Foreclosure – facing the forthcoming with knowledge

Foreclosure For Sale Sign

Power of Sale and Foreclosures – facing the forthcoming with knowledge


Foreclosure is a scary word, and it should be. It signifies a loss of control over your home and your financial stability; the social, emotional and financial consequences of foreclosure also come with long-lasting implications.  In our estimation, the 2014 year has seen the most power of sale properties in the Winchester, Chesterville, North Dundas Township, and Dundas County since any other year in the past decade.  In fact, we are seeing many properties being sold for less than the outstanding mortgage against the property!


The foreclosure/power of sale process can be started by a bank or lender after a property owner has failed to comply with the terms of their mortgage contract. The most common compliance failure is not making the agreed upon mortgage payments; however, if you read your mortgage contract, there are stipulations about keeping up insurance and maintenance on the property as well. The lender can get a court order to take control of the property with the intention of selling it to repay the outstanding mortgage debt, and any other expenses the lender may have incurred as a result of the foreclosure/power of sale proceedings.

There are many reasons why people fail on their debts. Sometimes it’s because of a serious illness, maybe the death of a loved one, a job loss, divorce, or many other reasons, and yet for others, it simply boils down to a lack of fiscal responsibility — amassing more debt than their income can pay for.

The best case scenario is to avoid a foreclosure/power of sale if possible and here are some options you may want to explore if you find yourself writing cheques your bank account can’t cash.


The Family Bank

Mixing family and money is always risky business. Everyone wants to get off the parental payroll and onto their own feet, financially speaking, but making use of friends or relatives — either by asking them to pay off the entire debt or helping with refinancing by co-signing a mortgage loan — is one option which may help you to avoid foreclosure.  It’s riskier for your friend or relative than it initially sounds, but if they are willing to help, it may be your best option.

Rent it or sell it

If your property is in a desirable area you can try to sell it quickly or find a roommate or tenant to help pay the mortgage. Contacting a local real estate team, like The Oldford Team, or property management company would be a good place to start when assessing the potential re-sale value or to inquire about area vacancy rates and what you can expect collect in monthly rental.

Negotiate the terms

Lenders are in the business of making money and they want property owners to pay their mortgages. The foreclosure/power of sale process is time consuming and costly so the lenders have a vested interested in helping a client through the financial crisis. There may be an opportunity to renegotiate the mortgage over a longer period of time, or at a lower interest rate, or for you to pay a smaller monthly amount for a short period if you’ve had employment difficulties.

In some cases, the foreclosure/power of sale process might even be stopped by a generous lender when back payments, interest and legal charges are repaid in full by the homeowner. There are many repayment scenarios and this is why it is so important to speak to your lender early about your financial problems.

You don’t make your situation any better by avoiding the phone calls and emails from the bank or lender when your mortgage goes unpaid month after month. Drawing up a repayment plan is also a good idea to formally present your lender with some ideas you have for reimbursement options that will be affordable in the future.

Remember, there is a human on the other end looking at your proposal.  Their hands may be tied by their company rules; they may not know Winchester from Waterloo; BUT, the easier you make it for them to see that you are showing them a way for repayment, the easier you are making it for them to work with you.

Friendly foreclosure or a deed-in-lieu

A friendly foreclosure basically means you hand back the keys to the property without the bank or mortgage lender having to go to court to force you. The advantage for the homeowner is that they will be immediately released by the lender from the loan and from incurring additional mortgage payments, surcharges and assorted legal fees. Also, the friendly foreclosure is considered a mortgage default which is less disastrous to your credit rating than a forced foreclosure.  Note that this is not applicable to all lenders and/or all provinces.  Talk to your lender for more details.


This is really a last resort option and doesn’t end a foreclosure/power of sale process, but might slow it down. In some cases, a home can fall under the bankruptcy exemption rule which means the court will protect the asset from being sold and allow the bankrupted individual to remain living there. Remember, you will want independent legal and financial advice before filing for bankruptcy protection.


It is important to avoid letting your financial problems get worse. If you’re late on a mortgage payment, talk to your lender immediately about working out a repayment plan. The lender doesn’t want to take your home away, but they do want the money you promised to pay them — with interest — when you bought the property to begin with.

Sir Francis Bacon is often quoted as saying, “Money is a good servant, but a bad master.” When you have it, money can work well to buy just about anything you desire in life. But when you owe it, money becomes the master, controlling you in many unpleasant ways.
Authored by Clayton Oldford from The Oldford Team based on an article by Vanessa Roman at the Halifax Chronicle Herald.

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