Nancy is in a real predicament. She has the opportunity of buying a piece of real estate. This particular home has everything she needs now, everything she can possibly need in the future, a wonderful price, and help from her employer to buy. So why are we talking about her? Three years ago, in an abusive situation, she had to declare bankruptcy.

She was discharged from her bankruptcy in August last year. She has reestablished credit with a leasing company for her car. She has managed to put aside some 5% of the purchase price for her downpayment. She has a good job with a secure future. So what seems to be the problem? All the banking institutions she has visited have told her that she cannot buy this home because she has not been discharged from the bankruptcy long enough.

These lenders have been telling her that because she has but 5% to put down, Canada Mortgage and Housing Corp must insure the loan against default, and that they (CMHC) insists that she be discharged a minimum of two years. The first part of this latter statement is correct, CMHC must be involved; the second part of the statement however is incorrect, CMHC has no policy with regards to a minimum time out of bankruptcy. CMHC's policy is to allow the Lender to make the decision on whether the applicant should be granted a mortgage. Most Lenders do have a policy with regards to bankruptcies, but tend to blame CMHC to "save face".

In Nancy's defence, her bankruptcy was not due to frivolous behaviour, it was due to spousal abuse. She has never missed a housing (rental) payment, nor has she missed any of her car payments. In my opinion, if anyone fits the mould of why the

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Bankruptcy Act was formed, Nancy is it. So how do we get around her problem? Shop around!

We went to national trust company. We offered to put 10% down instead of 5% (her employer would give her that other 5%). We gave them a short story (from Nancy) explaining her bankruptcy. We showed them that Nancy was buying a unit $18,000 under priced, and that she had a budget worked out that afforded her this unit at less than her current rent. With all that ammunition, the mortgage manager took a chance and approved the application. CMHC gave the purchase its blessing and the whole thing fell into place. In some situation, even with a bankruptcy in one's history, mortgaging is possible!

While I'm on the subject of bankruptcy, the new Act allows for applicants to settle their credit through a "proposal". That's where the Bankruptcy Trustee asks the Creditors to arrest their interest expectations, and allow the applicant to simply pay back the principal only. In recent months, we have had several people come to us to get a mortgage approval stating that under the "proposal", they have ample money left over to buy a house. All of these people should know that the lending institutions who went along with the proposal in the first place would object strenuously if they found out that the money you are saving (which is the interest they no longer are collecting) enabled you to buy a house.