Foreclosure – How does it work and how can we help?

Foreclosure rates in Alberta continue to rise as the long term effects of lower oil prices continue to be felt across the west. A recent trip to Ft McMurray highlighted the fact that more people than you think are in financial problem now that oil has settled in around the 40 dollar mark and shows no sign of rising any time soon. Calgary of course hit hard as well as lots of high end homes of people who relied on bonus’s and the extra’s provided by big oil to maintain their life styles go onto the market in an attempt to avoid foreclosure.

What can be done to help you once the process has started, is there a way to save the home you worked so hard to get in the first place. If there is equity in your home and I’m not talking 5% more like do you have 20% or more then we have a few options. Private lenders look at this in a more favourable way, if you still have your job or if there are ways to pay down bills and reduce monthly payments then private lenders may be a solution to paying down your debt and working towards being more solvent and keep the house as well.

How to apply for Foreclosure?

You need to be aware of how your foreclosure is applied, power of sale, which is often used by lenders in Ontario, is a remedy in which the lender has the right to initiate action against the defaulting borrower without the assistance of the court. The lender can seize the property to recover the loan amount, with interest, penalties, and all other fees. The funds received from the sale are used to clear these dues and any other debts linked to the property. The remaining amount, if any, is returned to the borrower. On the other hand, if any debt remain even after the sale of the property, the lender has the right to sue the borrower for the remaining debt and any cost that they have incurred during the process.

A lender can initiate the power of sale process as quickly 15 days after a borrower’s loan payment is late. However, the lender has to provide a 35 day period of redemption, during which if the borrower pays the total amount due and the sale of property is stopped. Usually the entire power of sale process is completed within 3- 6 months

What is Judicial Foreclosure?

In many other jurisdictions lenders have opted for another system called judicial foreclosure. It is a time consuming process in which the Court grants the ownership of the property to the lender, and the borrower loses his or her rights over the property. An important aspect of Judicial Foreclosure is that the borrower also loses out on any profits that are made from the sale of the property. If there is a short fall even after the sale, the lender has the right to sue the borrower for the remaining monies owed. This process can go on for a long time in fact years in some cases and in many cases the only winner are the lawyers who spend countless hours on the process.

Over all its not a great situation to be in but if we can help by using private money to help you keep your house then it may be worthwhile to pay a little more now and avoid any long term expensive solutions.

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