Foreclosure STOP Assistance
The term "foreclosure" evokes fear and stress. In the wake of COVID-19 shutdowns, there has been a substantial surge in individuals seeking assistance with foreclosure—a rise of hundreds of percentage points compared to pre-2020 levels.
Leveraging our expertise in managing foreclosures and power of sales, we have established connections with mortgage lenders willing to take over your mortgage, settling with the current mortgagee. Additionally, we often cover outstanding property taxes and explore options for consolidating other debts if necessary.
When facing foreclosure, traditional banks may not offer assistance, and once the process is in the hands of their lawyers, communication can become challenging or even nonexistent.
Unlike most mortgage brokers who lack familiarity with the foreclosure process, teaming up with us ensures access to the highest level of experience and knowledge. We guide you through the intricacies of the process, provide insights on how to halt it, and offer solutions for refinancing a mortgage in foreclosure. We are the experts.
The Foreclosure Process in Manitoba
- **Notice of Exercising Power of Sale:**
When the debtor fails to meet a required payment or breaches a condition or covenant of the mortgage, and this default persists for at least one month (or a longer period specified in rare cases), the mortgagee is entitled to initiate mortgage sale proceedings. Though not mandatory under The Real Property Act, a demand letter is typically issued by the mortgagee or its solicitor to the mortgagor, outlining the default details, steps to rectify the default or pay off the mortgage, and a timeline (usually 10 to 14 days). If compliance is not achieved, the mortgagee instructs its solicitor to commence mortgage sale proceedings by filing a Notice of Exercising Power of Sale ("NEPS") in the relevant Land Titles Office ("LTO"), with LTO approval usually obtained within 2 to 3 weeks.
- **Service of NEPS:**
Copies of the NEPS must be personally served on the mortgagor and any other parties identified during the NEPS filing, holding an interest in the lands subsequent to the mortgagee's interest. If the mortgagor is an individual, the mortgagor’s spouse or common-law partner must also be served unless the land is not homestead land. Serving the NEPS after LTO approval is recommended to avoid potential repetition if LTO requires changes.
- **Continuing Default and Application for Order for Sale:**
Should the default persist for at least one month after NEPS is served, the mortgagee can apply to the District Registrar of the LTO for an Order for Sale, using public auction, private sale, or both methods. It is advised to apply for an Order for Sale through both methods for efficiency and flexibility. Once the District Registrar confirms the application's completeness, the Order for Sale is made, specifying public auction or private sale. The auction takes precedence, followed by private sale if the auction is unsuccessful.
- **Court Order Required in Some Circumstances:**
If the alleged default in the NEPS is not related to the "big four" (payment of principal, interest, taxes, or insurance premiums), a Court Order is necessary for the mortgagee to proceed with the application for the Order for Sale.
- **Auction Advertisement:**
When proceeding by public auction, the sale must be advertised in a local daily newspaper at least 14 clear days before the sale date. In some instances, two papers may be required, necessitating at least 16 clear days’ notice. The advertisement and Order for Sale must be mailed to the mortgagor and any other interested parties.
- **Remedy by Mortgagor and Reinstatement:**
The mortgagor can remedy the default by paying the arrears and costs before the sale or foreclosure, reinstating them on the mortgage unless it is a demand mortgage or has matured with a payment-in-full demand.
- **Possession of Property:**
Typically, the mortgagor remains in possession until sale or foreclosure, unless the mortgagee demands earlier possession, which is determined case by case. Obtaining a Court Order for Possession may be necessary if the mortgagor fails to vacate voluntarily.
- **Auction Reserve Bid:**
The mortgagee prepares a reserve bid, usually set at the outstanding mortgage balance plus costs. In cases where this exceeds the fair market value, a lesser reserve bid may be set, often tied to the fair market value, if reasonable.
- **Transfer After Successful Auction:**
If there is a successful bidder at the auction, they must immediately provide a minimum 20% down payment and enter into the approved agreement for purchase and sale. First-time buyers should be aware of this requirement.
- **Auction or Private Sale:**
If the auction is unsuccessful, the mortgagee may attempt a private sale, often through a realtor. When proceeding to a private sale, a Notice of Intention to Sell by Private Contract must be mailed to relevant parties at least 16 clear days before submitting the purchase and sale agreement to the LTO for approval.
- **LTO Approval of Private Contract Required:**
Once a purchaser's offer is acceptable, it must be approved by the District Registrar. Approval requires the purchase price to be at least 90% of the average appraised value and the current opinion of value from a realtor.
- **Mortgagor Liable for Deficiency of Proceeds:**
If sale proceeds are insufficient to cover the outstanding mortgage and costs, the mortgagor and any covenantor remain liable for any deficiency under the mortgage covenant.
- **Application for Notice of Application for Final Order of Foreclosure/Final Notice to Redeem:**
If the auction fails, and the mortgage remains in default for at least 6 months, the mortgagee can apply for a Notice of Application for Final Order of Foreclosure/Final Notice to Redeem from the District Registrar.
- **Application for Issue of Order of Foreclosure:**
Once satisfied with the application, the District Registrar issues a Notice of Application for Final Order of Foreclosure/Final Notice to Redeem, requiring redemption within one month. Failure results in legal title transfer to the mortgagee, extinguishing subsequent encumbrances. The notice must be personally served, with a possible extension granted upon application.
- **Final Order of Foreclosure:**
If the mortgagor fails to redeem within the stipulated time, the District Registrar may issue a Final Order of Foreclosure, transferring legal title to the mortgagee, free of subsequent encumbrances. The covenants in the mortgage are fully extinguished, and the mortgagee cannot pursue the mortgagor or any covenantor for a deficiency if the property is sold for less than the original mortgage debt.
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It is crucial that we start to fix the foreclosure situation as early in the process as possible. Please reach out to us to start the discussion, and we can explore your options with you.