Helping Mortgage Brokers with Declined Clients

©Home Owner Soon, 2006-2009 1

Home Owner SoonThe $ecret Weapon of $ix-Figure Broker$


With strict approval guidelines and lenders tightening their belts, it's becoming increasingly more difficult to get clients approved.

Gone are the days when only the irresponsible were unable to obtain financing.

These days, those with high income, those new to Canada, and even entrepreneurs feel the wrath of the stringent financing qualifications.

Times are Tough


Do these clients deserve to fall through the cracks, while leaving you with nothing to show for your efforts?

Home Owner Soon Is Your Solution!

•No longer will you need to let another valuable client leave unsatisfied, you have another solution.

•No longer will you spend hours upon hours on a client only to end up getting zero for your efforts!

Throwing Declined Tenants a Lifeline


Home Owner Soon is a Toronto-based companythat offers nationwide rent to own solutions for both renters who are passionate about becoming future home owners, and the brokers who fight to fulfill their dream.

In 2006, Realtor Alex Kluge, MBA and Mortgage Agent Guy Lew, AMP identified a hole in the “B” market – a hole that was only getting larger as CMHC tightens lending guidelines.

Most rent to own companies are small local players, but there was no company with the kind of reputation and clout needed to fill the ever-increasing demand for a national rent to own option with a program with a complete solution.

Who is Home Owner Soon?


We are a people driven company governed by those values that best serve our future homeowners, our investors and our team of mortgage brokers and realtors.

We are well aware others have emulated our business model, but we continue to lead and thrive in this industry because our values are what set us apart.

The model does not work without a value based philosophy behind it and a commitment to not only uphold those values but truly live them.

We pride ourselves on being the standard for this industry.

What is Home Owner Soon?


What’s in it for you?


• You are the only one with a solution for your client when other brokers and banks turned their backs. •You can’t lose this deal because another lender cut your rate, or you being forced to buy down the rate due to competition making less fee’s.

• Your client benefits over the long term since their credit is slowly being rebuilt so they then qualify for traditional financing at competitive rates.

• You create additional income now while building a book of business in the future when these clients are handed back.

Why it makes sense to work with us?


•We pay 100 bps for every client that closes a rent to own deal with Home Owner Soon

IT JUST DOESN’T GET ANY BETTER THAN THAT!

How we will compensate you


NO THERE ISN’T. You can send as many as you have at any time, PAST or PRESENT.

How great is that?

Is there a limit to the number of clients you can send us?


Sounds great, but how does it all work?


Rent to own is also commonly referred to as Lease to own or lease option. The terms are interchangeable.

Rent to own is a lease agreement between the owner of the property (the lessor who is a Home Owner Soon investor) and the tenant owner (the lessee) .

Leases are agreed upon by both parties and the lease payments are paid monthly over the lease term-generally 2 to 5 years depending on the credit issues.

Rent to own explained


Option Credits…A set portion of the lease (20%) is credited towards the down payment and later used to purchase the home at the end of the lease term. This is accomplished through the monthly option credits.

Security Deposit…

The tenant-owner is required to bring in a minimum security deposit of 5% and up which is held by the lessor with no obligation to pay interest.

What are option credits and security deposits?


Your client chooses the property they want from MLS according to what amount they have been approved for.

Unlike some rent to own companies, we don’t force people to choose from current inventory. They can pick any home that best suits the needs of the family. That means you get to protect the realtor commission.

This means the house they love, and were initially declined for from the bank, could be theirs after all.

Where does the property come from?


There are two sides to Home Owner Soon.

So who buys the house?

Investor

Home Owner Soon

Tenant-Owner


Home Owner Soon essentially sits in the middle, brokering our investors on one corner and our eager tenant owners on the other.

When your client, which you have referred to us, finds that dream home they are looking for, they let us know.

We then tap into our database and offer the deal to one of our savvy investors. The investor that scoops up the deal then purchases the home in question and the lease to own agreement then kicks in.

So who buys the house? continued...


The lessee has the option to fulfill the purchase at the end of the term by making one more option payment before the lease ends. A sale or transfer price is set in advance and the appreciation rates for the area is based on market trends that can range from 3 to 5% per annum.

The lessee also has the option to walk away from the purchase before the end of the lease without penalty. But doing so would mean the forfeiting of all monthly credits accumulated and the entire security deposit to the lessee.

What happens when the lease is up?


Tell me more about the tenant?


• Low beacon score due to late payments, collections and judgment.• Absence of established credit (beacon R or I).• Bankruptcy and consumer proposal.• Non-renewable mortgage, or deals that are pushed into power of sale.

What conditions make someone suitable for rent to own?

• Business for self guidelines have changed with CMHC .• Current income shy to qualify under TDS rules, but expect future income to rise significantly higher due to the nature of the job


• GDS is 30% based on combined monthly income

• Gross Annual Income / 12 Months x (.3) = Maximum Lease Payment

• Lease Payment / (.0085) = Maximum House Value Tenant Can Be Qualified For

For example…

Income = $60,000 /12 = $5,000 x (.3) = $1,500/(.0085)

Maximum Purchase Price =$166,667 or $170,000

How we calculate their purchase price


Income is King!They need to have a sufficient income to be able to cover the monthly rent plus the monthly option credits.


Why might a deal be

declined?


•Low security deposit; a minimum deposit of 5% is required since this is the foundation for the down payment in the future. In some cases we are now looking for 10%.

(Note: deposits can go up due to employment, property location, credit issue and length of term.)

•Property values priced beyond what the lessee could afford in payments resulting in financial hardship.

Continued…

Things that can decline a deal


• Location is too rural and not marketable if it is in the middle of no where or the zoning is not residential.

• Property is too specialized like cottages, mobile homes, leased and native lands.

• Property is in disrepair with roofing, electrical, plumbing, heating and foundational issues or outstanding work orders.

• Type of employment is too unstable, seasonal, or lack of history.

Other factors for deal declines…


What We Are Looking For

In A File?


For successful candidates, the following documentation is required to start…•Application•Credit bureau•Short paragraph of what happened to your client’s credit.

Once you email your submission to our underwriter, we will respond with figures and checklist of documents we will require for our approval within 24 to 48 hours.

What we require for file submission


How to submit a file


If you have a deal to send our way, please email your deal to our underwriting department…

[email protected]

Tel: 416-840-4521

Fax:416-792-0567

Got a deal to send

mailto:[email protected]


Hopefully, you now see the tremendous potential our program has for both you and your clients.

Please don’t hesitate to contact me if you have any questions about our program.

We look forward to working with you in the very near future.

Sincerely,Guy LewDirector of Broker [email protected]

We looked forward to working with

mailto:[email protected]

Helping Mortgage Brokers with Declined Clients

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