How to Stop Power of Sale in Ontario

How to Stop Power of Sale in Ontario

Received a Notice of Sale or fallen behind on your Ontario mortgage? Contact your lender immediately, request a written arrears or payout statement, and have an Ontario real-estate lawyer review any formal notice. A repayment arrangement, refinancing or a voluntary sale may be possible, depending on the deadline and your circumstances.

• What is a Power of Sale (vs Notice of Sale)
• What triggers a Power of Sale
• Can the Lender actually take my house
• How much equity can I access in my home
• What if my credit score and income is low?
• How to stop a Power of Sale
• How Mortgage Agents Help

What is a Power of Sale?

• A power of sale is a legal process that can allow an Ontario mortgage lender to sell a property after a mortgage default, subject to notice rules. Default may involve missed payments or other breaches of mortgage terms.
• The lender generally serves a Notice of Sale before exercising its power of sale. A notice does not mean a sale is inevitable; the borrower may still be able to resolve the default or arrange another solution before the sale is completed.
• For a mortgage with a contractual power of sale, Ontario’s general notice timeline is as follows (see the Ontario Mortgages Act). The rules are different for a statutory power of sale:
• 1) A borrower misses a payment or otherwise defaults under the mortgage terms.
• 2) Under section 32, a lender generally must wait until a contractual default has continued for at least 15 days before giving a Notice of Sale.
• 3) The lender serves the required Notice of Sale on the borrower and other parties entitled to notice.
• 4) Under section 32, a contractual power-of-sale transaction cannot be completed until at least 35 days after notice. The statutory power under sections 24 and 26 has different requirements, including three months of default and at least 45 days’ notice.
• 5) After satisfying the applicable legal requirements, the lender may proceed toward a sale. Listing dates, possession steps and opportunities to resolve arrears depend on the circumstances; a lawyer should review the actual notice and mortgage.
• A lender exercising power of sale must take reasonable precautions to obtain the property’s fair market value; it cannot simply choose a bargain price to cover its debt. The sale may still produce less than an owner-managed sale in a more flexible timeframe.
• Sale proceeds are applied to the permitted selling costs, the mortgage debt and other amounts in the legal order of priority. Any remaining surplus generally belongs to the borrower, subject to other claims and the Ontario Mortgages Act.
• NOS vs POS? The NOS is a notification while the POS is the actual process that takes place
• In a power of sale, the lender sells the property and must account for sale proceeds under the applicable legal priorities. Foreclosure is a different court-supervised process in which the lender seeks ownership of the property. The two processes have different consequences for borrower equity and should not be confused.

What triggers a Power of Sale

• Even one missed mortgage payment may cause a default, but that does not mean a lender can immediately send a valid Notice of Sale or sell the home. For a contractual power of sale, Ontario generally requires at least 15 days of continuing default before notice can be given.
• If you have not yet missed a payment, contact your lender as early as possible. If you are already in arrears, act promptly and discuss these options:
• 1) Call your lender and ask about a written repayment arrangement or temporary payment relief. Interest-only payments, extensions or other accommodations may be available, but the lender is not required to approve them.
• 2) Review your home-equity options, including a second mortgage or mortgage refinancing. Conventional borrowing against home equity is usually capped near 80% of appraised value; requirements for alternative or private mortgages differ. Assess all fees, rates and repayment risks before taking on more debt.
• Missed payments can damage your credit score, and rebuilding it can take time.
• If repayment or refinancing is not sustainable, consider a voluntary sale. Selling the property yourself may offer greater control over timing and marketing, but the outcome and proceeds are not guaranteed.
• Remember that increasing your debt load when you already have financial concerns can exacerbate problems.
• Speak with a Mortgage Agent who can assess if refinancing is the best course of action.

Other articles: Debt Consolidation
Other articles: How to use Private Lenders
Other articles: Refinancing a Mortgage

Can the Lender actually
take my house?

• Under a power of sale, the lender generally sells the property rather than becoming its owner. Sale proceeds must be applied according to the legal priorities, and the borrower may be entitled to a remaining surplus.
• In a foreclosure, the lender may seek ownership through the court process. This differs from a power of sale, where the lender sells the property.
• If refinancing and repayment are not viable, ask a lawyer about a voluntary sale before the lender completes its sale. You may retain greater control over marketing and timing, but any sale must account for the lender’s rights, outstanding debt and deadlines.
• During power of sale, the lender controls the sale and must take reasonable precautions to obtain fair market value. The final price is not guaranteed.

How much equity can
I access in my home

• How much equity you can borrow depends on the appraised value, existing debts, income and lender policy. Learn how loan-to-value (LTV) is calculated before considering a second mortgage.
• A lender may require an independent appraisal or other acceptable valuation.
• The LTV compares the loan amount to the house value. Example: if the mortgage is $750,000 and the house value is $1,000,000, then the LTV is 75%.
• Lenders consider credit, income, existing mortgages, the property and the requested financing. The Financial Consumer Agency of Canada explains typical home-equity borrowing limits, which are not guaranteed approval levels.

Other articles: Debt Consolidation
Other articles: How to use Private Lenders
Other articles: Refinancing a Mortgage

How Mortgage Agents Help

• A Mortgage Agent can help with a Power of Sale in several ways:
• Confirm if you can add a second mortgage or refinance the entire mortgage.
• Assess how much loan you can qualify for.
• Calculate your new monthly payments.
• Recommend the best Lender whose solution will only make your situation better – not worse.
• Advise on all fees and risks with a new Lender.
• Review whether refinancing, a repayment agreement or a voluntary sale makes the most financial sense.
• Explain the potential fees and risks of a private mortgage, if one is being considered.

Power of Sale	Foreclosure	Refinancing
Second Mortgage	Payout POS	Alt Lenders

How much do
Mortgage Agents cost?

• Any and all costs must be disclosed in writing before you agree to financing.
• Alt Lenders charge a Lender fee. Sometimes there is a Brokerage Fee.
• If you use our Private lenders there is both a Lender and Brokerage Fee.
• In most cases, if you are refinancing with a conventional Bank, there is no extra payment required to the mortgage agent.

Other articles: Debt Consolidation
Other articles: How to use Private Lenders
Other articles: Refinancing a Mortgage

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jason@wodlinger.com	416.899.2750