Falling behind on your bills can be very stressful, but falling behind on your mortgage can be downright frightening. The thought of losing your home may be so overwhelming that you try to avoid even thinking about it. But that’s never the best approach.
If you’re having trouble keeping up with your mortgage, this booklet will give you strategies for getting back on track.
How Does It Work?
In Canada, there are two ways that a lender can recover funds from a default on a mortgage. Power of sale, which is practiced primarily in the provinces of Newfoundland, New Brunswick, PEI, and Ontario, involves very little influence from the court. Judicial sale is the common practice of British Columbia, Alberta, Saskatchewan, Manitoba and Quebec. Nova Scotia uses the term “mortgage foreclosure” but it is also considered judicial.
How long it takes a lender to foreclose on your home, and the steps they must take to do so also varies by province. This education is focused on the province of Ontario. More information specific to all provinces can be found at www.canadaforeclosurelist.ca.
The power of sale process enables foreclosure proceedings to move much more quickly since there is minimal involvement from the courts and is used in 90%-99% of all foreclosures. There is an option, but power of sale is much faster and costs less. The process begins with the lender simply sending a notice to the borrower.
Ontario is the only province that lists the property for sale with a real estate broker.
The Ontario Mortgages Act includes power of sale proceedings. There are two types of power of sale listed in the Mortgages Act: contractual and statutory. The difference is actually very simple. A contractual power of sale is one that is detailed in your original mortgage document, where a statutory power of sale is one that is not in your original mortgage document, hence created separately.
It is not common to see statutory power of sale since most all mortgages have power of sale provisions included when they are drafted. Nonetheless, the lender reserves the right to sell the property after the borrower is 3 months past due.
Once the borrower is notified of the intention to sell, he or she has 35 days to pay under a contractual power of sale and 45 days to pay under a statutory power of sale.
The Mortgages Act also regulates the process of the sale to ensure that a large population of potential buyers knows about the home. After sale of the home, there are regulations in place to control how money is dispersed.
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