This fall, the banks are bracing for a lot of property foreclosures. Mortgage payments that were suspended during the coronavirus pandemic were not forgiven, they were simply deferred. Now they have to be caught up.
As the expression goes, “the chickens are coming home to roost.”
Many won’t be able to catch up and will become delinquent. The banks will move in to foreclose on these delinquencies. It’s not what the banks want, but they will have little choice.
Some property owners will be facing a foreboding future—moving out of their homes, their neighbourhoods, their schools; losing their hard-earned equity; and getting a huge black mark on their credit file that will take years to recover from.
We can sometimes salvage such a situation and avoid being foreclosed on.
Instead of being forced out of their homes by a bank sale, the homeowner gets to stay in their own home, they get to keep some of their built-up equity, and they avoid the stain on their Credit Report!
Our model helps such people when they are in the redemption period (i.e., the grace period that a judge grants a homeowner after the banks have filed for foreclosure, to pay out the loan before the bank can put the property up for sale.)
Here is how it works:
Instead of selling the home on the open market and being forced to move and become strictly a renter again, and facing a long period to regain home ownership, the client makes a deal with us.
We buy the home at a value high enough to a.) pay out the lender and all legal costs associated with the process, and b.) provide the client with enough cash surplus for their deposit on a rent 2 own contract. This will likely be below market value but there will be no real estate fees.
Simultaneous with the purchase of the home, we enter into a lease-option agreement with the client to rent from us (as per our normal program) for a few years while building back their mortgage eligibility (also as per our normal program). At the end of the term, the client now re-mortgagable, we transfer the property back to them.
Any equity that was sacrificed in the initial sale to us, is recovered at the end of the term.
The client never has to move out of their home, they get to keep their most precious possessions and associations (like pets, which are often not welcomed in many other rental situations, their neighbourhood, their schools); they avoid the massive scar on their credit file; they keep their dignity; and they get to keep most, if not all, of their hard-earned equity.
There are, of course, some qualifying criteria:
– there must be a sufficient gap between the amount needed to pay out the foreclosing lender and the true market value of the property;
– there must be a strong commitment on the part of the client to rebuild their good standing with the banks. (Otherwise, we’d just be postponing the eviction from the property); and
– the home must be a reasonably good investment for us and our investors.
Do you know anyone in that situation? You can help them!
Why not refer them to our website, encourage them to fill out the application and to explain their current situation in the “Comment” section. We will follow up every such application.
Fraser Valley Rent 2 Own has been “Helping frustrated renters become happy homeowners!” for nine years.
Now we’re also putting smiles back on the faces of discouraged homeowners who are faced with losing theirs.