The possibility of missing mortgage payments is very stressful.
The fear of foreclosure looms but what’s the reality? If you are worried you can’t keep up, it’s important to know the facts to see if there are ways to help yourself.
The first thing to do is contact your lender. Most lenders are not interested in owning property – they’d rather you keep your house and continue paying them.
See if you can negotiate reduced payments for a time or change the terms of the mortgage so you can make lower payments over a longer period.
If you don’t come to some arrangement, your lender may foreclose. Foreclosure is a court process through which a lender can apply to take possession of your property or sell it.
If they sell it, the money goes towards paying the debts associated with the property and other costs related to the process.
If there is any left over, you get it; if not, the lender may try to collect the balance from you.
Before foreclosing, B.C. law requires lenders to send a “demand letter” asking you to either pay a certain amount by a certain date to get your mortgage back in good standing (re-instate your mortgage) or to pay the whole amount borrowed, plus interest and expenses (redeem your mortgage).
If you can do what the letter asks, for example by negotiating with your lender, borrowing the money needed, getting a new mortgage or selling the house, the process ends there.
If you don’t meet the requirements of the letter, the lender can file a petition in Supreme Court to start foreclosure proceedings and serve you with a copy.
If you are facing foreclosure, get legal advice as soon as possible to ensure your rights are protected. You also need to be aware of deadlines for filing court documents if you want to have a say in the proceeding.
Two good resources are Access Pro Bono (free half hour appointment with a lawyer) 1-877-762-6664 and Lawyer Referral (half hour appointment with a lawyer for $25 + tax) 1-800-663-1919. Legal Services Society also has a great publication on foreclosure called “Can’t Pay Your Mortgage?”
Amy Taylor is Coordinator of the Kootenay Boundary Credit Clinic, a project of Castlegar & District Community Services. The Clinic will be closing its doors as of Aug. 31, 2011. Thanks to our funders for supporting this valuable project!