Most Canadians have been told about houses being foreclosed on left and right in the beleaguered U.S. Home market. Many newspapers are running advertisements that guarantee to show Canadians how to cash in on undervalued properties south of the border "Florida waterfront condos for dimes on the dollar, anyone? What Canadians may not get is that foreclosure is not a uniquely American phenomenon. Though the incidence is relatively low in our stable real estate market, properties are foreclosed on every day in Canada. What is a foreclosure, how does it work, and what are the advantages for the average Calgary customer who is looking for a home?
What's a Foreclosure?
Foreclosure results when a house owner misses sequential payments to their bank (usually 3 months of payments) and has no means to catch up. This is known as distress, and it almost always leads to foreclosure. Once a bank starts the method "usually after written notice of a missed payment has been provided to the borrower, and more than 15 days have elapsed with no payment - it is extremely troublesome for the house owner to reverse it; legal costs and interest fees pile up swiftly and unless the house owner can come up with a giant amount of cash, the property will finally revert to the bank.
When the foreclosure process is complete, the bank can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and on top of that, if there is a recourse clause in the mortgage, the mortgagee "to paraphrase, the mortgage holder, the bank "can go after the homeowner for the remainder if the sale doesn't bring enough to pay the existing balance of principal and fees.
It's a unsettling situation, all right. We wouldn't wish such a distressing experience on any person. That being said, it does happen. Once the home has been repossessed by the lender, it's legitimate targets for clients. That is where you, as a buyer, come in.
2 Types of Foreclosures in Canada
So that you can understand the terminology "and with a little luck avoid this happening to you, ever - there are two main ways that a foreclosure can happen in Canada.
Foreclosure by legal sale, a. K. A legal foreclosure, involves the sale of the mortgaged property under the control of a court, with the takings going first to fulfil on the mortgage; then to any other lien holders; and, ultimately, the rest goes to the mortgagor (the borrower, homeowner) if anything is left. Under this system, the bank initiates foreclosure by filing a lawsuit against the borrower.
Foreclosure by power of sale, sometimes called non-judicial foreclosure, is by far the more commonly found type of foreclosure in Canada and it is made feasible with an easy Power of Sale clause being included in the mortgage contract. This process involves the sale of the property by the mortgage holder without court supervision. This process is in general much faster and less expensive than foreclosure by legal sale. The order of payout is the same as in a legal sale, with the loan corporation getting the results of the sale first.
What's a Foreclosure?
Foreclosure results when a house owner misses sequential payments to their bank (usually 3 months of payments) and has no means to catch up. This is known as distress, and it almost always leads to foreclosure. Once a bank starts the method "usually after written notice of a missed payment has been provided to the borrower, and more than 15 days have elapsed with no payment - it is extremely troublesome for the house owner to reverse it; legal costs and interest fees pile up swiftly and unless the house owner can come up with a giant amount of cash, the property will finally revert to the bank.
When the foreclosure process is complete, the bank can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and on top of that, if there is a recourse clause in the mortgage, the mortgagee "to paraphrase, the mortgage holder, the bank "can go after the homeowner for the remainder if the sale doesn't bring enough to pay the existing balance of principal and fees.
It's a unsettling situation, all right. We wouldn't wish such a distressing experience on any person. That being said, it does happen. Once the home has been repossessed by the lender, it's legitimate targets for clients. That is where you, as a buyer, come in.
2 Types of Foreclosures in Canada
So that you can understand the terminology "and with a little luck avoid this happening to you, ever - there are two main ways that a foreclosure can happen in Canada.
Foreclosure by legal sale, a. K. A legal foreclosure, involves the sale of the mortgaged property under the control of a court, with the takings going first to fulfil on the mortgage; then to any other lien holders; and, ultimately, the rest goes to the mortgagor (the borrower, homeowner) if anything is left. Under this system, the bank initiates foreclosure by filing a lawsuit against the borrower.
Foreclosure by power of sale, sometimes called non-judicial foreclosure, is by far the more commonly found type of foreclosure in Canada and it is made feasible with an easy Power of Sale clause being included in the mortgage contract. This process involves the sale of the property by the mortgage holder without court supervision. This process is in general much faster and less expensive than foreclosure by legal sale. The order of payout is the same as in a legal sale, with the loan corporation getting the results of the sale first.
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