HELP TO PREVENT FORECLOSURE
Foreclosure Prevention Services Program
Yes, foreclosure prevention is possible. In fact, if you choose your options right, not only can you prevent the bank from foreclosing on your home — you can also emerge from the process with a better credit score than when you started!
At the same time, the fact is that many homeowners tend to adopt a “deer in the headlights” approach to handling an impending foreclosure. Not only is this an ineffective foreclosure prevention strategy, but it often makes the situation much worse.
In order to understand how foreclosure prevention works, however, it’s important to know how the foreclosure process itself works. Let’s take a look.
The fact is that lenders do not like foreclosure either. For them, it is a time-consuming, expensive process. As a rule, a lender will only embark on a foreclosure if they believe it’s necessary to avoid losing even more money.
Thanks to this fact, it is often possible to negotiate an alternative payment schedule with the lender. If you contact the lender who has threatened to foreclose, they may be willing to work with you to find another way to bring your mortgage current without going through the courts and selling your home.
The other key thing to understand is that your situation may not involve a foreclosure at all — it may involve something worse. Since forecloures are so expensive and time consuming, in many provinces lenders have started making provisions for a so-called Power of Sale in the mortage. A Power of Sale allows them to sell your home with very little court intervention, and may be finished in a matter of weeks. If your lender is using a Power of Sale, you must act fast to stop it and keep your home.
How Foreclosures Work
Assuming that your mortgage is written to require judicial foreclosure instead of Power of Sale, the foreclosure action starts like any lawsuit. The lender, who is the Plaintiff, files a Statement of Claim with the local court, and serves you (you are now the Defendant) with a copy of the Statement.
After you’ve been served with the Statement of Claim, you have a 20 day window to file one of two things with the court (and serve copies on the lender): a Statement of Defence or a Demand for Notice.
If you do neither of these, the Plaintiff (lender) will note you are “in default” with respect to the court action. (This is separate from being in default on your mortgage — the lender claimed you were in default as part of filing for foreclosure.)
If you are “in default” on the court action, this means you have decided not to fight the foreclosure. You will not be given any further chances to defend yourself, and you won’t be notified about the ongoing court procedures.
Regardless of your choice, the lender will start filing more statements at the courthouse. The lender will usually apply to the court for a remedy, which is the legal term for some way of recouping the mortgage. The court will almost always issue an order at this point.
Especially if you have chosen to defend the case, the court will usually issue what is known as a Redemption Order. This order is actually in your favour. A Redemption Order gives you a certain time (which is usually 6 months, though it may be extended or shortened by petitioning the court) in which you can bring the mortgage current and make any other payments the court has ordered you to make.
During the redemption period, if you come up with the payments, you will effectively stop the foreclosure and keep your home.
If the court believes you have no chance of paying off the mortgage, however, it can skip the Redemption Order and simply issue an Order for Sale or Order for Foreclosure. Similarly, the court will likely issue such an order if you do not redeem the mortgage within the given period.
The way to prevent a foreclosure is simple — pay off the lender. Even if you cannot work out an alternate payment plan and no traditional lender will deal with you, the HOS Financial Buy-Back program is available to let you stay in your home. As part of the Buy-Back program, you will also go through credit mentoring which ensures you never face this problem again in the future.
Please note that we are not legal advisors and you should not consider this to be legal advice. If you are going through a judicial foreclosure, consult an attorney.