Missing a mortgage payment or being unable to finish repaying it is obviously the last thing you want to happen, but in reality, financial problems arise and sometimes managing them can be difficult. You should not, under any circumstances, ignore the problem if you find yourself in such a situation and you can not make your mortgage payments. Banks are often less willing to renegotiate your mortgage if you ignore them. Instead, do the following:
Communicate immediately with your mortgage lender; even if you are not 100% sure that you will not be able to make your payment.
- Be as honest and open with your lender as possible, then tell what’s going on so they can find a plan to help you.
- If you are given another chance, work as hard as possible to take full advantage of this second chance.
- Cooperate with everyone you do business with.
Whatever the reason, if you can not make your mortgage payments, you must be prepared to hear the word entered. Although most lenders do not usually want to go through the foreclosure process of your home, if you do not make your mortgage payments, it’s their legal right to do so and they will. Instead of waiting for the inevitable to happen, you should take responsibility, inform yourself and learn about the process of entering. Once you understand the process as a whole, you may be able to know not how to avoid it but at least how to make the process easier for everyone involved.
What is a seizure?
A seizure is a legal proceeding taken against a mortgage borrower who stops making payments on his loan. Since the home he bought with a mortgage acts as collateral for the mortgage, it can be taken back and sold by the lender if the borrower stops making payments. Since foreclosure is a legal process, the lender must first obtain court approval to repossess a home. Once the house is repossessed, it is usually sold so that the lender can recover the money he is owed.
A seizure is a serious problem and it could happen if you do not make your mortgage payments on time, but it’s important to understand that the foreclosure process will not happen right away. Here’s what you can expect once you stop making your mortgage payments:
- You do not automatically lose your home after a single missed payment.
- Your lender will contact you immediately. He will want to help you understand how to continue making payments.
- A seizure is a lengthy and expensive process; therefore, your lender will probably not offer it right away.
- You will start receiving letters from your lender. These letters usually come after 30 days, 60 days and 90 days.
- Once you have reached 90 days without being able to make your mortgage payments, you will be late.
- If you do not want to get in touch with your mortgage, you should expect the foreclosure process to begin.
In Canada, the seizure process varies from province to province. It is therefore important that you take the initiative to be informed about this and how seizures are made in the province where you live.
Generally speaking, in Canada, lenders are able to recover their money in two main ways; you should expect to go through one of the following procedures.
Judicial sale or judicial seizure is heavily involved in the legal system; a seizure is conducted under the direction of the Canadian judicial system. The process is usually slow and can take up to 6 months. Once the foreclosure order is given to the lender, the property of the house is automatically transferred to the lender. This means that you will receive all the capital.
The Judicial Sale or Court Seizure is used in the following provinces:
- British Columbia
- New Scotland
Power of sale
This process begins when the lender sends the borrower a notice and provides him with a 35-day redemption period. During these 35 days, the borrower can start making payments again and get back on track. If a borrower is able to do so, the power of sale will not be continued, but it will have to cover some costs associated with the power of sale.
The wind power allows the lender to sell the house he or she has seized without court involvement. This process is much faster than the court seizure.
The power of sale is used in the following provinces:
- New Brunswick
- Prince Edward Island
Dealing with an imminent seizure is not easy, but if you get ready, get in touch with a mortgage lender and are as cooperative as possible, you will go through the process.