Mortgage Enforcement Solutions
Mortgage deferral about to expire?
What you can expect if you can’t make your payments.
What is a Power of Sale? What is the process?
COVID-19 has had a decided impact on the Canadian mortgage market. In May unemployment in Canada hit a record high of 13.7%, with about 600,000 Canadians seeking deferrals of their ongoing mortgage payments. The deferral of payments, for some qualifying Canadians, could last up to six months.
Now four months later, many of those Canadians who qualified for a deferral are seeing or have seen those deferral plans come to an end, while the rest will be having to start making payments on their mortgage again in the next month or two.
This leaves many Canadians in a very precarious position, as the economy is just starting to open up again, it will take time for business to adapt to the new reality and for them to become profitable. Plus the burden of excess debt, credit cards, loan and lines of credit, has ballooned such that Canadian household debt has reached an all time high of 176% compared to gross domestic product (GDP).
The end result is that we as a nation can expect to see more missed payments and defaults on mortgages. Prior to COVID the mortgage default rate in Ontario was 0.09%, being less than one tenth of a percent, but that was when the unemployment rate was 5.5%. As indicated in May, with an unemployment rate of 13.7% we can now expect a mortgage default rate in Ontario of 1.00%.
With there being 2,000,000 mortgages in Ontario at any time, 1% would mean that 20,000 households will struggle to make their mortgage payments. If you are a mortgage broker or realtor, this would mean that 1% of your clients will struggle to make their payments.
If you or someone you know is struggling to make their payments, or will be struggling to make their payments, in these instances it is best to act quickly, the quicker you take positive steps the better it will be for your/their credit report and your/their pocket book.
For an understanding of the processes that lenders can take to collect or a default and the steps that you can take to avoid this process Geoff Rabideau of Rabideau Law has been presenting to mortgage brokers and realtors across the province of Ontario. The presentation is about forty minutes long but contains a very detailed description of the legal process, the steps you can take to protect your clients and slow the process down and provide your clients with the knowledge and assurances that they need in this precarious time.
For more information please feel free to reach out to Geoff Rabideau at firstname.lastname@example.org or call to schedule a meeting at 888.820.1321.