Credit Repair

[saskbrian]

When we are talking with potential RTO folks with credit issues, we tell them that one of the benefits of doing an RTO is that it can help them repair their credit file. How is this accomplished? Do I as the landlord report their monthly payment history to the credit bureau? Is my mortgage broker somehow involved ?
I want to be sure I know what I am talking about. Thanks.

Saskbrian

 

[RobMacdonald]

What you need to do is set up a realtionship with a mortgage broker that is will to counsel the clients over the period of the LTO option.

I work with a couple of groups in Vancouver and take mortgage applications from their potential LTO buyers. I review their application, identify what the pitfalls are to qualiifying today, and provide and few recommendations on how to repair their credit or resolve whatever the issue is.

If the clients are successful and proceed with the LTO, then I will contact them every 4 to 6 months over the term to check their progress. As we get closer to the end of the term, I will arrange for a pre-approval, so we can insure they are able to complete at the end of the term.

Part of the problem with LTO programs in the past, is that no one worked with the tenant buyer. And whatever issue they had today, was still an issue 2 years down the road. The process above helps to increase the success of the program.

 

[mortgageman]

QUOTE (saskbrian @ Jan 29 2010, 08:10 AM) When we are talking with potential RTO folks with credit issues, we tell them that one of the benefits of doing an RTO is that it can help them repair their credit file. How is this accomplished? Do I as the landlord report their monthly payment history to the credit bureau? Is my mortgage broker somehow involved ?
I want to be sure I know what I am talking about. Thanks.

Saskbrian

In many cases part of the difficulty for the tenant is they have no credit. Some lenders will use a reference letter from the landlord plus a history of good payment of a utility bill or two to establish creditworthiness.
Yes, mortgage brokers can offer valuable counseling/coaching to your RTO tenants.
All the best
Jason

 

[kboughen]

QUOTE (saskbrian @ Jan 29 2010, 10:10 AM) Do I as the landlord report their monthly payment history to the credit bureau? Is my mortgage broker somehow involved ?
Hi Brian.

Equifax will not report LTO payments on the credit report. Your clients will need to have good revolving credit history (along with other things) to qualify for a mortgage in the future. As Rob and Jason have already mentioned, if you want to give your tenant buyers the best chance to succeed at the end of the LTO Term, you should work with a Mortgage Broker that understands the entire LTO process and is willing to coach your tenant buyer.