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When a borrower does not make the agreed upon mortgage payments, their lender has the right to sell the property to reclaim their money. This legal process is called a power of sale and it is the most common remedy for lenders in Ontario who are looking to recoup their investment. This process was created in Ontario to be a superior alternative to the lengthy and resource intensive foreclosure process.
The homeowner has different options for stopping the power of sale depending on when the power of sale started, the equity in property, the value of the property, and the location of the property.
In a power of sale, any profit from the sale of the home after all secured debts and fees are paid must go to the former homeowner.
The most straightforward way to get money to stop the power of sale is to place a second mortgage on the property. The money from the second mortgage should be enough to pay arrears and fees and bring the first mortgage back into good standing.
If you’ve been turned down for a second mortgage, or if the lender is requesting the full mortgage amount, then you should try to replace the mortgage with a new one.
If every lender has turned you down for a mortgage, you can still try to sell the property before the lender takes the property