17 Apr What is Foreclosure?
Here is a term everyone should understand well to avoid ever being faced with it. It is by far one of the most stressful situations an individual could be dealing with when the lender has sent you a letter to inform they want to foreclose on a home. What does that mean?
Put in simple terms, if a mortgage borrower can no longer make mortgage payments, the mortgage enters the “foreclosure process”, or as is most commonly known, the Power of Sale. A mortgage lender will seek to sell the property to pay off the remainder of the mortgage. The power of sale is a process that requires less legal involvement and more cooperation. This process will allow you to potentially keep your home. But it’s not going to be cheap. If you have defaulted on your payment for longer than 15 days, the lender has the right to send you a notice of sale or notice of sale under mortgage. A notice of sale is the first step towards the power of sale.
At this point, you may want to contact your broker to ask if you a negotiation to pay the mortgage is possible before the actual power of sale starts. If the broker is able to obtain this permission for you from the lender, you may, at this point, be able to get a second mortgage to place behind the first one, to pay off any arrears, administrative and legal fees, and bring the mortgage back into good standing. It will take in account the number of missed payments, why they were missed, if the mortgage had been in default previously and the payment history of the mortgage borrower.
This is the reason why it is so important to be in touch with your broker as soon as you feel like you’re experiencing financial difficulties. Some mortgage lenders may be able to work with you to extend payments, refinance or obtain alternate financing. Do not wait for a foreclosure process to start.