What is Power of Sale?

In Ontario, when a borrower defaults on their mortgage payments, the lender can repossess and sell the home to recover the cost of the loan. This legal process is known as a Power of Sale.

The term Power of Sale is often used interchangeably with Foreclosure, however in the case of a Foreclosure, the lender takes complete control over the property (as in ownership) and can sell the property without any obligation in terms of its re-sale price to the owner. In the case of a Power of Sale, the mortgage lender is obligated to sell the property for the highest possible price, with the sale proceeds paying off the loan and associated cost (interest, arrears, real estate commissions, and various other fees). Any money that is “left over” goes back to the borrower.

Though there is generally little court involvement with a Power of Sale, when a borrower is in default of their loan, he/she will receive a demand letter from the lender Bring their mortgage payments and/or tax arrears up to date. This letter also advises them of a required timeline (Example: 10 days)… in which to do so. Some lenders are more lenient than others with respect to time frames which may have to do with the borrower’s track record, perceived equity and client relationships.

What should I do if I am facing Power of Sale proceedings?

If you are behind on your mortgage payments or facing power of sale for any other reason you still have some options available to you. Often, lenders don’t want to resort to a Power of Sale – the process is time consuming and usually expensive, so lenders may be open to alternatives.

One option is to secure a mortgage loan from NHMC (new first/second/third mortgage), which will allow you to pay off your original mortgage and arrears, or just bring the arrears current with a second or third mortgage.

How can New Haven Mortgage help me?

New Haven Mortgage is quick to respond to inquiries, quicker to analyze the loan request, and even quicker to issue a commitment once our preliminary review is completed. We have earned great credibility within the Mortgage Industry, and certain lawyers and lenders recognize our entity when we contact them for mortgage information statements, which may result in an expedited process.

We are experts in the alternative mortgage market and believe that you deserve another chance, and we would like the opportunity to help. Your free, no obligation consultation, is one Toll-Free call away.