Working with Bankruptcy

I know, I have said the B word. Most realtors run when they hear those words and for good reason. It means that in the past, someone was not responsible with money. If you run, you will miss out on a fantastic opportunity. Here is what I mean. The client's which will praise you the loudest are the ones who see you going above and beyond. So some good PR at the risk of wasting a few hours of your time.

Step 1) re-establish credit. Any person who goes bankrupt will have a terrible credit score and will have no credit cards or really any avenue to build credit. So step 1 is obtaining a secured credit card. The client will have to prepay an amount and then will recieve a card with a predetermined limit. As long as the client makes the payments on time and uses the card (every month, even a $10 purchase, ie. just gas), the client will start to build a better credit rating.

Step 2) down payment. Now down payment is an issue for people with bad credit, as most lenders will only lend 75% loan to value on a weak beacon score. Encourage your clients to start saving.

Step 3) time. Some lenders will consider a mortgage immediately for a client, but they want a larger down payment and offer higher interest rates. After 2 years, most people with a discharged bankruptcy can get bank rates again for a mortgage, but they must have at least 2 tradelines reporting for at least 1 year.

As a realtor, you may have been told not to work with anyone not purchasing within 100 days, but I encourage you to think long term with your clients. Remember, your personal contacts with any client can turn into a referral with friends and family of the individual.

Good luck out there.

Steve Bucher, Mortgage Consultant

www.mortgagebuilder.ca