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Here’s What to Do…And What NOT to Do
If you’ve just gotten a letter from your mortgage lender indicating that foreclosure proceedings are imminent, chances are you’ve been stressing out about your financial situation for some time now. For most people, the last bill that they let slide is their rent or mortgage payment, because they don’t want to end up out on the street. Once you get that letter, it’s likely that you’ve missed at least one payment, and perhaps two or maybe three. If you’ve done some research about mortgages, you know that the Web has many articles defining “foreclosure” and “power of sale” – but not much is out there telling you how to work your way out of your situation. After all, the banks would rather work with the existing homeowner in the vast majority of cases, because foreclosure is an expensive process for the banks – and once it begins, their revenue from the homeowner drops to zero. So here’s a basic guide on what to do once you fall behind on your mortgage – and what NOT to do.
Do…communicate with your lender
As soon as you realize you may have to miss a payment (or just make a partial payment) let your lender know. If you haven’t missed a payment yet, you have almost a 100% chance of this succeeding – remember, banks would rather work with you than foreclose on you, in almost every case. If you’ve already missed a
payment or two and received a letter about foreclosure, make that call as soon as
possible. Explain why you’ve missed the payments that you have, and your plan for catching back up. Even if you just need to “catch up” by moving your term end back 60 or 90 days and making your next payment on time, most banks will work with you. Most mortgage insurers have programs that help homeowners who have run into difficulty, and you may qualify for those as well.
Don’t…hope that the situation just goes away
Even if you ignore the letter, the bank will not forget about you or about your account. If the foreclosure ends up going through, it will stay on your credit for six years, which can keep you from getting any sort of loan from a traditional lender over that time period.
Do…reach out to a mortgage broker agent licensed in your province and experienced in private lending and foreclosure refinance solutions
What if the bank won’t work with you? You’re still not out of options. Amansad Financial is a broker agent licensed to handle these types of transactions. If you have sufficient equity, you might be able to refinance or take out a second mortgage. If you don’t have enough equity, but you want to remain in your home, we have a network of investors and private lenders who will work with you under IPR arrangements to give you a fresh start. In the rare event that we cannot find a solution for you, we suggest that you sell the house as quickly as you can and move.
Don’t…reach out to multiple traditional lender or broker agents
Most of these brokers aren’t used to working with borrowers in your situation – and if you have multiple brokers running your credit, that can have a detrimental effect on your credit. If a lender sees that you have a lot of inquiries on your
credit history, that can cause problems as well.
Do…save as much money as you can
This advice is for those who have already entered the legal process. Once the
Statement of Claim has come and gone, the foreclosure process will not end until
all of the arrears on the note as well as any legal fees are paid in full – unless the property has been sold or an entirely new loan is in place. During this time, you
should save any income that you would have used to make ongoing mortgage payments. You can put that money toward the total costs, pay for the appraisal with your new lender or pay for your move. No matter what you do…
Don’t…spend the saved money on nonessentials
After all you will need it for something crucial in the next few months.
Do…get ready for the fees
That’s right – closing costs, lender’s legal fees, brokerage fees, and so on. No
matter how you come out of your foreclosure, those helping you are doing so as a professional service. Misfortune brings unexpected costs, often in significant amounts, and a foreclosure is no different. With that said, though…
Don’t…pay any fees up front
No lender, or broker or foreclosure refinancing specialist should ask for fees up front, except when it’s time to order an appraisal, secure documents related to a condo (when applicable) and test for water potability (on rural properties). If you are asked to pay anything else up front, move on to the next company.
Do…research the process (but don’t dawdle)
Look into how foreclosure and power of sale work in Canada. The more you know, the stronger your position will be when dealing with lending brokers, and with your lender. You can set up a Google alert that will send you an email when new articles appear online about the topic.
Don’t…be timid or afraid
Don’t sign any agreement with a brokerage until the representative has answered all of your questions. Before you sign anything binding, seek out ILA (independent
legal advice). If you work with Amansad Financial, getting that sort of advice is
mandatory to ensure that your arrangements represent the best outcome for you
and your family.
In short, no matter what stage of foreclosure you find yourself approaching, you need to do the right thing for yourself and your family. Our goal at Amansad
Financial is to keep every customer in their home – but that doesn’t end up working for everyone, and if you’re in that situation, we will let you know up front. There are some brokers who will try to sell you an optimistic ending that is just unrealistic, but that’s not how we operate. Give us a call today!