Power of Sale
Is your property entering power of sale with your lender?
Perhaps you hit a rough patch and found that you were unable to pay your mortgage, and now you’re struggling to catch up. Unfortunately for individual homeowners, when a borrower fails to meet his or her mortgage commitments, the lender will consider that borrower to be in default of the mortgage.
When this happens, the lender has the legal right to sell your property to recoup any investment they have made when it comes to your mortgage. They also allow the lender to come back to the homeowner for any costs that they are unable to recoup as part of that sale. At the same time, if the home sells for more than the lender is able to recoup, that money goes back to the borrower. There are two types of power of sale situations: the first is contractual, where the power of sale information is written into the mortgage, and this is the most common method. The second power of sale situation is statutory, and gives a bit more time for the mortgagee to pay the delinquency before the lender takes action to sell the home.
Because ownership of the home does not transfer to the lender until the home has sold, the process often involves very big legal bills, often adding up to tens of thousands of dollars for the homeowner. It is important to move quickly when you are facing a power of sale situation, in part to reduce the costs that you, as the homeowner, would be responsible for.
A power of sale mortgage through CVE Mortgage Group allows you to properly market your home for sale yourself enabling you to get top dollar (as opposed to your lender selling to simply get their investment back).
The Power of Sale Process Explained
According to the Professional Real Estate Investors Group Canada, a lender can begin the power of sale process after a mortgage is in default by at least 15 days but more usually, once the mortgage falls behind 3 months. The first step is that the lender issues a notice of sale under mortgage. There are typically 45 days between the notice of sale coming out and the end of the notice period.
If you can bring your mortgage out of default by the end of the notice period, the notice of sale goes away and the power of sale situation ends. But, if you are unable to fix the problem, the lender can move through the court system, starting with a statement of claim, which asks the courts to allow the lender to take possession of the property and ask for the property to be sold to recoup their investment.
When the situation reaches the statement of claim notice, borrowers have 20 days to issue a defense, or 30 days if borrowers file a notice of intent to defend.
If a homeowner files no defense, the courts often give the default judgment in the lender’s favor. Lenders typically file for a motion for summary judgment when there is a defense filed. Either way, the judgment typically comes very quickly.
After the lender gets a Writ of Possession from the courts and files a copy with the local sheriff, the borrower will be evicted so that the property can be sold. A lender can use a realtor to sell the property, but it doesn’t always happen that way.
Homeowners should know, according to CanadianWealthBuilders.com, that losing a home through power of sale stays on one’s credit report for six years.
How Can CVE Mortgage Group Help?
If you have entered into power of sale, or feel you could be in the near future, it does not mean that you have to lose all of the equity that you have built into your home. Perhaps you just had some bad luck and simply need a little bit of time to get back on your feet. Whatever the scenario may be, CVE Mortgage Group is here to help!
Professionals at CVE Mortgage Group can help you to sell your home for top dollar, or, in some situations may be able to get you a second mortgage to pay off the first mortgage and stop the power of sale proceedings. We offer home mortgages that are based on the equity you’ve developed over the years.
We will sit down with you and help you to go through your documents to ensure that you get the best mortgage possible or the top dollar for your home, should the sale be something you pursue. We will walk you through the power of sale process and potentially help you keep your family’s home.
A Power of Sale Mortgage could potentially be the right mortgage option for you and your family. Since this is quite a complex subject, please feel free to contact CVE Mortgage Group by either calling us or using the contact form below. Someone will be in contact with you shortly.