So you received a letter from the bank and they are saying they want to force a power of sale on your house. We get it, this is one of the most stressful situations you could ever be placed in. Times have been tough lately and families across Canada are facing similar situations as Bank Foreclosure in Canada are not uncommon. 

This is definitely not an ideal situation and it is important to know what rights or solutions you have available to you. 

The Power of Sale is typically the lenders first choice here in Ontario. So let’s dive in a little deeper and share some creative solutions keeping in mind that this article is by no means league advice just suggestions. Our goal here is to provide you with some possible options, your rights, and the process that you may now be looking at.

A power of sale requires less legal involvement and more cooperation from both sides. This is actually the most common method and is the prefered process for Ontario.

First things first, the power of sale process will potentially allow for you to keep your home. However it’s going to come with a hefty price tag.

If you have defaulted on your payment for more than 15 days, the lender in turn now has the right to send you a notice of sale or notice of sale under mortgage. This notice of sale is actually the first step towards the beginning power of sale in Ontario.

Fifteen days doesn’t sound like a lot of time and maybe you were away or had some unforeseen family issues that took your attention away. It seems like an unfair move from the lender but it is their legal right to do so in such a short period of time. 

So what should you do if facing power of sale on your home? First on the agenda should be call the bank or lender and ask them if you can work something out or negotiate to pay your mortgage before the actual power of sale begins. If they say yes, you are in great shape. If they inform you that it has already been turned over to their legal team then you may be in some trouble.

Dealing with a legal team means more expenses and at this point the usually don’t want to negotiate unless you are planning on making a full payment plus paying their legal fees. 

So…

You may still be allowed a second mortgage to pay off any arrears, legal fees, admin costs etc and bring your mortgage back into good standing. 

As a borrower you have the right to redeem the equity you have built in the house at any time until the house is sold and closes. Fact is, with a few exceptions to the rule, a power of sale is a protection for the borrower that gives them 37 days where the lender can’t take any other actions and the owner/borrower has the chance to return the loan to good standing.

Before a power of sale can commence, the lender has to serve you notice and allow a certain amount of days for redemption. In Ontario Power of Sales this period is 37 days. That means you have 37 days to reconcile your mortgage debt and get your mortgage back into good standing with your lender. For a statutory power of sale you have 45 days to produce the money needed to return things to good standing. The mortgage act states that the lender has no right to commence any further action against the borrower until the notice of power of sale expires. 

If you are unable to return your mortgage to good standing after the 36 days, the lender will more than likely serve you with a statement of claim for the outstanding debt, as well as possession of the property.

Once this happens, you now have 20 days to file a statement of defence response in court. You NEED to do this, not filing a response in court will lead to a default judgement and award a writ of possession to the lender. What is a writ? The Writ of Possession is a request to a superior court judge to allow the lender to evict and take possession of a property.

Keep in mind filling a response isn’t always a successful means of defence unless there is a serious issue with your lender. The enforcement of security for non-payment is the right of the lender.

This point of the process is where most people begging to fill on panic. If you have built equity in your home it is very important you focus on a solution to repay the debt immediately. Arranging a second mortgage or paying the defaulted mortgage amount in full with a new first mortgage are the most common solutions. 

If the court decides in the lenders favour the lender can start the eviction process. Once this eviction process has completed, the lender can now auction off your house and pay off the debt owed with the funds raised. If the final bid amount is higher than the debt owed on the house, you will receive the difference (after fees have been paid). If the sale of the house doesn’t cover the amount owed, the lender will still hold you solely responsible to cover that balance.

Makes sure you are working with a specialist like https://www.mission35.com when getting new loans otherwise you risk losing your home when you may have been able to save it. Keep in mind that if you have limited equity built into your home it’s highly unlikely anything other than the sale of your home will happen. 

Sell your house to a cash buyer. With a cash buyer you can get a real offer on your house within 24-48 hours. In a situation where you only have 37 days to sort things out you don’t want to spend time finding a real estate agent, listing the property and then waiting for it to close as it may be too late. This whole process can take months where as a cash house buyer only needs about an house to look at your house, gather information and then make you an offer most times with the closing of your choice ie FAST! This whole process can be done in a week allowing you to pay off the outstanding debt to the lender and giving you peace of mind. 

Speak with your lender or mortgage specialist to see if there are any options for loan modification to give you some relief in the short-term.

Power of sale is obviously scary and stressful situation. However, taking action, not panicking, and knowing your options more is the best defence you can have when trying to avoid losing your home to Power of Sale in Ontario.

If you face a Power of Sale in Ontario, make sure to consult with experts, and most importantly, don’t ignore it!  

If you need help please reach out www.helpfulhousebuyers.ca or 416-939-1082 and 519-505-4357