Example: using home equity to clear $65K of CRA tax debt before a lien is registered

CRA arrears are a special problem in mortgage lending. Once CRA certifies a debt it can register a lien against your property, and for unremitted GST/HST or payroll source deductions its deemed-trust rights can rank ahead of other creditors. Most A-lenders won't advance funds while a tax debt is unresolved. Left alone, the file was heading toward a lien, which makes everything harder and more expensive.

The borrower had real equity, but his bank wouldn't refinance with the CRA balance unresolved — a chicken-and-egg trap.

We arranged financing with a lender that permits a direct CRA payout from the advance — the tax debt is paid in full on closing, removing the lien risk in the same transaction. Because of the CRA situation this sat outside A-lender guidelines, so we used an alternative solution for a short term.

As with every bruised-credit file, the structure included an exit: a one-year term to clear the CRA matter and re-season the file, then a planned refinance back to A-lender pricing once the borrower is bankable again.

The CRA balance was paid in full on closing, the lien threat was removed, and the borrower kept his home. The short-term rate is higher than A pricing, but it's a deliberate bridge — the exit plan is to refinance to standard pricing once the file is clean.