Getting the facts if you find yourself facing a Power of Sale is essential to saving your home. Understanding your options starts with a clear understanding of the process for a Power of Sale/Foreclosure. Our team has a trusted team of professionals to help you keep your house. They can supply the money through a private loan to stop a Power of Sale or Foreclosure.
The Power of Sale begins when a homeowner or borrower defaults on the mortgage terms. The lender must follow strict guidelines, including sending a Notice of Sale 15 days after the default. A Power of Sale can take four to six months to complete.
The borrower can stop the process at several points. However, if they do nothing, they can be evicted and the property sold. Foreclosure is the other way a lender can recoup their losses after a mortgage default, but these are less common.
Unfortunately, that’s one of the more prominent myths that needs to be dealt with.
The lender can move towards evicting the homeowner, but there’s a process. A Notice of Sale Under Mortgage can be delivered 15 days after the default. The homeowner has options.
There’s a waiting period of 35 to 40 days and a Redemption Period where they can make things right.
If the homeowner doesn’t pay the mortgage or bring it up to date, the next stage is a Statement of Claim. This is important because it allows the lender to ask for the amounts owed and move toward taking possession of the property.
The homeowner gets another chance to file a Statement of Defence to present their side. Barring that, a default judgment and Writ of Possession come next from the lender’s side.
Once the Power of Sale process has reached that point, the homeowners are evicted. The lender then proceeds to sell the property for market value.
The Lender must prepare two different appraisals to ensure the property’s price. Any offer must include clauses stating that the property is being sold in an as-is condition.
There is an order to distribute the proceeds.
Under a Power of Sale, if there’s any money left, it goes to the former homeowner.
People who strain their resources and find themselves with bad credit can face a Power of Sale. However, other groups of home and property owners find themselves involved in this process.
People who break a mortgage agreement and default on a loan can face a Power of Sale. This occurs generally after they miss one or several mortgage payments or breach a covenant in the mortgage. Examples include non-insuring the property or not paying the taxes, damaging the property on purpose, or using it for illegal purposes.
Homeowners have options to stop the power of the sale process. There’s a period that comes after a Notice of Sale is delivered, and that’s called the Redemption Period. This is a period of time during which the borrower can bring the mortgage back into good standing or pay it off entirely. The lender’s legal fees need to be included as well.
One way to get the money to stop the Power of Sale process during the redemption period is through a private loan. The process here is more streamlined than with a traditional mortgage. Plus, acceptance is based on the amount of equity in the property. Equity is defined as the amount of the home that’s being paid off and is mortgage-free.
There are many good reasons for stopping a Power of Sale. Not the least of which is the damage it can do to your credit report and score.
There are several ways that a Power of Sale can negatively affect your credit score. First and foremost are the missed mortgage payments that get reported to credit bureaus before the Power of Sale process starts. Equifax’s credit agency reports that your payment history makes up 35% of your score. The models used in credit scoring look at things like missed payments and your credit history.
Borrowers must also remember that the process can appear in their public records and affect their credit scores. Equifax reports that this accounts for 10 percent.
This is another myth. Lenders need to sell the property as close to market value as possible, if not at market value. There is a legal duty for the lender to give an honest effort to market and sell the property at a fair price. The idea is to cover all the associated costs listed above and return any money left over to the homeowner.
However, power-of-sale properties sometimes sell at a lower price for a few reasons:
At the end of the day, buyers need to compete with other buyers. This auction like system will generally drive the price up to what is a fair market value.
Our team manages several real estate websites such as MortgageBrokerStore.com and PowerofSalesOntario.ca. Led by principal broker, Ron Alphonso, we have over a decade in experience providing private mortgages and resolving power of sale and foreclosure issues. Ron is often consulted by major media outlets such as Toronto Star and Global News for his input.
Our team works with real estate all across Ontario and provides free help and advice to those that call. If you or a loved one is in a difficult Power of Sale situation, considering calling us at 416-499-2122 or by email ron@powerofsalesontario.ca.
jonathan August 26th, 2024
