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No matter which reason pushed you, but foreclosure is definitely not a good situation to be in. If the bank has sent you the letter stating that they are foreclosing your home, then surely this is a very difficult time for you. Although it is uneasy and you are finding no way, know that you are not alone. Thousands of families not only in Canada but also in the whole world are in a similar situation to yours.
But again, even if the foreclosures are not uncommon, they are not favorable too. So, moving to the main agenda, what to do in this situation? Well, it depends on where you live in Canada. But mainly, you have two options: One, the power of sale; two, judicial foreclosure. Neither of these is ideal, but it is still a remedy for a situation you are in.
As a matter of fact, the household debt in Canada has reached an all-time high. Now, the average Canadian owes $1.65 for every $1.00 of disposable income. The national average for credit card debt has now reached its highest at $3,500. In the total debt of $1.8 trillion, a hefty $1.29 is mortgage debt. So, in such an alarming situation, homeowners are finding it difficult to pay their monthly bills, let alone mortgage payments.
Despite low-interest rates, stable inflation, and increasing house demand, the debt problem is unabated. Thus, the chances of an average Canadian defaulting on payments are much high now than ever before.
Lenders and Foreclosure
Foreclosure may not be a pleasant thing for the borrower, it is not ideal for the lender as well. In fact, a lender exhausts all its options before delving into the foreclosure process. This is because there are various legal troubles and expenses that are attached to foreclosure property.
For anyone trying to get the property back, there is a gulf that they need to pass. The process is time taking and exhausting for everyone involved. So, it is a no-brainer for the lenders to first try all the options and then go for foreclosure.
Understanding Foreclosure Process in Canada
If you have missed just one payment and think that you will receive a foreclosure notice, then you are mistaken. If it is just one payment missed, contact your lender and they will be happy to settle this for you. Foreclosure comes into play only when you have missed a couple of payments and have not contacted the lender.
If missing payments becomes the habit of a borrower then the lenders have no other option but to start the foreclosing process and take your possessions back. If you haven’t made payments on time, you might have received the bank warning already that they could start the foreclosure process shortly.
So, if you are a borrower and have received the foreclosure notice, you can opt for one of the two options discussed below.
1. The Power of Sale
You might be able to get a second mortgage to put behind the first one in order to pay off any arrears, administrative and legal expenses, and get the mortgage back on track.
Borrowers can redeem their home equity at any moment until the property is sold and closed. In truth, with a few exceptions, the power of sale is special protection for the borrower in which the lender is unable to take any further action for 37 days and the owner has the right to reinstate the loan.
Before the power of sale may begin, the foreclosing lender must give you notice and allow you to redeem your property for a set number of days, which varies by province. This time period is 37 in Ontario.
This means you have 37 days to pay off your mortgage obligation and get your mortgage back on track with the lender. You have 45 days to come up with the money if the power of sale is statutory. The lender is prohibited from taking any further action against you until the notice of sale has expired, according to the mortgage statute.
2. Judicial Foreclosures
In British Columbia and Alberta, where the courts supervise the foreclosure process, judicial foreclosures are popular. It’s critical not to panic during a judicial foreclosure and end up doing nothing. True, a bank foreclosure doesn’t always mean you’ll lose your house but doing nothing when you’re served with papers almost always does.
Speak with your mortgage consultant about merging your debt – both mortgage and consumer debt – into a new first mortgage.
When the lender, now known as the plaintiff, files a statement of claim with the court, a judicial property foreclosure will begin. The plaintiff will also serve a copy of the statement of claim on you, the defendant. You have 20 days from the time you receive a copy of the statement to respond.
This might be done in the form of a defense statement or a demand for notice. These deadlines differ by province, so consult a mortgage specialist as well as legal counsel. This material is not intended to be taken as legal advice and should not be treated as such.
Do it, whichever option you choose. If you don’t accomplish this, you’ll lose your case, and the court won’t consider your viewpoint when making their decision. As a result, you are quite likely to lose your home.
If you submit a statement or a demand to the court, they will assess your case and may issue a redemption order. This allows you time to correct your position by getting your mortgage in good standing and staying out of foreclosure.
If both above methods are not feasible in your case, then you can speak with your lender to see if they have any options for a loan modification. If yes, then there is surely a short-term relief for you. However, if you are facing a bank foreclosure or power of sale in Canada, then do consult with experts. Remember doing anything on your own can create more difficulties for you. So, don’t do anything and go straight to experts for this.
The Bottom Line
At Lionsgate, we specialize in helping people get the extra cash they need, obtain funding for private mortgages, as well as for other real estate transactions. If you are looking to buy land in Canada, get a mortgage or apply for a loan, fill the form below. Or, You can leave us a message and we will try to connect you with local lenders and sources that best meet your needs.
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