GTA House Buyers Helps a Lot of Home Owners Stop Power of Sale in Toronto, Ontario.
We help most people before the bank takes possession, but we’ve also helped people after the bank has sent the Sheriff to change the locks and evict the home owner. It all depends on when the seller has contacted us. I highly recommend calling GTA House Buyers as soon as you think you might fall behind on payments. With our lawyers we have negotiated a lot of discounts for home owners… we get reductions from lenders on fees, penalties and interest… and occasionally we get discounts off the mortgage principal owing… but it all depends on the lender and the situation.
NOTE: Power of Sale is commonly referred to as foreclosure, but in the Toronto area its technically Power of Sale.
Ok… There are two main ways we help home owners to stop power of sale or foreclosure. One, we buy your house. And Two… we give you a loan.
Method #1: We Buy your house
If the bank starts the power of sale process there are A LOT of costs: interest, penalties, lawyers fees. And the bank’s lawyers are expensive!
When the bank hires a Sheriff to evict the owner from the house and the bank takes possession, then there are MANY MORE costs: sheriff fees, cleaning, repairs, property management fees, realtor fees.
In the Power of Sale process there are a lot of costs that are outside of your control. The sooner you decide to sell, then the less costs you will have.
GTA House Buyers and our lawyer have negotiated many times with banks and private lenders to reduce the amount owing on mortgages. So if a lender gives you a statement with a large balance owing, there may be options to reduce that amount owing.
When would a lender be likely to reduce the amount owing on your mortgage?
- Slow market. If houses in your area are taking a long time to sell, then lenders don’t want to take possession. A slow market is obvious during a recession or if the government changes rule and cause a slow down. But it can happen in specific towns, neighbourhoods and condo buildings. Maybe there is just too much inventory and not enough buyers in your area.
- You are behind on property taxes or income tax. These taxes get paid out first when a house sells, before the the mortgage gets paid out.
- Your house needs a lot of renos. When a house needs a lot of renovations, then the value is not clear… and its definitely lower than if the house is in great condition. It can take a lot of money, time and effort to renovate and increase the value. Renovations don’t always go according to plan and the contractors who are hired to do renovations don’t always stay on time and on budget. So there are a lot of risks.
Low equity. A house may have low equity because it has problems and needs renovations or repairs. Or if you bought recently and paid a small down payment, then there is probably little equity. If house prices have dropped in your area, then maybe you have negative equity.
If the lender sees a couple of these problems, then they may be willing to negotiate and lower the money you owe them. It helps to have an experienced buyer, such as GTA House Buyers, who also have an experienced lawyer and who give you a strong firm offer to purchase with a fast closing.
Example #1: House in Whitby, Ontario
The seller contacted me to buy their house, I saw the house, then gave them an offer and they OK’d the agreement. But days later I couldn’t reach the seller on their phone for a couple days. I ended up going by and saw that the lender had taken possession of the house. They had a notice on the front door. Apparently the Sheriff had come and changed the locks and evicted them. The sellers never told me that they were this far down the path of Power of Sale. But not to worry… we bought the house fast and got the seller back in so they could take their belongings. We even paid for a moving truck and a helper for their move.
But… this house needed a lot of renovations. There was water damage in the basement and pets had stunk up the house. So the 1st mortgage lender did reduce a couple thousand dollars of the penalty fees and interest. The first mortgage lender was a trust company… not one of the big 5 Canadian banks… I’ve noticed these smaller lenders tend to be more negotiable and flexible.
Example #2: Scarborough/Toronto Grow-Op House
Another example is a house we bought in the Scarborough area of Toronto. The house had been used as a marijuana grow up and had been busted by the police. When the city finds out about a grow-op that means a parade of city inspectors, engineers, and environmental consultants have to come through the house at every step in the renovations to ensure it’s cleaned up and safe. It’s EXPENSIVE to renovate one of these houses and pay all the fees to the city and consultants. The value of this house nose-dived the day the police busted it. It turns out there was a second mortgage on the house that was in default… well do you think the second mortgage lender reduced some of the money owing to them. They sure did! The lender took some of their money owing… which is better than none! Second mortgage lenders are easier to negotiate with because they are in a riskier position.
Example #3: House in Oshawa, ON
There was a house we bought in Oshawa where the mortgage lender reduced principal. Yes, the lender did a short sale… which is very rare in the Toronto Area. No, it wasn’t one of the Big 5 Canadian banks, but it was a nationally recognized bank. No, I don’t want to say the bank’s name publicly… I’m sure they don’t want to get a reputation for reducing the mortgage amount owing. But the house was cluttered and needed renovations. Also, the house sellers hadn’t paid property taxes in YEARS and taxes equaling about 7% of the property value were owing. So the lender was in a difficult position because there was little equity in the house. The result is that the bank reduced the mortgage amount owing to get the house sold FAST.
Well that’s enough for this article on how to STOP Power of Sale in Toronto, Ontario. Next time I’ll discuss how we help home owners to stop power of sale by giving a loan.
No matter where you are in the Power of Sale process, give us a call at (647) 848-7790 and we can talk with you to figure out your options. If the Sheriff has already changed the locks and you’re out of the house, we can still buy your house… but please don’t wait that long. Whether you’re behind one mortgage payment, or the lawyer letters have started, or you have a notice that the Sheriff is coming… just give GTA House Buyers a call and we’ll do our best to be of service and explain our solutions for stopping power of sale. There are several ways to stop the bank from taking your home.