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What Does a Home Repossession Mean?

What Does a Home Repossession Mean?

Ontario homeowners are very proud to own property and work hard to keep their property in the best condition while ensuring the mortgage(s) on their property remain in good standing. In this Province and across the country mortgage default remains a very rare occurrence. Of all household debt, most Ontario homeowners will work diligently to keep paying their mortgage on time and in full. 

Recent statistics reflect this reality for Ontario homeowners. According to the numbers released on February 24th by the Canadian Bankers Association, of the 2,083,895 owned properties in Ontario, only 0.10% have fallen into mortgage arrears as of November 2020 which totals 2,008 properties.

Although homeowners falling into mortgage arrears remain a rare occurrence, lenders do have the authority under the Ontario Mortgages Act to utilize one of two methods available to handle mortgage default. As a rule of thumb, most Ontario-based lenders tend to use the method of Power of Sale to try to encourage homeowners to put their mortgages back into good standing or try to repossess the property if the mortgage remains in arrears. 

The other main method used to handle mortgage default is referred to as Foreclosure. Although rarely utilized by Ontario lenders, foreclosure requires court approval to undergo the default process and usually takes much longer than a power of sale to complete.

If you are facing the threat of repossession of your property by your lender, it is imperative to try to take the necessary steps to prevent losing your home. It is of equal importance to understand fully one of the final steps in the power of sale process here in Ontario– issuing the Writ of Possession by the courts that can lead to being evicted by a sheriff from your home. 

Is there Time to Reverse the Default Proceedings?

You have been informed by your lender that you are officially in arrears in your mortgage. Your lender is now informing you that a power of sale is being initiated on your home. Do you have time to reverse this decision? Do you still have time to put your mortgage in good standing? 

The answer to these pressing questions is yes. Although there are only a few legal options to delay the default process including filing for a Statement of Defence or asking a judge to delay the default process, these options are extremely expensive for the homeowner and rarely are granted. There are other ways to prevent the lender from taking back possession of your property. These options include:

  • Allowing an Ontario-based buyer to purchase your property at fair market value with a discount. This option is quick and straightforward and does not require the services of a real estate agent and the cost of renovations or fixes because the property is sold in the state the property is currently in.
  • Refinance your principal mortgage. This option enables an Ontario homeowner to change the terms of their first mortgage to provide funds to pay back the mortgage arrears and enabling mortgage payments to be made comfortably.
  • Take out a second mortgage on the property. By taking out any type of second mortgage options using existing home equity, the funds will be available to put the mortgage back into good standing and enable the Ontario homeowner to pay the monthly payments moving forward. Different types of second mortgages include Home Equity Lines of Credit (HELOCs), home equity loans, a second mortgage, or even a home renovation loan.

Understanding a Writ of Possession and Eviction Process

In addition to taking any necessary steps available to stop your home from being repossessed by your lender, it is necessary to fully understand one of the final steps in the power of sale process. After you have been informed by your lender that a power of sale will be initiated on your home if the mortgage is not brought out of arrears, there are legal steps that the lender must also take before you can be evicted from your property and the lender is in the position to sell it.

A Notice of Sale clearly stating that an Ontario homeowner is in arrears and that the lender intends to take possession of the property must be sent to all properties associated with the property including relevant third parties. A redemption period must be given to provide time for the mortgage holder to put the mortgage in good standing. 

If the mortgage remains in arrears then a Statement of Claim is sent to the homeowner. If arrears are still outstanding then it is at this point that the lender can file a motion to the courts to ask for default judgment and to be issued a Writ of possession.

What is a Writ of Possession? A writ of possession is a court order sent to a sheriff to enforce a judgment made by the courts. The writ of possession legally allows your lender to take possession of your property and sell it. The writ of possession must be obtained by a lender to legally take possession of a property, sell the property and force the homeowner to leave the property 

The property owner is given notice of the pending eviction (usually 2 weeks and the Notice of Eviction is sent from the sheriff’s office.) The Notice of Eviction will clearly state the time and date that the homeowner must vacate the property. If the homeowner still refuses, the Sheriff will come and physically remove the occupants from the property.

A property can only be repossessed by the lender after all steps are followed by the lender and the result if the power of sale is not stopped by the homeowner is the eviction of the current homeowners. Following eviction, the lender can take back possession of the property and attempt to sell the property.

Mortgage Broker Store Can Help Stop Repossession of Your Home

At Mortgage Broker Store, we have specialized expertise in the legal aspects as well as the ways to stop a power of sale. We can offer advice as to the best options open to prevent your home from being taken from you. 

If you have been turned down by the banks to secure mortgage loans due to poor credit, Mortgage Broker Store has access to a wide network of Ontario-based private lenders who will be able to negotiate mortgage options using existing equity in your home to provide the funds to pay off mortgage arrears and stop a power of sale on your valued home.

March 30th, 2021

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