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How to stop a home foreclosure

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Canadians and people around the world have felt the pressure of the COVID-19 pandemic. With unprecedented job loss, it’s not surprising that many homeowners are in trouble with their mortgage payments causing home foreclosure. Many borrowers are facing the possible loss of their homes through a power of sale by their lenders.

If you have received a notice of a power of sale on your property, it’s important not to panic. There are solutions to help you keep your property and stop a home foreclosure. It’s critical to communicate with your lender immediately to work on a repayment plan. It can be overwhelming to deal with financial difficulties. However, not taking action quickly could result in unrecoverable losses. If you want to stop power of sale in Toronto or anywhere across the country, it’s important to get the right help from your lending partners.

home foreclosure
Home foreclosure

What is a power of sale?

If a homeowner does not make their agreed payments on their mortgage, the lender has the right to sell their property to make back their money. This legal process is referred to as a power of sale, and allows investors a straightforward method to regain their losses. The power of sale process is much quicker and easier than the lengthy legal process of foreclosure and has become the preferred method of collection by lenders.

A power of sale process takes approximately six months to complete. Following the sale and the payment of all extended debts, any profit will be returned to the borrower. Although this process is less complex than a foreclosure, it is still the last option for homeowners as the extensive fees involved often eat away at any resulting profits from the sale, leaving them with nothing.

Stopping a power of sale

Each method that will help you to avoid a power of sale involves some manner of repayment to your lender. Once homeowners receive the notice of sale, they typically have up to 40 days to pay any arrears and fees on the mortgage to get back in good standing. If this period expires without payment of the arrears, the lender has the right to request the full amount of the remaining mortgage. There are a few options available for homeowners who simply do not have the cash on hand to make payment arrangements.

Second mortgage

The simplest way to avoid a power of sale is to take out a second mortgage on your property. The value of a second mortgage should be enough to pay your arrears and fees on your original mortgage and bring it back into good standing. You will likely need to deal with a private lender that will overlook issues with credit and income.

New mortgage

If you don’t qualify for a second mortgage, your other option is to take out a new mortgage on your property. You will need to be able to qualify for an amount that will allow you to pay off the principal amount on your original mortgage, including any fees and penalties. Private lenders are most likely to grant a new mortgage when there is a power of sale on a property.

Sell your property

If lenders have rejected you for a new or second mortgage, you may need to sell your property. Before the lender takes ownership of your home, you still have the opportunity to sell your house on your own. You can use the sale amount to pay off your outstanding debt and principal, and any profits are yours to keep.

Life can take unexpected turns, as we have all learned during the COVID-19 pandemic. If you find yourself facing a power of sale on your home, talk to your lender and a private mortgage broker today to discuss options that will allow you to keep your home and move forward into a brighter future.

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