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.
The mortgage company or bank must follow a formal legal process called a mortgage sale or foreclosure.
Typically the process will start with a default letter directly from the mortgage company and, if the arrears are not brought current, the mortgage company assigns the file to a lawyer to start the mortgage sale process.
Usually, you get a formal written demand from the lawyer with a deadline to bring the mortgage payments, taxes and costs current and if that is not done, the mortgage sale process is commenced.
The mortgage sale process varies by Province but you are typically served with a notice of mortgage sale identifying an auction date approximately one month later and the notice is then published in the newspaper for 4 consecutive weeks. At the auction, the property may be sold to the highest bidder or the property may be taken back by the mortgage company and listed for sale.
If there is a deficiency after the property is sold, meaning that the sale proceeds were not sufficient to pay the mortgage, costs and taxes in-full, the mortgage company will then commence a Court action against the parties to the mortgage-seeking recovery of the deficiency and this will usually result in a judgment being issued against those parties.
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 current as well in order to stop the process. The further into the process you get, the more it will cost to stop it.
If you are just starting to have problems with your mortgage payments and have other debts, it could make sense to deal with those other debts through a bankruptcy or proposal in order to free-up cash to deal with mortgage payments. You can keep your house in a bankruptcy or proposal as long as you are able to make the payments.
Alternatively, if there is no reasonable prospect of you being able to bring the mortgage current and keep the house, you can file for bankruptcy or file a proposal at any time and, as part of the process, walk-away from the house. The bankruptcy or proposal will deal with the deficiency claim even if that claim has not yet been determined; you do not need to wait for the house to be sold.
A Licensed Insolvency Trustee can help you determine if there is any reasonable prospect of being able to keep your house and whether and how a bankruptcy or consumer proposal can help resolve the situation.
Powell Associates Ltd. is a Licensed Insolvency Trustee (LIT) focused on providing debt settlement, proposal and bankruptcy solutions for individuals and businesses. We offer free consultations to review your personal financial situation and practical debt resolution options. Contact us to discuss your situation over the phone or book an appointment to meet us face-to-face in Saint John, Moncton, Fredericton, Charlottetown or Dartmouth - it's your choice.