In Ontario, when a borrower defaults on their mortgage payments, the lender can repossess and sell the home to recover the cost of the loan. This legal process is known as a Power of Sale.
The term “Power of Sale” is often used interchangeably with “Foreclosure”; however in the case of a mortgage foreclosure, the lender or financial institution takes complete control over the property (as in ownership) and can sell it without any obligation in terms of its re-sale price to the owner. In the case of a Power of Sale, the mortgage lender is obligated to sell the property for the highest possible price, with the proceeds going to pay off the loan and any costs associated with the default such as interest arrears, real estate commissions, and various other fees. Any money that is “left over” goes back to the owner.
Though there is generally little court involvement with a Power of Sale, when a borrower is in default of their loan, he or she will receive a letter of demand stating they need to bring their mortgage payments and tax arrears up to date. This letter also advises them of a required timeline (i.e.: ten (10) days) in which to do so. Some lenders are more lenient than others with respect to timeframes which may have to do with the borrower’s track record, perceived equity and client relationships.
What should I do if I am facing Power of Sale proceedings?
If you are behind on your mortgage payments and facing a power of sale, you still have some options available to you. Often, lenders don’t want to resort to a Power of Sale – the process is time consuming and usually expensive, so lenders may be open to alternatives.
One option is to secure a mortgage loan from another lender (i.e.: new first mortgage or a second mortgage), which will allow you to pay off your original mortgage and arrears, or just bring the arrears current with a second mortgage. This may also allow you to spread out the remainder of your loan repayment over a longer period of time, and lower your monthly payments.
How can MortgageDirect2u help me?
MortgageDirect2u located in Toronto, Ontario, is an expert in the alternative mortgage market. We approve borrowers based on the equity in their home (the difference between the value of your house and what is owed against it). If your home has enough equity, we can approve you for new financing even if you have been turned down elsewhere.
We’ll provide you with practical advice, friendly service, and a mortgage that fits your needs and budget. We can eliminate the Power of Sale proceedings. We believe you deserve another chance and we like to help good people who are experiencing financial hardships. We promise to treat you with the respect and dignity you and your family deserve