Just like everywhere else in Ontario, the quaint village of Bolton has seen notable increases in property appreciation. With a country feel while only 50 km from Toronto, Bolton sits on the Humber River in the Region of Peel. Those that have chosen to call Bolton home can enjoy the relaxed atmosphere of a small town and take advantage of big-city amenities within a short commute. 

Positive housing statistics felt throughout the Province are mirrored in the Bolton area. According to the May Housing Report, Bolton has seen a significant upward trend relating to both the average selling price for a single-detached home and the number of housing sales. May 2021 saw the average house price climb to 1.2 Million. This represents a 40.1% increase compared to May 2020 housing statistics.  Houses also are selling very quickly in the Bolton area. It only takes an average of 11 days to sell a property in May 2021.

Although default numbers have remained very low throughout the prolonged pandemic, some Bolton homeowners may have felt the economic pinch. Some may also be facing an imminent power of sale or foreclosure on their properties. It is beneficial to have a clear understanding of what these measures your lender may have taken entail. It is of equal importance to try to stop any default proceedings and keep possession of your home.

Power of Sale and Foreclosure Defined

Power of Sale– In this default process, the lender retains the right to sell the property. While the homeowner still owns the home, the power to sell the property legally rests with the lender. The power of sale default method is the predominant method preferred by Ontario-based lenders. 

Once the home is repossessed and sold by the lender, any profit goes back to the homeowner. The fees can however be substantial and any cost of the power of sale will eat into any profit made on the home sale. Fees and legal expenses can run as high as $30,000. A power of sale will be a shorter process than a foreclosure and does not involve the courts or require a court application to initiate.

Foreclosure – In the Foreclosure default process the lender takes over ownership of the property. The lender is responsible for all potential gains on the property as well as all liabilities. There are other key differences in the foreclosure process:

1. The involvement of the courts– In a foreclosure, a lender must make an application through the courts. It becomes a legal process involving lawyers and the court’s approval.

2. How the proceedings are initiated– In a power of sale, a notice of sale will be sent to the borrower informing them that the lender will be starting the power of sale process due to default. In the event of a foreclosure (Judicial sale), the lender will have to apply to the court asking for permission for the court to start proceedings.

3. Time that each process takes-The foreclosure process takes considerably more time because of having to make an application directly to the courts. 

What Are the Steps in A Power of Sale/Foreclosure?

  1. Lender Must Allow for 15 days – Once a homeowner has missed a mortgage payment a lender must provide for 15 days to allow for the property owner to try to put the mortgage in good standing. Once the specified period has passed and the mortgage remains in arrears, only then can the lender initiate power of sale proceedings.
  2. Send a Notice of Sale to Borrower –  A lender is now entitled under the Canadian Mortgages Act to send a notice of sale. The notice of sale letter will specify that the mortgage is in arrears and that the homeowner has a redemption period to try to put the mortgage in good standing.
  3. Lender Will Issue a Statement of Claim – If the homeowner does not pay off the mortgage arrears at the end of the redemption period the lender has the legal right to issue a Statement of Claim to address the debt owning and take possession of the property
  4. Lender Can Take Possession of the Property – After the Statement of Claim has been issued and the homeowner has neither paid off the entire mortgage loan plus legal fees nor put the mortgage in good standing, the lender is now in the position to take possession of the property and take legal steps to evict by the lender asking a lawyer to draft a Writ of Possession to filed with the court. The judge is now in the position to grant a Judgment for Possession. The current owners will be asked to evict the property at a specified date once the Sheriff has filled out the eviction paperwork. The Sheriff will send a Notice of Eviction which will specify the time and date that the homeowners must vacate the property. If they do not leave voluntarily, then they may be forcibly removed by the authorities from the property.
  5. Take Steps to Sell the Property – In the final steps of the power of sale proceedings, the lender can now legally take possession of the property and attempt to sell the property as-is. The fees will be the responsibility of the previous owner and can be extremely high. The profit will go to the former homeowner and be reduced significantly.

Ways to Stop a Power of Sale or Foreclosure on Your Property

It is always advisable to look into any option available to halt and prevent the power of sale or foreclosure on your home. You will have time during the process to put your mortgage in good standing or take other measures to prevent your lender from repossessing your property. Mortgage Broker Store is very experienced and knowledgeable about the technicalities of both default methods and ways to try to stop a lender from taking your home:

  1. Taking out a private mortgage to pay off any arrears owed on your property. A very good option to help stop a power of sale on your property is to negotiate a private second mortgage on your property using existing equity. Private lenders will be able to provide such an option despite poor credit and any legal proceedings associated with a power of sale. A private lender will assess the Loan-To-Value (LTV) on your property and assess the degree of equity. Generally, a lender will loan up to 75% of the appraised value of your home ( 75% LTV) and will prefer at least 25% equity in your home.
  2. Selling your house quickly without renovations or fixes. Ontario has a network of buyers who will be able to buy your home in its current condition. These buyers will be able to sell your property at market value with a discount after assessing a current appraisal of your property and others in your area. The main advantage of this method to prevent a power of sale/foreclosure on your home is that you will avoid the costs of hiring a realtor, investing in renovations, and any repairs needed on your property.
  3. Renegotiating your principal loan (first mortgage) with a private mortgage loan despite poor credit. – Another option available to those facing imminent power of sale/foreclosure on their home is to take out a private first mortgage to replace the mortgage that has fallen into arrears. Any private primary mortgage will be short-term in length (generally 1-3 years) and a private lender will be able to negotiate such a loan fairly quickly and it remains a straightforward process. LTV will be calculated, and existing equity will be utilized for the private secured mortgage loan.

Mortgage Broker Store Can Direct You in the Process of Power of Sale/Foreclosure on Your Home

You have worked hard to buy a home. Don’t risk losing it. Mortgage Broker Store has specialized knowledge in the power of sale and foreclosure process. We also have access to a network of well-established private lenders in the Bolton area and throughout Ontario who will be able to negotiate a private mortgage loan using the existing equity in your property and assessing the Loan to Value (LTV) on your property. Take the steps to stop your house from being taken back by your lender. We will be able to answer any of your concerns and point you in the right direction- towards keeping your home!

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