Saturday, May 1, 2010

The foreclosure process in British Columbia

In BC the foreclosure process in is controlled by the Supreme Court. This approach to foreclosure is called Judicial sale. For the  home owner this means is that each step of the foreclosure process needs to be approved by the Supreme Court including when to start selling, the listing price, the terms of sale, and any commission paid.

These are the main steps of the foreclosure process a:
  • If you stop paying the mortgage, you will initially get a letter from your lender or maybe even a phone call. The lender is making sure this is not a simple error of some sort and is giving you a little while to fix the problem.
  • Within 2~3 months you will get a letter from the lender demanding you to pay the arrears in full before a certain date and letting you know that a lawyer will soon be hired to initiate foreclosure proceedings if you do not.
  • If you do not pay the arrears as required, the lender will then ask a lawyer to initiate the foreclosure process. You will get a "demand letter" from the lawyer demanding you to either pay the full amount owing on the mortgage or only the arrears. You will be given a date after which the foreclosure process will be initiated.
  • The first step in the foreclosure process is for the lawyer to file a document named “foreclosure petition”. Within few days after the petition is filed in the court you will be served with a copy. The petition is being sent to all interested parties including other mortgage holders, tenants in the property, other lien holders etc.
    Make sure you read the petition and follow the instruction of how to file an appearance.
  • Few weeks you will receive a notice of the first hearing in the court. At the hearing the judge will give the lender an “order nisi”, and 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” and it can as long as 6 months and as short as one month.
  • Following the redemption period , the lender may choose to have the property listed for sale by the court or seek an “Absolute Order of Foreclosure” from the court.
  • In the case of the property being listed for sale by the court, the court needs to approve the sale of the property. If the sale does not generate sufficient money to pay the petitioner in full, the bank can then seek a deficiency judgment from the court against you.
  • In the case where an Absolute Order of Foreclosure is given, the bank becomes the new registered owner of the property and all other respondents are removed from the title. Once this order has been given by the court, no further action can be taken against the borrower, These Absolute Orders of Foreclosure take place only if the property value equals or exceeds the debt, and the borrower has no assets to apply toward any deficiency.
Although it seems that you have time to fix the problem it is in your best interest to stop the foreclosure process as soon as possible. If you feel that you are being treated unfairly by the lender, you should get legal advice. Otherwise, you should focus your efforts on stopping the foreclosure by finding a reasonable solution.

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