Brokers may needlessly be passing up deals involving rehabilitated bankruptcy clients, says one agent servicing that niche and routinely arranging A deals only two years after a financial crisis.
“Certainly, there remains a challenge, but it’s not as challenging as people think it is,” Ajit Hundal, a mortgage associate with DLC Canadian Mortgage Experts in B.C. “It does require more work of the broker, but I regularly get clients into prime rates in two years after filing for bankruptcy.”
That timeframe may surprise even some seasoned brokers working the A sphere and generally gun-shy about taking on deals involving bankruptcy-discharged clients.
They needn’t be, said Hundal, who uses those more complicated deals to make up as much as 20 per cent of his overall sales each year.
Canadian bankruptcy laws allow for bankruptcy discharge in as little as nine months for first-timers, although 21- and 24-month terms are more common.
Brokers generally advise clients that they’ll need another year after discharge to resurrect that failed credit, but that rebuilding can take place during bankruptcy, said Hundal, who has developed strong referral relationships with bankruptcy trustees.
The more-truncated process allows clients to get back into the homeownership game sooner and also expands that potential market for brokers, many of whom are grappling to maintain revenue streams in a slowing market.