Difference between revisions of "Foreclosure"

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{{REVIEWEDPLS | reviewer = [https://www.ganapathico.com/our-team/nathan-ganapathi/ Nathan Ganapathi] and [https://www.ganapathico.com/our-team/anna-kurt/ Anna Kurt], Ganapathi Law Group|date= October 2017}} {{Dial-A-Law TOC|expanded = home}}
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If you default on your mortgage, the lender can go to court to take the property you mortgaged or sell it to pay the debt. This process is called '''foreclosure'''.
  
{{Dial-A-Law TOC|expanded = housing}}
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==What you should know==
Foreclosure scares people because it means they may lose their house. But if you face foreclosure, you may still be able to help yourself if you understand what it is and how it works.
 
  
==What is foreclosure?==
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===If you default on your mortgage===  
Foreclosure is a legal action that a moneylender can take if a person who borrowed money using a mortgage stops paying back the mortgage. Foreclosure allows the lender to take or sell the person’s house by first getting a court’s permission to do so.
+
A '''mortgage''' is a loan used to buy a home or other property. The lender, such as a bank or trust company, provides part of the purchase price of the property. The borrower promises to pay the lender back, plus interest.
  
==What is a mortgage?==
+
[https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-250/latest/rsbc-1996-c-250.html#sec231_smooth Under the law in BC], a mortgage gives the lender a '''charge''' — meaning an interest or a right — against the property being purchased. That charge gives the lender rights if the borrower '''defaults''' on the mortgage. The most common way for a borrower to default is by not making payments under the mortgage as promised.
A mortgage is a contract between a borrower and a lender to repay a loan. It gives the lender some assurance that the borrower will pay back the borrowed money. When you get a mortgage to buy a house, you borrow money from a person or company and you promise to pay back that money, usually with interest and in regular payments. The lender makes sure you will repay the loan with a mortgage, or charge, against your house, registered at the Land Title Office. You may have the right to pay off the mortgage and get the charge on your house removed—some mortgages allow that. For more on mortgages, check script [[Mortgages and Financing a House Purchase (Script 408)|408]], called “Mortgages and Financing a House Purchase”.
 
  
==What happens if you miss a mortgage payment or make a late payment?==
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If you default on your mortgage, the lender has the right to '''accelerate''' (speed up) the mortgage. This allows the lender to claim the full balance owed under the mortgage, plus interest and other costs, even though the mortgage term hasn’t yet expired.
Following a missed or late payment, you are unlikely to automatically lose your house. Lenders don’t want to foreclose if they don’t have to because it is expensive and takes time. A lender will likely not start to foreclose until 2 or 3 months after you stop paying. Normally, a lender will first send letters demanding payment. Then, if you don’t reply, the lender will often start to foreclose and sue you at the same time.
 
  
If you have a short-term problem, like a temporary layoff, you may be able to make a deal with the lender to make smaller payments for a time, and add the amounts you fall behind to the total amount of your mortgage. Or, you may be able to make smaller payments for a while and a larger catch-up payment later. Most lenders would rather make some sort of deal and keep the mortgage in good standing, instead of starting expensive foreclosure proceedings in court.
+
The lender can start legal proceedings to take the property or sell it to pay the mortgage debt. This legal process is called '''foreclosure'''.
  
The law tries to help you if you have a good chance of paying what you owe and if you try to get your finances in order. Only in the worst cases are you likely to lose your house and any equity you’ve built up in it. Equity is the amount that your house value exceeds your mortgage loan and any other debts that other lenders have registered against your house.
+
{| class="wikitable"
 +
|align="left"|'''Tip'''
 +
For more on mortgages, [[Mortgages and Financing a Home Purchase|see our information on mortgages and financing a home purchase]].
 +
|}
 +
 +
===You don’t automatically lose your home if you default===
 +
Following a missed or late mortgage payment, you don’t automatically lose your home. Lenders don’t want to foreclose if they don’t have to, as it’s an expensive process and takes time. A lender will likely not start to foreclose until after two or three months of missed mortgage payments.
  
==If a lender starts to foreclose, what happens first?==
+
If you miss a mortgage payment, the lender will usually send a reminder letter. If they don’t hear from you or receive the missed payment, the lender will then follow up with a '''demand letter'''.
If there’s a Supreme Court Registry where your house is located, the lender has to start legal proceedings there. You will receive a document called a “petition for foreclosure”, which is the lender’s notice to you that they are commencing a legal action in court to get back the money they loaned you with the court’s assistance.
 
  
==What should you do if you receive a petition for foreclosure?==
+
In fact, under the law, the lender ''must'' send you a demand letter before they can start legal proceedings to take your home.
Get legal advice right away. If you want to protect yourself and take part in the court proceedings, you must file a Response to Petition (with supporting affidavits) within 21 days of getting a petition for foreclosure. You must file the Response at the court address shown on the petition. You also have to deliver 2 copies of your Response to the lender. Once you do this, no one can take any steps in the foreclosure without notifying you. If you don’t file a Response, the foreclosure will go ahead without you, and you won’t be able to protect yourself. After you file the Response, you will get a document called a Notice of Hearing, which tells you when the lender will ask the judge for the order nisi to start the foreclosure.
 
  
==What happens at the hearing?==
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The demand letter must say exactly what you owe. It must also say that:
The court will give the lender an “order nisi” (a type of non-final order), but in most cases, it will also give you time to redeem the mortgage by paying the full amount you owe, plus interest, costs, and taxes. This time is called the “redemption period” usually spans 6 months. Sometimes, however, the lender will ask the court for a shorter redemption period. The court can make an order to sell your house at any time, including at the order nisi stage.
 
  
One good reason to attend the court hearing is to ask the judge for as much time as possible to get the money to pay off the mortgage or sell the house. If you need more time, you can ask for an extension. If you ask for a long redemption period or an extension, the court will want to know what you have done to pay off the mortgage and what chance you have of paying the mortgage or selling the house on your own or through your own real estate agent. You should use a lawyer in this case because a lawyer can advise you on your options, including possible refinancing, even with another lender.
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* you have to pay a certain amount by a certain date to catch up on what you owe to '''reinstate''' your mortgage (restore it to good standing), or
 +
* you have to pay the whole amount you borrowed (not just what you owe) plus interest and expenses to '''redeem''' your mortgage (pay it off).
  
When the redemption period ends, the court can give the lender a final order of foreclosure—see the section called “The lender can apply to court for an order absolute” below. Or, the lender can ask the court for the right to have their own real estate agent list your house for sale. If there are other people or companies with a charge against your house, besides the lender who started to foreclose, they may ask for the right to sell your house. If the court gives the lender or anyone else the right to sell your house, it gives them conduct of sale, meaning the lender takes control over selling the home. If this happens, you cannot sell the property yourself. If anyone asks the court for conduct of sale for your property, you should ask the court to give you exclusive conduct instead. This means that only you are in charge of selling it. Alternatively, you can ask the court to give you at least joint conduct with the other person or company, so you have some control over the sale.
+
====Exploring options with the lender====
 +
If you have a short-term problem, like a temporary layoff from work, you may be able to negotiate with the lender. For example, you might offer to make smaller payments for a time, and add the amounts you fall behind to the total amount of your mortgage. Or, you might offer to make smaller payments for a while and a larger catch-up payment later. Most lenders would rather make some sort of deal and keep the mortgage in good standing, instead of starting foreclosure proceedings in court.
  
==You can do two things during the redemption period:==
+
The law tries to help you if you have a good chance of paying what you owe and if you try to get your finances in order. Only in the worst cases are you likely to lose your home and any '''equity''' you’ve built up in it. Equity is the amount your home value exceeds your mortgage loan and any other debts registered against your home.
#You can pay off the lender that started to foreclose. To get the money for this, you can try to borrow from another lender or a relative, at a lower interest rate or over a longer repayment period. Doing so will allow you pay off the first mortgage and lower your monthly payments. However, this may be difficult, as most lenders look at your income to decide whether to give you a mortgage and your income may be what stopped you from paying your current mortgage in the first place, resulting in the foreclosure.
 
#You can try to sell the house, preferably using your own real estate agent. Invite several experienced real estate salespeople who do business in your area to look through your house and tell you what they think it would sell for. Be honest with them about your situation, then choose the realtor you trust the most or feel most comfortable with. If you sell the house, you can use the money from the sale, first to pay any property tax you owe, and then to pay the mortgage and other charges registered against the title, including court costs. If there’s any money left over (equity), you keep it. But if the money from selling your house doesn’t completely pay off all of the lenders, you may have to pay them the difference. Meanwhile, if the lender or anyone else with a charge against your house gets an offer to buy your house, they can apply to court for an order authorizing that sale.
 
  
==What if you have no equity in your home?==
+
===If the lender starts a foreclosure action===
If you owe more than you can sell the house for, you will probably want to get out of the situation with as little expense and trouble as possible. However, you should still take action instead of ignoring the problem. You may want to work with the lender to minimize costs by agreeing to the foreclosure. Normally, you would only do this if the lender will give you a full release from your mortgage, meaning you won’t owe the lender any more money. If the lender won’t agree to this, you can simply let the foreclosure proceedings go ahead and use the time as a rent-free period to get your finances back in order. If any other people or companies with debts registered against your house are not paid from the money from selling your house in the foreclosure, you will still have to deal with them. Otherwise, they can sue you for any money you still owe them.
+
After a default, if you don’t '''reinstate''' the mortgage (by paying the amounts you owe) or '''redeem''' it (by paying the mortgage off fully) within the time set out in the demand letter, the lender can start foreclosure proceedings. Usually, this happens after you’ve missed three months of payments. But it can happen sooner.
  
==The lender can apply to court for an order absolute==
+
If there’s a Supreme Court registry near where your home is located, the lender must start the proceedings there. You will receive a document called a '''petition''' for foreclosure. This is the lender’s notice to you they are bringing a legal action to get back the money they loaned you.
The final order for foreclosure is called an “order absolute,” and it comes after the redemption period ends. If the lender applies for an order absolute and the court grants it, the house then belongs to the lender and you have to leave it. Further, you lose all rights to the house. You will no longer owe the lender any money, but if anyone registered a debt against your house after the mortgage, (for example, if you have a second mortgage) you’ll still owe that money. In exceptional cases, you can apply to the court for relief from losing your house if you can pay the balance in full. Then the court can order the lender to transfer the house back to you.
 
  
==If the lender gets an order absolute==
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====If you receive a petition for foreclosure====
If the lender gets an order absolute, and registers title in its own name, it cannot make any further claims against you. It can sell the house, but if the sale does not produce enough money to pay off the mortgage, you do not have to pay the difference.
+
Get legal advice right away. If you want to protect yourself and take part in the court proceedings, you must file a '''response''' to the petition. You have to file this response within '''21 days''' of getting the petition. You must file the response, together with supporting affidavits, at the court address shown on the petition. You must also deliver two copies of your response to the lender.
  
Lenders do not usually ask the court for an order absolute. Instead, they will sue you when they start to foreclose and ask the court for an order to sell your house to pay off the loan. If the money from selling your home doesn’t completely pay off the mortgage loan, the lender can attempt to collect the difference from you.
+
Once you take these steps, no one can take any steps in the foreclosure without notifying you. If you don’t file a response, the foreclosure will go ahead without you, and you won’t be able to protect yourself.
  
==What happens if you have a second mortgage or other charges registered against your house?==
+
After you file the response, you will get a document called a '''notice of hearing'''. This sets the date of a court hearing where the lender will ask for an '''order nisi''', the initial order in a foreclosure action.
Any mortgages or charges registered before the lender’s mortgage continue and are still valid. However, any that were registered after the lender’s mortgage are cancelled and the holders of those charges lose their security. For example, if you have two mortgages on your house, and the first lender forecloses, the second lender will have to pay off the first lender or lose its security. Then the second lender would have to try to get you to pay its loss.
 
  
==Summary==
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{| class="wikitable"
A mortgage is a contract to repay a loan, secured with a charge on land. It’s registered against your property in the Land Title Office. If you fail to pay the mortgage, for example, by falling behind in your mortgage payments, the lender may start to foreclose. Then if you can’t pay the mortgage loan in full, either by selling your house or in some other way, the lender can take your property or sell it to pay off the loan.
+
|align="left"|'''Tip'''
 +
For step-by-step guidance on responding to a foreclosure petition, [[if-youre-facing-foreclosure|see our in-depth information on if you’re facing foreclosure]].
 +
|}
 +
 +
===If the lender asks for an order nisi===
 +
At the first court hearing in a foreclosure action, the lender asks the court for an '''order nisi'''. This order sets the length of the '''redemption period''', which is the time period during which you can redeem, or pay off, the mortgage. The order nisi also includes a personal judgment against you for the amount you owe.
  
If you receive a foreclosure petition, get legal advice right away. It doesn’t cost much to have a first meeting with a lawyer. As well, you should see a lawyer if anyone asks you or your spouse to sign any new documents, because your spouse may not be liable under the original mortgage documents.
+
[https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-253/latest/rsbc-1996-c-253.html#sec16_smooth Under the law in BC], the default redemption period is '''six months'''. However, the court can order that it be shortened or extended. One good reason to attend the court hearing is to ask the judge for as much time as possible to get the money to pay off the mortgage or sell the home.
  
==More information==
+
{| class="wikitable"
Check script [[Mortgages and Financing a House Purchase (Script 408)|408]], called “Mortgages and Financing a House Purchase”.
+
|align="left"|'''Tip'''
 +
Courts rarely order a redemption period longer than six months. What is more common is to apply later to extend the redemption period beyond six months. You will need to show you have enough equity in the property to pay the lender the amount owed. You also need to show there’s a reasonable chance of payment within the added time.
 +
|}
 +
 +
===If the lender asks that your home be sold===
 +
During the redemption period, the lender (or another creditor) may ask the court for an order for '''conduct of sale'''. This order gives the creditor control over selling your home to cover what you owe.
  
 +
You might be able to oppose the order by showing you have equity in the property or you are making efforts to sell the property yourself. You can argue that your efforts to sell the property are preferable, since creditors may be inclined to want to sell the property faster, at a lower price, than you would like.
  
[updated April 2015]
+
If the court gives the lender or another creditor conduct of sale, you cannot sell the property yourself. But you may be able to oppose the '''approval of the sale'''. Court approval must be obtained for any sale. The creditor with conduct of sale presents a buyer’s offer at a court hearing. You may be able to argue the offer isn’t enough, and that more time should be allowed to get a better price. That said, where there is more than one offer, the property will almost certainly be sold.
  
 +
===Your options during the redemption period===
 +
During the redemption period, you have options, depending on your circumstances.
  
----
+
One option is to '''redeem the mortgage''' (pay it off). To get the money for this, you can try to borrow from another lender or a relative. You might seek a longer repayment period or a lower interest rate. Doing so could allow you to pay off the mortgage and lower your monthly payments. However, getting a loan in the amount needed may be difficult. Most lenders look at your income to decide whether to give you a mortgage and your income may be what caused you to fall behind in your mortgage payments in the first place, resulting in the foreclosure action.
----
+
 
 +
Or you can try to '''sell the home'''. You could invite several real estate agents in your area to look through your home and tell you what they think it would sell for. Be honest with them about your situation, then choose the realtor you trust the most or feel most comfortable with. If you sell the home, you can use the money from the sale, first to pay any property tax you owe, and then to pay the mortgage and other charges registered against the title, including court costs. If there’s any money left over, you keep it. But if the money from selling your home doesn’t completely pay off all the lenders, you may have to pay them the difference.
 +
 
 +
===If the lender applies for an order absolute===
 +
The final order for foreclosure is called an '''order absolute'''. It comes after the redemption period ends. If the lender applies for an order absolute and the court grants it, the home then belongs to the lender and you must leave it. You lose all rights to the home.
 +
 
 +
If the lender gets an order absolute, and registers title in its own name, it cannot make any further claims against you. It can sell the home, but if the sale does not produce enough money to pay off the mortgage, you do not have to pay the difference.
 +
 
 +
Lenders do not usually ask the court for an order absolute. Instead, they more commonly ask the court for an order for conduct of sale, to sell your home to pay off the loan. If the money from selling your home doesn’t completely pay off the mortgage loan, the lender can attempt to collect the difference from you, relying on the personal judgment against you in the '''order nisi'''.
 +
 
 +
==Common questions==
 +
 
 +
===What if I have no equity in my home?===
 +
If you owe more than you can sell the home for, you will probably want to get out of the situation with as little expense and trouble as possible. However, you should still take action instead of ignoring the problem. You may want to work with the lender to minimize costs by agreeing to the foreclosure. Normally, you would only do this if the lender will give you a '''full release''' from your mortgage, meaning you won’t owe the lender any more money. If the lender won’t agree to this, you can simply let the foreclosure proceedings go ahead and use the time as a rent-free period to get your finances back in order. If any other people or companies with debts registered against your home are not paid from the money from selling your home in the foreclosure, you will still have to deal with them. Otherwise, they can sue you for any money you still owe them.
 +
 
 +
===What if I have a second mortgage registered against my home?===
 +
After foreclosure proceedings, any mortgages or charges registered ''before'' the lender’s mortgage continue and are still valid. However, any that were registered ''after'' the lender’s mortgage are cancelled. The holders of those charges lose their security. For example, if you have two mortgages on your home, and the first lender forecloses, the second lender will have to pay off the first lender or lose its security. Then the second lender would have to try to get you to pay its loss.
 +
 
 +
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Latest revision as of 23:05, 16 October 2020

This information applies to British Columbia, Canada. Last reviewed for legal accuracy by Nathan Ganapathi and Anna Kurt, Ganapathi Law Group in October 2017.

If you default on your mortgage, the lender can go to court to take the property you mortgaged or sell it to pay the debt. This process is called foreclosure.

What you should know[edit]

If you default on your mortgage[edit]

A mortgage is a loan used to buy a home or other property. The lender, such as a bank or trust company, provides part of the purchase price of the property. The borrower promises to pay the lender back, plus interest.

Under the law in BC, a mortgage gives the lender a charge — meaning an interest or a right — against the property being purchased. That charge gives the lender rights if the borrower defaults on the mortgage. The most common way for a borrower to default is by not making payments under the mortgage as promised.

If you default on your mortgage, the lender has the right to accelerate (speed up) the mortgage. This allows the lender to claim the full balance owed under the mortgage, plus interest and other costs, even though the mortgage term hasn’t yet expired.

The lender can start legal proceedings to take the property or sell it to pay the mortgage debt. This legal process is called foreclosure.

Tip

For more on mortgages, see our information on mortgages and financing a home purchase.

You don’t automatically lose your home if you default[edit]

Following a missed or late mortgage payment, you don’t automatically lose your home. Lenders don’t want to foreclose if they don’t have to, as it’s an expensive process and takes time. A lender will likely not start to foreclose until after two or three months of missed mortgage payments.

If you miss a mortgage payment, the lender will usually send a reminder letter. If they don’t hear from you or receive the missed payment, the lender will then follow up with a demand letter.

In fact, under the law, the lender must send you a demand letter before they can start legal proceedings to take your home.

The demand letter must say exactly what you owe. It must also say that:

  • you have to pay a certain amount by a certain date to catch up on what you owe to reinstate your mortgage (restore it to good standing), or
  • you have to pay the whole amount you borrowed (not just what you owe) plus interest and expenses to redeem your mortgage (pay it off).

Exploring options with the lender[edit]

If you have a short-term problem, like a temporary layoff from work, you may be able to negotiate with the lender. For example, you might offer to make smaller payments for a time, and add the amounts you fall behind to the total amount of your mortgage. Or, you might offer to make smaller payments for a while and a larger catch-up payment later. Most lenders would rather make some sort of deal and keep the mortgage in good standing, instead of starting foreclosure proceedings in court.

The law tries to help you if you have a good chance of paying what you owe and if you try to get your finances in order. Only in the worst cases are you likely to lose your home and any equity you’ve built up in it. Equity is the amount your home value exceeds your mortgage loan and any other debts registered against your home.

If the lender starts a foreclosure action[edit]

After a default, if you don’t reinstate the mortgage (by paying the amounts you owe) or redeem it (by paying the mortgage off fully) within the time set out in the demand letter, the lender can start foreclosure proceedings. Usually, this happens after you’ve missed three months of payments. But it can happen sooner.

If there’s a Supreme Court registry near where your home is located, the lender must start the proceedings there. You will receive a document called a petition for foreclosure. This is the lender’s notice to you they are bringing a legal action to get back the money they loaned you.

If you receive a petition for foreclosure[edit]

Get legal advice right away. If you want to protect yourself and take part in the court proceedings, you must file a response to the petition. You have to file this response within 21 days of getting the petition. You must file the response, together with supporting affidavits, at the court address shown on the petition. You must also deliver two copies of your response to the lender.

Once you take these steps, no one can take any steps in the foreclosure without notifying you. If you don’t file a response, the foreclosure will go ahead without you, and you won’t be able to protect yourself.

After you file the response, you will get a document called a notice of hearing. This sets the date of a court hearing where the lender will ask for an order nisi, the initial order in a foreclosure action.

Tip

For step-by-step guidance on responding to a foreclosure petition, see our in-depth information on if you’re facing foreclosure.

If the lender asks for an order nisi[edit]

At the first court hearing in a foreclosure action, the lender asks the court for an order nisi. This order sets the length of the redemption period, which is the time period during which you can redeem, or pay off, the mortgage. The order nisi also includes a personal judgment against you for the amount you owe.

Under the law in BC, the default redemption period is six months. However, the court can order that it be shortened or extended. One good reason to attend the court hearing is to ask the judge for as much time as possible to get the money to pay off the mortgage or sell the home.

Tip

Courts rarely order a redemption period longer than six months. What is more common is to apply later to extend the redemption period beyond six months. You will need to show you have enough equity in the property to pay the lender the amount owed. You also need to show there’s a reasonable chance of payment within the added time.

If the lender asks that your home be sold[edit]

During the redemption period, the lender (or another creditor) may ask the court for an order for conduct of sale. This order gives the creditor control over selling your home to cover what you owe.

You might be able to oppose the order by showing you have equity in the property or you are making efforts to sell the property yourself. You can argue that your efforts to sell the property are preferable, since creditors may be inclined to want to sell the property faster, at a lower price, than you would like.

If the court gives the lender or another creditor conduct of sale, you cannot sell the property yourself. But you may be able to oppose the approval of the sale. Court approval must be obtained for any sale. The creditor with conduct of sale presents a buyer’s offer at a court hearing. You may be able to argue the offer isn’t enough, and that more time should be allowed to get a better price. That said, where there is more than one offer, the property will almost certainly be sold.

Your options during the redemption period[edit]

During the redemption period, you have options, depending on your circumstances.

One option is to redeem the mortgage (pay it off). To get the money for this, you can try to borrow from another lender or a relative. You might seek a longer repayment period or a lower interest rate. Doing so could allow you to pay off the mortgage and lower your monthly payments. However, getting a loan in the amount needed may be difficult. Most lenders look at your income to decide whether to give you a mortgage and your income may be what caused you to fall behind in your mortgage payments in the first place, resulting in the foreclosure action.

Or you can try to sell the home. You could invite several real estate agents in your area to look through your home and tell you what they think it would sell for. Be honest with them about your situation, then choose the realtor you trust the most or feel most comfortable with. If you sell the home, you can use the money from the sale, first to pay any property tax you owe, and then to pay the mortgage and other charges registered against the title, including court costs. If there’s any money left over, you keep it. But if the money from selling your home doesn’t completely pay off all the lenders, you may have to pay them the difference.

If the lender applies for an order absolute[edit]

The final order for foreclosure is called an order absolute. It comes after the redemption period ends. If the lender applies for an order absolute and the court grants it, the home then belongs to the lender and you must leave it. You lose all rights to the home.

If the lender gets an order absolute, and registers title in its own name, it cannot make any further claims against you. It can sell the home, but if the sale does not produce enough money to pay off the mortgage, you do not have to pay the difference.

Lenders do not usually ask the court for an order absolute. Instead, they more commonly ask the court for an order for conduct of sale, to sell your home to pay off the loan. If the money from selling your home doesn’t completely pay off the mortgage loan, the lender can attempt to collect the difference from you, relying on the personal judgment against you in the order nisi.

Common questions[edit]

What if I have no equity in my home?[edit]

If you owe more than you can sell the home for, you will probably want to get out of the situation with as little expense and trouble as possible. However, you should still take action instead of ignoring the problem. You may want to work with the lender to minimize costs by agreeing to the foreclosure. Normally, you would only do this if the lender will give you a full release from your mortgage, meaning you won’t owe the lender any more money. If the lender won’t agree to this, you can simply let the foreclosure proceedings go ahead and use the time as a rent-free period to get your finances back in order. If any other people or companies with debts registered against your home are not paid from the money from selling your home in the foreclosure, you will still have to deal with them. Otherwise, they can sue you for any money you still owe them.

What if I have a second mortgage registered against my home?[edit]

After foreclosure proceedings, any mortgages or charges registered before the lender’s mortgage continue and are still valid. However, any that were registered after the lender’s mortgage are cancelled. The holders of those charges lose their security. For example, if you have two mortgages on your home, and the first lender forecloses, the second lender will have to pay off the first lender or lose its security. Then the second lender would have to try to get you to pay its loss.

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