Mar 24, 2020
THE NEW REALITY: PRIVATE MORTGAGE DEFAULTS - POWER OF SALE & FORECLOSURE - Part I of a Series
PART I of a series of blog posts intended to aid private mortgage lenders who will soon find themselves dealing with mortgage default, power of sale and foreclosure, perhaps for the very first time. This is the New Reality. It is stark and invasive, affecting everyone and everything around us. Private mortgagees are no exception.
Just last month – February, 2020, which seems like forever, 2 of the most common causes of mortgage default that I was seeing in my practice were the death of a mortgagor or marital breakdown. Few families can financially survive either of these 2 calamities. Although anecdotal in nature, the point that I am trying to make is that most folks were paying their mortgage debts in full and on time. That was then.
This is now. Covid-19 has changed everything – literally turning each of our worlds upside-down, virtually overnight. Today (March 24/20), Ontario’s government is ordering all non-essential businesses to shut down completely.
This means that more and more mortgagors will be facing layoffs and dealing with unemployment. And not for days and weeks, but for months and months while we socially distance from one another.
Family income, which was already stretched to the limit, likely will not be available to make timely mortgage payments. CMHC and Canada’s other mortgage insurers have already declared a 6 month moratorium on the payment of principal and interest for all insured mortgages (except for insured mortgages more than 3 months in default).
How will this affect private mortgagees? That is the $64,000 question, of course. I intend to explore this topic thoroughly in this blog. I’ll deal with some of the likely effects of social distancing and closing of businesses on private mortgagees. I’ll unpack the need for: default notices; notices of sale; the differences between power of sale and foreclosure and judicial sale; the seize or sue limitation that exists in many of Canada’s western provinces (but not in Ontario); how to take possession; the duties and obligations of being a mortgagee-in-possession; cleaning and maintenance of inventory (vacant homes); appraisals; listings; sales and much much more.
No one can predict the future, of course. And our lives are changing so quickly, that it is hard to stay current. But with that in mind, I hope that all mortgagees – whether institutional mortgage lenders or private mortgage lenders - will find this blog interesting and informative. But needless to say, this blog is intended for information purposes only. It is not legal advice and cannot be relied on as such. Nor is it a substitute for hiring your own legal counsel, who will be an essential member of your mortgage default and mortgage remedy team. And lastly, this blog is just my opinion. I reserve the right to change my mind. And I reserve the right to be wrong.
Be well and stay healthy.