If You Are Facing Pre-Foreclosure or Foreclosure, You May Be Able To Stop It
Written by: Kristen White
Foreclosure is an extremely stressful situation and the process is unknown to many people. It is important for you to know the process you are facing. Information in this article is a general overview of the Foreclosure process and mainly applies if your first mortgage is in Foreclosure and your first mortgage is with a larger banking institution or credit union. If you have a second, third or fourth mortgage that is in Foreclosure with a smaller credit union or private lender, some information in this article applies but the Foreclosure process can be drastically different.
We specialize in Pre-Foreclosure, please call us today if you have questions regarding your 1st, 2nd, 3rd or 4th mortgage with a larger banking institution or credit union or a smaller credit union or private lender.
1. If you have fallen behind on mortgage payments, your Bank/Lender will send you a letter and also call you to make you aware of the missed payment(s). If you don’t respond or attempt to bring your payment(s) up to date, the Foreclosure may start immediately without any further notice to you. There is no general rule on the number of missed payments it takes for your Bank/Lender to start the Foreclosure and is solely at the discrepancy of the Bank/Lender.
2. The Foreclosure Process in British Columbia is by Judicial Sale and is under the supervision, authority and control of the BC Supreme Court. The Court decides when to start selling, decides the sales price, the terms of sale and any commission paid to a Realtor. The Bank/Lender who holds your mortgage starts the legal process by obtaining the Court’s permission to sell the property.
3. The Bank/Lender’s Foreclosure Lawyer will send you a “Demand Letter”. This letter informs you of the total amount remaining on the mortgage debt that you owe and includes missed mortgage payments. You will also be informed of legal costs plus interest on the outstanding debt amounts that you will be responsible for.
4. The Demand Letter will indicate a deadline date (approximately two weeks after you initially receive the letter), that the Bank/Lender will allow you to catch up on all missed mortgage payments that are behind to bring your mortgage back into good standing. You will also be responsible for legal costs to date (in some cases under $1,000.00 at this stage), plus you will have to provide proof that your property taxes are up to date and that the property is currently insured for the full replacement value.
5. If the amount of money you owe in missed payments and property taxes is provided in full by the deadline date along with the proof of required property insurance, the Foreclosure will stop. It is in your best interest to stop the Foreclosure at this point in the processes and bring your mortgage back into good standing with your Bank/Lender. You will protect your equity, credit and avoid further Legal costs from the Foreclosing Lawyer. Any time after the Demand Letter stage, there still may be solutions but you are taking a greater risk of losing everything to the control of the Bank/Lender and Court if you do not have the funds to bring your mortgage back into good standing.
6. If the Lawyer does not receive the money you owe by the deadline date, the Lawyer can commence immediate legal proceedings without further notice to you. A Foreclosure petition will then be filled in the Supreme Court. In this process, the Bank/Lender is named the petitioner and you (the borrower of the mortgage), are named the respondent(s).
7. An Order of Nisi is then established. The Court will determine the amount you owe to the Bank/Lender and will decide how much time to give you to pay back the outstanding balance. This period of time is known as the Redemption Period. You can sell the property at this time as long as sell it for the full outstanding balance owed to Bank/Lender or try to obtain a Foreclosure Mortgage from another Lender.
8. If you can’t sell the property or obtain another mortgage by the time the Redemption Period has expired, the Bank/Lender will seek an order approving sale of the property called a Court Ordered Sale (or Judicial Sale). The property is now in control of the Bank/Lender who will sell the property with a Realtor of their choice. If the Bank/Lender does not obtain the amount of money from the sale that you owe for the mortgage debt, mortgage payment arrears, the Realtor’s commission for selling the property,
accumulated Lawyer fees, plus applicable interest, the Bank/Lender and CMHC can legally sue you for any amount outstanding that you owe.
10. The final stage if necessary is an Order Absolute. This is what may happen if your second, third or fourth mortgage is in Foreclosure with a smaller credit union or private lender. The Lender seeks an order absolute, which means the Lender becomes the new registered owner and you are removed from the title.
It is in your best interest to stop the Foreclosure when you initially receive the Demand Letter from the Foreclosure Lawyer. Anytime after this stage in the process, there still may be solutions but you are taking a greater risk of losing everything to the control of the Bank/Lender and Court if you do not have the funds to bring the mortgage back into good standing.
We specialize in stopping Pre-Foreclosure. We can reinstate your mortgage, stop the Foreclosure and make monthly payments towards your mortgage. Contact us today if you have questions. We do not charge any fees or real estate commissions: 604- 812-3718.