People may be forced to go into foreclosure for many reasons. From divorce, to job loss or medical emergencies, financial circumstances can change making it hard to make those mortgage payments to a lender. While contacting a lender at an early stage may reduce the possibility of going into foreclosure on a home, it is still possible to have to go through the foreclosure process on a home in Alberta. And foreclosure can happen regardless of the type of Canadian home mortgage they may have. Get a better idea of what to expect from the foreclosure process.
Understand More About Foreclosure
Homeowners hand over ownership to the lender or mortgagee through this legal process when the mortgage goes into default. Not making timely mortgage payments allows the lender to regain ownership, but there are other reasons why the foreclosure process may start, including failure to insure the property or not making addressing significant damage.
Stages of the Foreclosure Process
A borrower will first receive a Demand Letter. This notice, sent by legal counsel, will inform the homeowner that the foreclosure process will begin. Making back payments and covering lawyer fees can stop the process from continuing. However, many are not in the situation to do so.
After the notice is received, a Statement of Claim will come in the mail. Homeowners have a 20-day window to respond. Not doing so, permits the lender to continue with the process without any additional information provided to the homeowner. The five ways to respond to a Statement of Claim are:
- Getting Noted in Default and not responding;
- Negotiating a Quit Claim;
- Submitting a Demand of Notice;
- Submitting a Statement of Defence; and
- Choosing to negotiate for a Consent Order for Foreclosure.
Each option has its share of consequences. Not responding will allow the process to quickly continue without any more information provided to the homeowner. A Quit Claim returns the property's title to the lender and homeowners lose any equity. A Demand of Notice allows the homeowner to be involved and be able to dispute issues in Court. A Quit Claim and Demand of Notice requires the services of an attorney. This may also occur with a Statement of Defence, a route that may be of use when there are significant inaccuracies in the initial documentation. A Certificate of Independent Legal Advice is required as part of the Consent Order for Foreclosure, useful for those with significant equity in a home. Homeowners who choose this path can continue to reside in the property for a longer period and may have the opportunity to sell the home.
The Stress of Foreclosure
Once the foreclosure process begins, it can place undue stress upon the occupants. Those who can may want to make up arrears to halt the process. This process often requires homeowners to pay all the legal costs of the lender which can be an additional financial burden. Additional problems may occur when a homeowner has signed a personal guarantee which can allow a lender to seek a deficiency judgment. This allows a borrower to still be responsible for payments after the sale of the home.
Those who cannot stop the sale of the home early in the foreclosure process and who have significant equity may want more time in which to locate a potential Highland home buyer. It is good to know all the options available. Many find it useful to remain involved in the process and know what rights they continue to have when they go through the foreclosure process.
By Justin Havre