Its that sinking feeling you get when your new client discloses that they are in arrears with CRA. You know that the options for your client just got more limited because many ‘A’ lenders try to avoid borrowers who don’t pay their taxes on time. Sure, maybe you can get it done as an exception if your borrower is strong, but that’s not a given. It’s a vicious circle – your client wants the new mortgage to pay out CRA, but the CRA debt creates a problem getting a new mortgage. How do you break this cycle? What can you do?
Consider recommending the option of a 2-step process to your client. Use a MIC to fund the amount needed to clean up the CRA debt. Most MIC’s don’t mind paying out 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, but if your client wants to break the vicious circle, this may be the answer. To make it a bit more palatable to your client, 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 to pay out the MIC.
Clearly an exception with an ‘A’ lender is still the best solution for these borrowers, but if that’s not available, consider solving the problem with a 2-step process.