Nobody wants to be faced with the prospect of losing their home. For some homeowners, all it can take is a lost job or a sick or injured loved one to put a strain on the finances and miss a few bill payments – namely the mortgage. We’ve outlined the difference between Power of Sale and Foreclosure and how the Power of Sale Process in Ontario works and what to do if you are faced with a ‘Notice of Sale’.
Power of Sale vs. Foreclosure
If you find that you are unable to make your monthly mortgage payment, after 15 days the lender can send what is called a ‘Notice of Sale’ which is an official letter sent to all individuals in the mortgage agreement that states when the final payment must be made.
The key differences between a Power of Sale and a Foreclosure are that in a Power of Sale the lender sells the property and the former homeowner gets the excess profits from the sale of the property. In a Foreclosure, the lender takes title of the property and the homeowner gets nothing from the sale of the property. The Power of Sale process takes approx. 6 months and a Foreclosure can take up to a year.
What to Do if You’ve Received a Notice of Sale
In the case of a missed mortgage payment, the lender has the ability of being the Power of Sale process in order to recoup their money. A Power of Sale can also happen if the borrower happens to be using the property for an illegal purpose, if they have not kept the property in good condition, paid property taxes or don’t have adequate property insurance.
According to Ontario laws, residents can be evicted and see their homes sold in order to pay the mortgage lender the principal amount they initially loaned. This amount includes interest and related expenses and fees, which can add up quickly.
Luckily, there are several effective methods you can use to stop the Power of Sale process, and if you work with an experienced Mortgage Broker, you can ensure a stress-free experience.
Stopping Power of Sale
For a lender to proceed with a Power of Sale, they have to follow a relatively strict process. At Burke Financial, we use our expertise and knowledge to help borrowers behind on their payments by stopping a Power of Sale from occurring. We can help get lenders off your back and put you on the road to financial security and stability.
Our team has the experience to STOP Power of Sale proceedings in their tracks and can do so using a number of tried-and-true methods. We help stop Power of Sale proceedings across Ontario.
Here is what you can expect to experience during Power of Sale proceedings:
The first step in Power of Sale proceedings in Ontario is contacting the borrower. Typically, this step is done in writing. This point of contact notifies the borrower that they are in default and gives them a chance to fix the problem.
If the situation is not taken care of, the lender will then deliver a Notice of Sale via registered letter, as well as notice under the Bankruptcy Act. This can only be done 15 days after the borrower has gone into default and no sooner. According to the Ontario Mortgages Act, the notice of sale must be sent to all appropriate mortgage agreement parties, including creditors.
At the point of the redemption period, a lender cannot take any further action for 35 days. If a married couple occupies the property, the lender must wait 40 days. This is called the Redemption Period. During this redemption period, all mortgage arrears must be paid to bring the mortgage into good standing. If the mortgage is due, the borrower must pay off the entire mortgage debt (including any of the lender’s legal fees). This can be done by using a debt consolidation loan.
If the borrower cannot pay the lender the appropriate amount during the redemption period, the Power of Sale moves to the next step. At this point, the lender issues the State of Claim to collect any owing amounts and take possession of the property.
If a borrower does not file what is called a Statement of Defence, the lender can obtain a Default Judgement, have a Writ of Possession, deliver that writ to the appropriate authority in the jurisdiction where the property is located, and that authority (sometimes a Sheriff) will arrange for an eviction. Only after all of these steps are taken (and the physical removal of the borrower from the property) can the lender sell the property to recoup their losses.
At Burke Financial, we specialize in communicating with lenders on behalf of our clients and delivering the best techniques and resources to combat a Power of Sale in Ontario. When it comes to protecting your home and your family, we leave no stone unturned. Our Mortgage brokers are available on-hand to put a stop to this process and ensure you remain in your home.
Stopping a Power of Sale on your home can be a complicated process unless you have a team of experts on hand to guide you through every step. Contact us today.
