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Welcome to the Consumer Proposals category of the Support Group. Don't want to file bankruptcy? A consumer proposal is an alternative. This is the place for discussions about Consumer Proposals.
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Discussion: Mortgage renewal/transfer during consumer proposal  (Read 18440 times)
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« on: March 12, 2011, 05:22:32 PM »
TreeFrog
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Hi, All,

Just wanted to share this part of my story. I filed a consumer proposal in 2009. I asked the trustee what would happen about my mortgage renewal in July of 2011, and he quite correctly told me that mortgages are almost always renewed as per usual, as long as the payments are up to date.

This was comforting until I learned that my mortgage company, GMAC, was phasing out its business in Canada, and had decided not to offer renewals to ANYone (not just those whose credit ratings had declined). In a later twist, I found out that "selected" GMAC mortgages in Canada were "being renewed" by GMAC's Canadian holding, Resmor Trust. However, although GMAC recently sent me a letter inviting me to talk to Resmor about my renewal, Resmor informed me that all GMAC applicants had to re-qualify according to Resmor's "A" mortgage lending guidelines.  Thus, I would not qualify for a mortgage with them. That left me out in the cold, and quite panicked.

My trustee was very reassuring, and told me that many of our local lenders had recently becomes educated about consumer proposals, and were now aware that they were not the same as bankruptcies. He referred me to three in our community - two were credit unions, and one was CIBC. I went to a meeting with one credit union, and they were very welcoming and sat down and looked at my numbers. My trustee was vouching for me that was was paying my proposal payments regularly, and they took that into account, plus the fact that my other data (income, house value, etc.) fell within their guidelines. It probably also helped that my Equifax Beacon score is now 628 - not great, but pretty good for a person in a proposal (I've had two secured credit cards for almost a year). The credit union offered me a five-year closed mortgage at the posted rate. They are not requiring me to roll the proposal amount into the mortgage financing (there's a TD-Financial mortgage product that does this, so I wondered if it would be required).

I am delighted! My two years of worrying about this are over.

I am posting this in case anyone else is in the same worrisome situation.  We've been hearing for two years that it can be impossible to get new mortgage funding during a proposal. This is obviously no longer the case.  I saw a press release recently that Equity Financial Trust in Toronto will be offering similar deals - although at a slightly increased interest rate.

Many individuals in consumer proposals need mortgage funding and are good potential customers. The mortgage biz in Canada is waking up to this. If you are in a similar position to me, don't take a raw deal - shop your business around until you get a fair deal. There are decent options out there now.

Best wishes,
~Wendy
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« Reply #1 on: March 12, 2011, 07:06:30 PM »
Sunny
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That's wonderful to hear! I'm sure you were just gutted when you heard your mortgage wasn't going to be renewed. Can I ask which credit unions you were talking about? We're with Meridian right now, and I really have no idea how they view proposals.
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« Reply #2 on: March 12, 2011, 08:14:12 PM »
TreeFrog
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Yes, it was a worrisome time after my proposal, because I began hearing rumours that GMAC wasn't renewing anyone because their parent co. in the USA was going bankrupt ... then that GMAC wasn't going bankrupt after all ... then that they were leaving Canada ... then the vague stuff about Resmor.  GMAC told me to inquire 120 days before the term was up, so I did, on March 1, and found out that I'd be mortgage-shopping. Fortunately I'd told my trustee about my concerns previously, and he'd reassured me that there would be options. But I didn't really believe it fully until I met with the credit union. Credit unions tend to focus more on "common sense" lending. So, if you have a CP but otherwise your credentials are good, they may be the people to see.

The particular Credit Unions my trustee recommended were Superior and Northern Lights - but I think these are very local to Northern Ontario. I met with Superior and they'll be doing my mortgage, at their posted rate of 5.25%. My trustee also mentioned CIBC. I guess the thing is, if you're in need of mortgage funding, don't despair or assume that you'll have to go to the knee-breakers ... summon up your courage and ask around. Options are opening up.

Best wishes!
~Wendy
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« Reply #3 on: March 15, 2011, 11:18:32 AM »
Lilly83
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Hey Wendy, that is GREAT news! Thanks for sharing your story!

This deffinatly makes me feel better about my situation even though I do not have a mortage, or the means to need or get one any time soon. But our long term goal is to buy a place in abuot 7 - 8 years and the CP will help me be able to save our down payment.

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« Reply #4 on: March 19, 2011, 06:16:06 PM »
noendinsight
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I am glad you touched on this subject.  It is the main thing that has stopped me from doing anything about my debt problem.  I have only wanted to file for CP on the debts that are in my name only.  Not the mortgage or Home Equity Line of Credit that my husband and I have together.  I am very afraid that it would affect us being able to renew our mortgage when the time comes.  I don't think he would ever forgive me if the choices I made caused us to lose our home, or sent our interest rate sky high. 
Has anyone ever come across this particular problem ?
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« Reply #5 on: March 19, 2011, 10:27:39 PM »
TreeFrog
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Hi noendinsight,

The only reason I anticipated any difficulty was because my mortgage company left Canada during the term of my mortgage and so was no longer doing any renewals - thus I had to approach another financial institution during my proposal for financing.

If you file a CP, it will affect only your unsecured debt, and not your mortgage or any other debt such as your line of credit that is secured against your house.  Your mortgage co. will receive a notification of your CP, but normally they pay no attention and simply renew at renewal time, as long as your payment history is good.

So, I wouldn't let this concern keep you from investigating a solution to your debt problem.  Go see a trustee and they should be able to reassure you on the matter.

Best wishes,
~Wendy
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