When a borrower defaults on a mortgage in Ontario, the lender may take steps to recover the debt through foreclosure or power of sale. While both methods allow the lender to sell the property and recover the outstanding balance, there are key differences between them. In this article, we will explore the differences between foreclosure and power of sale in Ontario and help you understand which option may be best for your situation.
Foreclosure in Ontario
Foreclosure is a legal process that allows the lender to take ownership of the property and sell it to recover the outstanding mortgage balance. In Ontario, foreclosure is a court-supervised process that involves the lender filing a Statement of Claim with the court. The borrower has 20 days to respond to the claim and may dispute the lender’s right to foreclose. If the court determines that the lender has the right to foreclose, the property will be sold at a public auction, and the proceeds will be used to pay off the mortgage debt. Any remaining funds will be paid to the borrower.
Foreclosure is a lengthy and expensive process in Ontario and may take several months or even years to complete. The borrower may be responsible for paying legal fees, court costs, and other expenses associated with the foreclosure process. In addition, the borrower may be liable for any shortfall if the sale proceeds are not enough to cover the outstanding mortgage balance and associated fees.
Power of Sale in Ontario
Power of sale is a non-judicial process that allows the lender to sell the property without court supervision. In Ontario, the lender must first issue a Notice of Sale to the borrower, which provides a deadline for the borrower to pay off the outstanding mortgage balance. If the borrower fails to pay off the debt, the lender may sell the property and use the proceeds to pay off the mortgage balance and associated fees. Any remaining funds will be paid to the borrower.
Power of sale is a faster and less expensive process than foreclosure, and it allows the lender to recover the outstanding mortgage balance quickly. However, the borrower may be liable for any shortfall if the sale proceeds are not enough to cover the outstanding mortgage balance and associated fees.
Which option is best for your situation?
If you are facing foreclosure or power of sale in Ontario, it is important to understand your options and seek professional advice. Foreclosure is a court-supervised process that offers greater protection to the borrower, but it is also more expensive and time-consuming. Power of sale is a faster and less expensive process, but it offers fewer protections to the borrower.
Ultimately, the best option for your situation will depend on a variety of factors, including the amount of the outstanding mortgage balance, the value of the property, and your ability to repay the debt. It is important to seek professional advice from a lawyer or mortgage professional before making any decisions.
In conclusion, foreclosure and power of sale are two methods that lenders in Ontario may use to recover outstanding mortgage debt. While both methods allow the lender to sell the property and recover the outstanding balance, there are important differences between them. Understanding these differences and seeking professional advice can help you make the best decision for your situation.
What should you do today?
If you are facing the possibility of foreclosure, it is important to know that there are other options available to you. While foreclosure can be a difficult and stressful process, you can take steps to avoid it and protect your financial future.
At Fast Ontario Home Buyer, we understand the challenges that come with owning a home, and we are here to help you navigate your options. Rather than going through the foreclosure process, which can be time-consuming and expensive, we are experienced investors and home buyers that can work with you to negotiate discounts off the amount owed to the bank. Click here to contact us now. Our experienced team of real estate professionals can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it entirely, even if your home is worth less than you owe.
We buy houses in the all over Ontario from people who need to sell fast, and we can help you too. Whether you are facing foreclosure, need to sell your home quickly, or just want to explore your options, we are here to help.
Don’t let the stress of foreclosure overwhelm you. Contact us today to learn more about how we can help you avoid foreclosure and protect your financial future.