Cleared $65K of CRA tax debt with home equity — before a lien was registered

CRA arrears are a special problem in mortgage lending: most A-lenders won't advance funds while a tax debt is outstanding, because the CRA can register a 'super-priority' claim that jumps ahead of the mortgage. Left alone, the file was heading toward a lien — which makes everything harder and more expensive.

The client 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 client is bankable again.

The CRA balance was paid in full on closing, the lien threat was removed, and the client 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.