To stop foreclosure on your home you need to know what a notice of sale and statement of claim is. Although the housing market is booming in Canada, there lies a problem of impending foreclosures. There are many reasons for this, but the COVID-19 pandemic has proved to make affording payments difficult for low-income households.
If you’re not making your mortgage payments, you may receive a notice of sale from your lender. Although it isn’t a good letter to get in the mail, plenty of homeowners do not understand what it is or what to do. Keep reading to learn more about it and what you can do to keep your home if you’re facing potential eviction.
What Is a Notice of Sale?
There are several phases in a foreclosure. If you are at the stage where you have a notice of sale, you have missed paying payments on the house. Lenders will send you friendly reminders about helping you catch up on your payment before sending a notice of default.
Failing to pay or reach a set agreement on payments with your lender will result in a notice sale. At this point, you are 90 days or more past on-time payments. It is the first stage in the Power of Sale process which means your lender will attempt to sell your property due to failure to make payments.
Lenders send notice of sales to all people on the property, including anyone who has an interest in the property. This may be the owner, tenants, spouses, guarantors, and lien claimants.
Lenders may submit this notice of sale to the public to make it known the property will be available for auction and when. When you receive a notice of sale, lenders are informing you your mortgage is far behind in default and to arrange payments by a certain date. If you cannot meet this arrangement, the process of foreclosure may continue.
What Is a Statement of Claim?
If you get a notice of sale, you will have several documents which include the statement of claim. Lenders send this out after the notice of sale. It marks the end of the redemption period a lender allows. Having this document means you must pay the mortgage balance in full as well as any legal fees.
Once the redemption period passes, the “final chance” you have to stay current is gone. You are no longer able to resume your mortgage. You will also receive a negative judgment on your credit report.
What Occurs After a Notice of Sale?
Ignoring a notice of sale is not good. Doing nothing will speed things up that work against your favor. Lenders think about profit, and if you are unable to pay, they are at a loss. They are at even more of a loss if they don’t recoup some of their losses by selling the house.
After your property is available to the public, the short-sale is over once the lender accepts a price from the highest bidder. Lenders create an open bid by calculating unpaid taxes, fees for any outstanding loans, and fees that come with the sale.
Once a lender is happy with the price and the buyer meets other requirements, the house is sold and the finalization is close to complete.
One of the last steps after a sale is over is to complete a trustee’s deed to the buyer. This deed serves as proof that the home is theirs and they have full entitlement to it.
The amount of time you have to stay in your home at this point is up to the new buyer. You may have a few weeks to move out or a few months to move out. Once the house is legally not yours and a set move-out day is in place, the new buyer will have the right to evict you if you refuse to leave.
What If the Lender Can’t Sell the House?
In the event the lender is unable to sell via auction, there’s another move they will do. The bad news is you will still face eviction and have to leave, while the lender becomes the owner.
It’s not profitable for lenders to stay as the owner so they will attempt to sell the home through a broker. Most will get the help of a real estate-owned (REO) manager. These are also known as “bank-owned.” Lenders often remove liens and other fees to make selling more attractive when short sales fail.
How to Prevent a Notice of Sale From Finalizing
Foreclosing on a home is expensive and long. It’s not something lenders would prefer to do if they can help it. Lenders avoid selling homes but will do it as a last resort.
If you are behind on your house and missed mortgage payments, chances are you are not in a financial situation where you can afford to make payments. This is harder when larger sums are required.
One idea that serves as a solution to prevent a notice of sale from going further is to complete home equity refinancing. Getting a second mortgage is another way you can correct excessive debt and added interest penalties. You will be able to get your account current again.
You can work with a mortgage broker to help you. They can help calculate your home equity.
You want to do this quickly to secure your home. The last thing you want is a non-renewal of your original mortgage. You will need to replace your old mortgage with another lender.
You may also need to address other debts as a way to help fix your mortgage debt. Homes with high equity are great. Home equity allows you to borrow on your home.
Work With a Competent Mortgage Broker in Canada
Getting a notice of sale in the mail is a dreadful event. The good news is that the fight to keep your house is still possible. You increase your chances of correcting missed payments, getting rid of debt, and getting current by working with an experienced mortgage broker ASAP.
Contact us for private mortgage solutions. We help you find a way to keep your house if you are experiencing hardship when you fall behind.