“I’m behind in payments…will the bank be initiating power of sale of my home in Toronto?”
Nobody wants to lose their house. Unfortunately, sometimes financial circumstances turn against you and those burdening payments become simply too much to manage.
If your situation progresses too far, you may be forced into the unfortunate situation of having the bank sell your property under power of sale Toronto Ontario, leaving you temporarily without a place to stay. In addition, there may be long-term consequences, including a dramatic and long-lasting impact to your credit (and your ability to purchase a house in the future).
No one wants that. That’s not an ideal outcome. Fortunately, there is a strategy you can take today to help you proactively protect yourself and get back on track to financial solvency.
Here’s a brief overview of the foreclosure process
The foreclosure/power of sale process can vary depending on location and the type of mortgage you have.
Usually, if you miss a few mortgage payments, your loan lender will begin sending you notices and then warnings. Over time, if you fail to pay back the mortgage payments you missed, the lender may initiate power of sale and force the sale of your property.
Ultimately this means the bank will be in possession of your home and you will eventually need to find a new place to live.
Fortunately, you have options!
If you wait until your home is in power of sale or foreclosed upon, it can have a devastating effect on your credit rating. One option to protect yourself is to work out an arrangement with the lender called a “deed in lieu of foreclosure”.
This is when you hand over ownership of the house to the loan company so that they save the money they would spend on foreclosure proceedings, which can be substantial. And you will be able to avoid having a foreclosure listed on your credit rating.
You can also avoid foreclosure by selling your house before the bank initiates power of sale or foreclosure proceedings. If your loan is paid in full then there will be no further penalties against you and your credit score. (If your loan isn’t paid in full you will need to make up the shortfall).
Here’s an example: Let’s say you owed $400,000 on your home and you sold your home to us for $390,000. You would give that money to the loan company, along with $10,000 to make up the short-fall, and your loan would be paid off. (If you contact a real estate lawyer, you may be able to negotiate a deed in lieu of foreclosure deal in which the loan company agrees not to go after the difference in exchange for the deed to the house.
I want to avoid giving my house back to the bank in Toronto!
Why do people choose to sell their home instead of going through foreclosure? (After all, they still don’t live in their home anymore.)
Well, losing a home can be difficult but the impact on your financial situation and your credit is considerably less than if you simply wait out the foreclosure process. In fact, going through foreclosure could impact your credit score by as much as 100 to 150 points. So the short-term challenge of selling your house is still a better choice than the long-term pain of giving your house back to the bank.