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Foreclosures in Edmonton & Surrounding Areas

Foreclosure relates to secured debts, such as your home, which are not included in your bankruptcy. In order words, if you declare bankruptcy, your home is not included the bankruptcy and your mortgage isn’t automatically in foreclosure. In Alberta, your proportionate ownership interest in your principal residence (including mobile home) up to $40,000 is exempt from the bankruptcy.

Because your mortgage is a secured debt, your mortgagee (i.e., lender) cannot collect if you declare bankruptcy. Your mortgagee has other collection options available, however. Usually, if you miss just 2 mortgage payments, you may begin receiving contact from the lender for payment. If you miss a third payment or are unable to catch up and stay caught up, the lender will begin the foreclosure process.

Foreclosure is the result of being unable to pay your mortgage, whereby the lender takes over ownership of your home. Foreclosure essentially functions to terminate all your rights as the mortgagor (i.e., borrower). The lender then sells your home to pay off what you owe them. If the home is sold for less than what you owed, then you may be required to pay the difference that is short. A court order for foreclosure is the relief requested by a mortgagee in a lawsuit instead of asking for a judgment for money. The order authorizes the mortgagee to sell your home and results because you did not make the agreed mortgage payments but have the asset available for sale.

  1. The foreclosure process begins with a demand letter to you as the homeowner, which puts you on notice that the arrears need to be paid or else you will be sued and the home will be sold. You may want to list the home for sale in response but this does not prevent the lawsuit from happening.
  2. Next, a Statement of Claim is provided to you as the owner, notifying you that the lawsuit has started by filing a Lis Pendens or “litigation pending” lawsuit.
  3. You must be careful about what steps you take next as the home can only be sold at the early stages of the lawsuit. If there is little or no equity in the property, you may not have the authority to sell the home once the court controls the process without the court’s authorization of a Judicial Sale. You also need to be aware of the mortgage terms and conditions including the cost to pay off your mortgage or move it to another property before taking any steps.
  4. The foreclosure process usually takes about 6 -10 months to complete. You can still make mortgage payments during that time, though it is unlikely. You are usually able to remain in the home while it is for sale but may need to move on short notice.
  5. In the event of a foreclosure and sale by the bank at a loss, the bank will make a claim under the mortgage insurance policy to recover their loss and break even. The mortgage insurance company will then seek reimbursement from you for the amount they had to pay out.

If you are have trouble paying your mortgage and you are concerned about foreclosure, contact your Faber Trustee for debt help. You may have more options available if you act sooner, especially if you can cut costs in other areas. Sometimes, if you can deal with debts and other bills, you are able to resume and then catch up regular monthly mortgage payments and stay in the home. For more information about bankruptcy and avoiding mortgage foreclosure in Edmonton and Grande Prairie, contact us at Faber Inc. today.

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