If you have a borrower with a consumer proposal, helping them may not be as difficult as you fear.
But be aware that alternative lenders treat a consumer proposal much differently than traditional lenders.
If you happen to have been involved in the world of mortgage lending for long enough, you’ll know that a consumer proposal was once called an “Orderly Payment of Debts”. And frankly, this is a much more descriptive name as it better explains what the borrower is working through. As an alternative to bankruptcy, a consumer proposal allows a debtor to make arrangements with all of their creditors to make partial payments. This often occurs over a length of time to satisfy the debt and be able to avoid bankruptcy.
Consumer proposals and bankruptcy are seen very differently by lenders.
This is because these types of debtors are seen as making an effort to make their creditors whole, at least partially if not in full.
Although, traditional lenders don’t generally have a positive attitude toward a consumer proposal. And one can in fact, raise some red flags for many ‘A’ lenders. And they likely won’t lend if there is one still showing on the borrower’s credit report. With an almost guaranteed ‘no’ if there is still amounts owing.
That’s where alternative lenders fill the gap. We are generally willing to pay out Consumer Proposals with the proceeds of a refinance. And if we see one on title, it can actually be a positive indicator of the character of the borrower. So, in this sense, alternative lenders do indeed help borrowers with an orderly payment of their debts.
So, if your borrower has a consumer proposal on their report, give the experts at Kokanee Mortgage a call. Our expert underwriters have mortgage solutions where many lenders do not.