terms than were available the previous year.
These last two steps are repeated each year until our clients are right back to where they were in their salad days, before life and too much credit or CRA or whatever temporarily got the better of them.