A mortgage rescue plan is a term used to describe a strategy to stop a mortgagee sale. The term sounds macho and has a sense of urgency because in most cases, the borrower is desperate to be ‘rescued.’
The lender would have already triggered the process by serving a demand for payment, and a Property Law Act Notice (or a PLA Notice). The PLA Notice outlines the default amount and gives a deadline date in which the borrower must remedy the default. If the borrower fails, the lender takes the next step of repossessing and selling the property.
You can get help to stop a mortgagee sale. But you must be involved in the plan.
Here’s what you’ll go through when making the plan.
Reach Out to A Mortgage Broker
The first person to make a move to stop a mortgagee sale is you. There’s no such thing as a universal mortgage rescue plan that works for everyone. It’s unique to you and your situation.
You must accept the situation. Agree that you are in financial difficulty, it’s probably not going to get better any time soon, and you’ll lose your home if you don’t seek help. It is also advisable to seek legal advice from a qualified professional such as a lawyer.
Be sure to do this right away since wasting time is not a card you can use when trying to stop a mortgagee sale.
When you reach out to a financial advisor, verify that he or she is registered with the Financial Service Providers Register.
Be Completely Honest About Your Situation
When you’ve settled on an advisor, the first thing he or she will do is to try and understand your situation. They will seek to understand you, the borrower, the circumstances, and the lender.
Be an open book and layout all your financial issues. You never know which one could be the best bargaining chip. But be honest and don’t fabricate anything.
Compare the Mortgage Balance Vs the Home Value
In a mortgagee sale, the lender has only one objective, to clear the outstanding debt. Although the mortgagee sale process requires the lender to seek the best possible price, the lender is likely to look for a price that can repay the loan and any other costs incurred in the recovery process. If the property fetches a better price, the extra money will be paid back to you. However, if the price does not meet the lender’s needs, the lender still has the right to pursue you for payments.
Therefore, you must know the value of the home and the mortgage balance.
It is also important to note that due to the unusual circumstances, mortgagee sale homes often don’t fetch the rightful price. So if the sale price doesn’t cover the debt, you could be facing a bankruptcy situation.
Check Options to Get You Out of the Red First
The next move would be to handle the immediate danger. You must negotiate with the lender for more time and get financing to stop the mortgagee sale.
Since your credit status is already marred by the unpaid mortgage, financing this step may be more expensive than ordinary loans. Also, you may need a guarantor. But you must look for a long term solution.
Seek to Refinance or Downgrade
After you’ve cleared the immediate danger, you can opt to refinance the mortgage with a new lender. You will probably need a guarantor for this one too.
Alternatively, you could also sell the property without the ‘mortgagee sale’ stigma and downgrade to a more affordable property.
Remember, your mortgage rescue is unique to your situation. A mortgage broker experienced in crafting mortgage rescue package can get you out of trouble.