Most brokers and borrowers know cities and municipalities have the right to sell a property for tax arrears.
And as a broker, you may find yourself in a situation where you’re helping a borrower with property in a tax sale. Both the number of delinquent years and specific process for sale varies from city to city. And despite the differences, the effect is still the same.
If you find yourself working with a borrower facing a tax sale, your solution crafting skills will likely be tested.
Some things that you should keep in mind when working in these situations:
- If a borrower’s property taxes are in arrears, it is likely that there will be other debt issues as well. This may not always be the case but it does occur often enough.
- Property taxes are charges that rank in priority ahead of mortgages. So, lenders may be extra cautious in underwriting files where the property taxes have fallen into arrears in the past.
- When presenting the file to a lender, think of it like you would a foreclosure rescue file.
- You’ll want to provide a comprehensive plan for the lender to show how the borrower got themselves into the situation they’re in.
- The lender will need to know how the new mortgage will fix the situation
- And you’ll need to show the lender the changes the borrower has made to ensure this financial situation doesn’t occur again.
And remember, a well-prepared application will go a long way to getting an approval.
If the borrower can demonstrate that their situation was a one off and not likely to repeat, this can also help with their approval.
The experienced underwriters at Kokanee Mortgage are well versed in being able to see the character of the borrower. We know when a borrower takes steps to better their situation, they should not be defined by their past.