I Received a Mortgage Sale Notice – What Can I do?

January 27, 2015

I Received a Mortgage Sale Notice – What Can I do?

When you fall behind on mortgage payments your bank has the right to take control of your house and sell it.

If you are behind on your mortgage payments, the bank has the right to take control of your house and sell it.

The mortgage company or bank must follow a formal legal process called a mortgage sale or foreclosure might include the following steps.

Default letter from the mortgage company, if you don’t pay the arrears the mortgage company will assign your file to a lawyer to start the mortgage sale process.
A demand letter from the lawyer with a deadline to pay the mortgage payment arrears, taxes and costs; if you don’t comply with this demand, the mortgage sale process will start.
The mortgage sale process varies by Province, typically you are served with a notice of mortgage sale identifying an auction date approximately one month later. There is a notice published in the newspaper for four consecutive weeks.

At the auction, the property may be sold to the highest bidder. If there are no bidders, the property is transferred to the mortgage company. The mortgage company now owns the property; and will list the property for sale with a Real Estate Agent.

When the property is sold, if there is a deficiency, the sale proceeds were not enough to pay the costs of the mortgage sale, property taxes and the mortgage debt in full. The mortgage company will file a lawsuit against you to recover the deficiency. If you don’t successfully defend this lawsuit, the Court will grant a judgment against you for the amount of the deficiency.

You can usually stop the process at any point up to the auction date by bringing the mortgage current and paying all of the costs incurred by the mortgage company in conducting the sale process. You may have to bring property tax arrears in full, as well, to stop the process. The further into the process you get, the more it will cost to stop it.

If you are starting to have problems with your mortgage payments and have other debts, it could make sense to deal with those other debts through a personal bankruptcy or consumer proposal to free-up cash to deal with mortgage payments. You can keep your house in a personal bankruptcy or consumer proposal as long as you keep your mortgage payments current.

If you are unable to afford the mortgage payments on your property, you can file a personal bankruptcy or consumer proposal at any point during the mortgage sale process. You don’t need to wait until the mortgage company has sold the property and file a lawsuit against you to recover the deficiency.

Alternatively, if there is no reasonable prospect of you being able to bring the mortgage current and keep the house, you can file for personal bankruptcy or consumer proposal at any time and, as part of the process, walk away from the property. You don’t need to wait until the property sells, or the mortgage company has filed a lawsuit for a deficiency.