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60-day notice/ late on mortgage payments Robert & Stacey

Robert is a firm believer that the early bird gets the worm! he puts in many hours at work and makes sure his family does not lack for anything.  Robert is a general contractor and things are going quite well for him. His wife Stacey is a personal support worker and a devoted mother of two young daughters, aged 7 and 9 years old. 

As luck should have it, Robert gets lucky! happens on two very juicy contracts that will be more then worth his while. Unfortunately, after working countless hours on them and hiring his crew to execute the work, the contracts do not pan out and the companies he had the contracts with both go bankrupt…  

Robert is in a jam; he must pay his workers and for some pre-ordered materials for the job. His budget is completely out of balance… He is a proud man, and he does not talk about it to his wife, not wanting to worry her. He decides to skip a mortgage payment or two, just the time to get some other contracts going and put everything back on track… 

But when it rains it pours… He unexpectedly hits a dry spell and cannot seem to get any contracts. He is losing sleep thinking over his situation and trying to figure something out. He keeps up a confident façade but deep down he has never felt so out of control in his life. 

It is Stacey’s birthday, and he has planned to get her a wonderful gift to show her how much he loves her. He arrives home anticipating her usual beautiful smile waiting for him at the door. When she opens the door, she has tears in her eyes. Somebody else came today to give her a gift… The bailiff with a 60-Day Notice! This is not what Stacey had in mind for her birthday… 

Here are the details of Robert and Stacey’s financial situation: 

  • 310 000$ is the value of their home. 
  • 230 000$ is the amount owed to their bank. 
  • 6 000$ is the amount owed in mortgage arrears. 
  • 10 000$ in combined personal debts 
  • 246 000$ is the total amount required to get the situation under control. 

246 000$ / 310 000$ x 100 = 80% loan to value on the home.  

The right Solution: Lease-Buyback to stop a 60-Day Notice. 

Lease-Buyback is an alternative financing solution which consists of: (a) transferring the property temporarily to one of our designated investors, (b) leasing it for a term of 2 to 5 years and then (c) transferring it back to you at a fixed priced. During the lease period you follow a credit repair program to make sure that your credit is re-established and that you can buy-back your property without a hitch.  

You sign a lease-buyback contract that gives you the exclusive option to buy-back the property. Also, since the lease-buyback price is fixed at the beginning of the term, there are no surprises and you get to keep any appreciation above that price, if your property is worth more! Example: lease-buyback price is set at 335 000$ and property is worth 345 000$. The extra 10 000$ is yours to keep! 

Why did we go with a Lease-buyback for a 60-Day Notice instead of a private loan?  

The private loan is not viable solution for two main reasons:  

  • Robert & Stacey’s debt level and loan payments would be too expensive for them to sustain.  
  • Private lenders will usually limit their loans at 75% of the value of the property.  

In our current situation, a private loan at 75% of the value of the property would simply not be enough to pay off all of Robert and Stacey’s debts. Also, a private loan would be more expensive than the lease buy-back option. they would be looking at a 12% interest-only payment with the private lender! 

With the lease-buyback program, the payment is comprised of a rate of 5.99% + taxes + home insurance, with a minimum monthly lease credit of $100 per month. This is comparative to a traditional mortgage where you have a portion of the payment going towards the principal and the other going to interest, the lease-buyback program offers you a minimum of at least $100 per month that gets applied against your future buyback price!  

What it looks like in numbers: 

  • Lease buy-back: $2,035 per month (including property taxes and home insurance) with an additional $100 per month as lease credits for the next 36 months. 
  • Lease credits would add up to between $3,600 to $6,000 over the length of the term (3 to 5 years) 

VS 

  • Private loan: $2,920 per month in mortgage payments, you need to pay your city taxes, school taxes and home insurance on top of this payment. 
  • $0 from your monthly payments get applied your mortgage balance. 

Benefits of a lease-buyback solution for a 60-Day Notice: 

  • All creditors are paid,  
  • Debt consolidation without making a proposal to the consumer,  
  • Reduced monthly payments, 
  • Keep their home,  
  • We offer support for their credit repair with the CCBU (Canadian Credit Bureau) over the term, 
  • Buyback price of the house is fixed, thus even if the value of the building exceeds the price of the agreement, Robert and Stacey buy it back below market value!  
  • Monthly payments are lower than a private lender, which translates into more liquidity in their pockets for savings and a safety fund. 
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