There are times when making your mortgage payment each month becomes a real financial struggle. The problem is that if you miss your payment, even just once, your lender has the right to declare you in default. Have you already received written notification that you are in default? If so, you need to speak with a real estate attorney to shield your rights in the process.
The content of this article should not be construed as legal advice. It simply gives you a basic look at how foreclosure and power of sale both work. They both can lead to you losing your home. Do you live in the London Region of Ontario? Is it possible that you will default on your mortgage? HOS Financial has solutions for you, even if the legal process is already underway.
How does power of sale work?
The “power of sale” process ultimately leads from default to the loss of your home. The main difference between power of sale and foreclosure has to do with the way the transfer of ownership happens. With a power of sale, the transfer happens when the property sells, when it goes directly from the borrower to the buyer. Another difference is that the borrower can still owe money after the house is sold, depending on how the sale goes. Here’s an overview of how a power of sale works:
How is the foreclosure process different from the power of sale?
When you default on your mortgage, the lender can initiate proceedings that lead to the foreclosure of your home. This involves a legal process whereby a judge finds that foreclosure is necessary and, at that point, ownership of the house changes from the borrower to the bank. Your debt is satisfied, and the bank can take no further action against you. This means that foreclosure actually has fewer risks for you than the power of sale process does, although both will leave you without a home and without credit. Here are some of the basics of this process:
What if the bank has already notified you that you are in default?
Have you already received written notice of default? Consider the HOS Financial Lease Buyback/rent to own program.
You sell your home to HOS Financial – and then you use the proceeds to pay off your Mortgage balance. Then, you start a lease purchase contract with HOS Financial. You stay in your own home, and you pay rent/lease each month. Some of that rent (20%) goes into a savings pool to be added to yoru original equity when you started the program. This Original Equity plus 20% of all Lease Payments become your final down payment when you execute the forward mortgage agreement to buy your home back. Once the lease is up, you go to the bank and start a new mortgage. Your credit report doesn’t show anything about a power of sale or a foreclosure – which means your financial life isn’t in ruins.
If you’re curious about how we can help people in the London Region, give HOS Financial a call today!