A ‘power of sale’ is the legal terminology used for the repossession of real estate by the bank that holds the mortgage. In almost 100% of cases, a power of sale takes place when the mortgagee (the owner of the property) fails to meet regular re-payment on the mortgage loan. Late payments do not necessarily fall under this category, especially if you arrange with your bank to make payments on an arrears payment plan (agreed to, by your bank of course). Power of sale usually occurs after 2-3 consecutive missed payments, and when there is no due diligence on the owner’s part to bring the mortgage back into good standing. A power of sale can also be issued if the bank decides not to renew you at the end of the term (for any legitimate reason), and they are not paid out within the time frame allotted (varies per banking institution).
Since time is valuable in such a scenario, it’s important to get in touch with a mortgage brokerage immediately upon receiving the notice by registered mail. Unfortunately, once a power of sale is issued, the major banking institutions cannot help and the issuing bank will typically give 30 days from the time of the first notice to find a new mortgage without further proceedings. If this cannot be met, both legal and daily penalty charges will pile up and your expenses will only worsen. Power of sale proceeding are very expensive both for the owner and the bank, however the bank will not lose money, but the owner certainly will! The faster it can be resolved, the less costly it will be.
If you find yourself in a power of sale dilemma, please follow these steps:
- Read thoroughly the notice received in the mail. Power of sale proceedings are always mailed to the address of the property which is undergoing power of sale and copies are also sent individually for each person on title.
- Send this notice to us ASAP. We can begin working on finding a new mortgage with little to no time wasted.
- Provide your lawyer’s information to us as well, so that we can begin communicating with them. Likewise, they will communicate with the lawyer representing the bank.
- Prepare all documents typically part of any mortgage process (home insurance statement, property tax bill, employment documents, etc. We’ll provide you with a complete list once we speak)
- Prepare the home for an appraisal. As part of the refinance process, an appraisal is always needed to confirm the home value. An inspector will come to the house at your convenience to do a 30-40 minute walk through. You will need to allow access to the property.
A power of sale can be a nerve wracking experience, but we’ll walk you through it at a pace which does not add more stress to the situation… that’s our promise.