“If you are a broker and your customer has bad credit, what do you say to them?” says Jayson Zilkie, director of sales for Refresh Financial in Kelowna, B.C. “The only thing you can do is tell them, ‘Go get a secure credit card and come back to me in a year.’ We know that just doesn’t work, and it isn’t effective.”
For mortgage professionals electing to service the high risk segment of the industry, sourcing money from private investors and other institutions can be costly to their clients oftentimes causing them to lose faith in their representative and seek alternative advice.
Brokers have been undertaking negotiations on behalf of their clients themselves to offset the costs. Bill 55 – introduced in July 1 of this year – has removed any ambiguity on the matter, and now more than ever brokers are boning up on legitimate debt settlement and abatement programs and the benefit they present for all parties involved.
Those new options are emerging just in time.
According to Statistics Canada, household debt to disposable income reached a record high in Q4 2014 when it climbed to 163.3%.
“It has really grown – especially in the last 12 months,” says Zilkie. “The people who have bad debt are usually the ones who are financially illiterate. No one is helping them – there are people who will lend to them, but not help them. Some 25% of the people who are in our program are either in bankruptcy or are just going through it.”
Clients once considered by brokers to be beyond help when it came to mortgage loans are now within reach thanks to new credit repair options.