Some practical case examples of how we work.
Client approaches a mortgage professional for a second mortgage for the purpose of consolidating bad debts. Their situation is as such:
Appraised value of home: $480,000
Existing 1st: $335,000
Total bad debts to be consolidated: $70,000
The agent would like to place them with an institutional lender to reduce costs. They need the LTV to be no more than 80%, consolidating debts would put them at approximately 84.4%. Instead the agent refers the client to SCS:
Our lawyer reduces the $70,000 to $45,000 including fees and provides settlement agreement letters to the agent or lenders lawyer.
Effectively the LTV requirement is now 79%, leaving a 1% buffer for fees and making this deal totally viable.
The client's beacon score begins to raise within 30 days, and by the end of the mortgage term the lender has no issue replacing themselves.
Client approaches mortgage professional to purchase a home, has a large down payment but outstanding collection items. The agent explains that the interest rate will be over 5%, the client starts thinking about approaching other agents. Instead, the agent suggests the following solution using SCS:
Purchase price: $515,000
Money for down payment: $80,000
Total bad debts: $40,000
Our lawyer uses a portion of the down payment to settle the debts, reduces them to $25,000 including fees
Remaining down payment: $55,000
Client now has no bad debts, and still has over 10% down. The client can either proceed with financing now, or wait a few months as the beacon score increases to obtain the lowest possible rate.
Client has been approved for financing, deal is at the lawyers closing. Surprise! Upon title search, a lien appears registered on the property. The agent contacts SCS whos lawyer contacts the lien holder the same day and either arranges a postponement, or arranges a settlement figure for the agent to approach the lender with to determine if a further capital injection is possible.
Client approaches a realtor to sell their house looking to downsize due to unmanageable debt, realtor refers them to SCS. Our lawyer coordinates with the lawyer closing the transaction to pay out debts from proceeds and changes the clients financial position accordingly:
Sale price: $725,000
Existing mortgages: $520,000
Total bad debts: $150,000
Utilizing money from the sale debts are reduced to $115,000 upon closing
Client now has an extra $35,000 available from proceeds.
The client’s bureau begins to improve within 30 days and they have additional money for their next purchase.