Your new client discloses that they are in arrears with the CRA.
A sinking feeling settles because you know this immediately limits their lending options. And we already know that many ‘A’ lenders will try to avoid borrowers who aren’t in good standing and need to pay out the CRA.
While it can be possible to accomplish the deal through an ‘A’ lender as an exception, that is in no way a guarantee.
So, they need the new mortgage to pay out the CRA but the CRA debt creates the problem in getting the new mortgage.
It feels like a vicious cycle for your client.
So, how do you break this cycle? What can be done?
Consider recommending the option of a 2-step process to your client.
- Use an MIC to fund the amount needed to clean up the CRA debt. Most MIC’s don’t mind paying out the CRA – in fact it’s a large part of the business. Yes, there will be some additional fees and costs associated with the MIC mortgage. However, if your client wants to break the cycle, this may be the answer.
- To the benefit of many clients, many MIC’s offer open mortgages. And for ‘A’ borrowers, the rates and fees will be quite reasonable. Then, once the debt is cleared up, take them back to a conventional lender and pay out the MIC.
Clearly, an exception with an ‘A’ lender is still the best solution for these borrowers who need to pay out the CRA. But the 2-step process is a great way to solve the problem if the exception is not available.
The expert underwriters at Kokanee Mortgage have decades of experience in lending and are always at the ready to help. They know how to craft solutions to any and all mortgage lending issues.