The town of Aurora is perfectly located in the Golden Horseshoe region, specifically in the region of York. Within a short commute to central Toronto, Aurora provides a more relaxed lifestyle while still having access to big-city amenities nearby. 

As many homeowners choose to move out of the Toronto downtown area and into outlying GTA towns that provide more space, Aurora is attracting interested buyers that would like to live full time in the area. The population of Aurora as of the 2011 population census is 53,000, and the current 2021 population, given average population projected growth puts the population closer to 66,000.

Similar to most areas of the Province, the housing market in Aurora is in full throttle. Recent real estate statistics provided by the May Monthly Housing Report, indicating that the average house price in May 2021 has now reached $1,252,505 which represents a 40.1% year-over-year increase from May 2020. Houses are being snapped up in a record 11 days on the market with increased inventory as we head towards June.

Fortunately, mortgage default numbers also remain very low, despite being in the grips of a long and drawn-out pandemic. According to the Canadian Bankers Association, the number of homeowners that have fallen into mortgage defaults is still minimal.

As of the February 2021 numbers, the total percentage of properties that have fallen into default is 0.10% which represents just 2,130 properties currently in mortgage arrears out of  2,086,163 owned properties in Ontario.

What Exactly is Mortgage Default?

Every month, Aurora homeowners that carry a mortgage(s) on their homes are required to pay a negotiated monthly payment as set out in the terms of their mortgage contract. If the amount is paid in full and on time then the mortgage is said to be “in good standing.” This simply means that the homeowner has not missed or been late or partially paid their agreed monthly mortgage amount.

If, on the other hand, a homeowner fails to pay a monthly mortgage payment, pays past the required due date, or pays only a partial payment the mortgage is now said to be “in arrears.” When a property owner is in arrears with a mortgage payment, the property is at risk of being in default and a lender may legally take steps to try to have the homeowner put their mortgage in good standing. 

If payments are not made, then a lender can legally, under the Ontario, representing Mortgage Act, choose one of two recognized default methods to try to collect arrears and/or try to take back possession of the property in the hopes of selling the property in the condition it is currently in.

The two recognized methods lenders have at their disposal in the event of mortgage default are Power of Sale and Foreclosure. Technically, both default methods can be used, however, the vast majority of Ontario-based lenders choose to utilize the Power of Sale because it is a faster method than foreclosure and unlike a foreclosure, a power of sale does not require the consent of the courts to complete.

In a power of sale, the lender has the right to sell the property. The lender has been given the power to sell a home or property. In the event of Power of Sale, the homeowner still owns the home, but the lender now has the legal right to sell it. 

Foreclosure is a default process that allows for the lender to take over ownership of the property. The lender is responsible for all potential gains on the property as well as all liabilities.

Different conditions can fall under the broad term ‘default.’ Late, partial, or missed mortgage payments are the main reason for a lender to initiate a power of sale, however, there are other reasons that a lender may threaten the power of sale proceedings on a given property:

  1. Insurance unpaid 
  2. Not renewing the mortgage
  3. Letting property conditions go
  4. Taxes unpaid on the property

The Steps in a Power of Sale and Foreclosure

Although foreclosure does differ from a power of sale concerning court involvement and the length to carry out the entire process, lenders are required to follow designated steps to legally complete power of sale or foreclosure on a given property:

  1. Lender Must Allow for 15 days (redemption period)
  2. Send a Notice of Sale to Borrower (after the redemption period)
  3. Lender Will Issue a Statement of Claim (if the arrears is not paid in full)
  4. Lender Can Take Possession of the Property
  5. The Lender will have a lawyer draw up a Writ of Possession to be filed with the court. A judge is then in a position to grant a Judgement for Possession
  6. The Sheriff will send a Notice of Eviction which will specify the time and date that the homeowners must vacate the property.
  7. The Lender will now take Steps to Sell the Property in the condition it is in.

Ways to Stop a Power of Sale or Foreclosure

Each default process does take time. It is important to know that with each successive step, a homeowner has ample opportunity to pay off the arrears and any legal expenses and put the mortgage in good standing. It is highly encouraged to do so. Generally, a default process can be stopped by taking one of these steps:

  1. Sell your property Quickly in the Current Condition is- There are recognized property buyers in Ontario who will buy your property as is to avoid the lender taking legal possession of your property. These buyers will assess the appraised value of your home and offer a fair market price with a discount. This approach will enable you to sell your home without needing to put in additional costs to costs to cover renovation or fixes.
  2. Take out a private second mortgage – Any private additional mortgage loan can be negotiated to help pay off any costs of the default process and help to pay the mortgage moving forward. A private lender will not exceed 75% LTV, or 75% of the assessed value of your home. Private lenders will assess both the LTV and the existing equity in your home (usually at least 25% equity is preferred) to determine the terms of a private mortgage loan.
  3. Take out a new mortgage to replace the existing mortgage– A private first (primary mortgage) can also be negotiated on a short-term basis to replace the terms of the mortgage that has fallen into arrears. The interest rates associated with a private mortgage (both secondary or primary) tend to be between 7% to 12% and the fees affiliated with a private mortgage loan will fall between 3% 6% of the total cost of the loan.

Mortgage Broker Store Can Direct You Towards Keeping Your Home

Mortgage Broker Store can provide solutions to homeowners that may be facing imminent default proceedings on their home. With access to a wide range of private lenders in the Aurora area and throughout Ontario, we will be able to direct a homeowner to a private lender who can negotiate various private first and/or second mortgage arrangements to help pay off arrears and put the mortgage in good standing.

We will be able to answer any concern you may have regarding the default proceedings and guide you in the steps that are best for you. Steps that will help you stay a homeowner and keep your valued home.

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