A non-judicial foreclosure, by definition, is a foreclosure that does not go through the court (judicial) system. Another term for a non-judicial foreclosure is a Power of Sale.
Compared with a traditional judicial foreclosure, a non-judicial foreclosure or Power of Sale proceeds much more quickly. For homeowners facing foreclosure, it’s usually a matter of at least six months before they must leave their homes, and there is some margin of time where they can still save their homes. If they face a non-judicial foreclosure or Power of Sale, they may have a few weeks before they will have to move — and if they want to save their homes, they must act immediately.
What Is A Non-Judicial Foreclosure?
The traditional process by which lenders take possession of property due to a mortgage in default is called foreclosure. In a full foreclosure process, the lender must sue the borrower in court, and wait for the court to remove the borrower’s claim to the property.
Since foreclosures, like any kind of court process, tend to be expensive and time-consuming for the lender, lenders in a number of areas — primarily Newfoundland and Labrador, Ontario, Prince Edward Island, and New Brunswick — have switched to a “non-judicial foreclosure” process.
This process, also known as Power of Sale, does not require the involvement of a court until the very final stages. As a result, where a judicial foreclosure might take well over 6 months, a non-judicial foreclosure can be finished in weeks.
Generally homeowners facing a non-judicial foreclosure still have a 35 day period within which they can “redeem” the mortgage. During this period, homeowners can pay off the remaining mortgage (including any incurred fees) and thereby keep their homes. If they do not redeem the mortgage during the 35 day period, the lender goes to the trustee (who is holding a “deed of trust” which allows them to sell off the property without getting permission from the court) and informs them that the homeowner is in default.
What Options Are There For Homeowners Facing Non-Judicial Foreclosure in Canada?
Since a non-judicial foreclosure can go very fast, any homeowner who’s been served notice of default should contact the lender immediately. If they fell behind on their payments due to an emergency or illness, the lender may be willing to work out an alternate payment schedule — a non-judicial foreclosure is still undesirable for the lender if they believe they can recover some other way.
If this is not possible, then the borrower should look for a new mortgage. Traditional lenders will be able to lend at the best rates, but since many homeowners facing foreclosure are not eligible for traditional loans programs are available to connect them with alternative financing. If you are facing a non-judicial foreclosure and you need alternative financing to save your home, contact us — not only can we bring in the money to stop your foreclosure, we will restore your credit back to good health while you live in the home.