Facing a Mortgagee Sale? Here Are Some of Your Rights and What to Expect from the Lender

Facing a Mortgagee Sale? Here Are Some of Your Rights and What to Expect from the Lender 

The process of Mortgagee sale can be a stressful one, more so to the distressed homeowner. Although the bank or lender has the right to look out for their interests, the odds are often in their favor. A broke homeowner stands no chance against resource-rich lenders. 

Fortunately, we have a robust justice system backed by several laws to protect you. The lender must also meet certain obligations in a mortgage contract. Here’s a look at some of your rights and the obligations of the lender. 

Your Rights During the Mortgage Process 

Mortgage contracts are complex and many consumers hardly understand the kind of financial commitment they are signing into. Several laws protect the borrower’s interests and help to avert mortgagee sales scenarios. These legislations may include: 

Besides, the Responsible Lending Code compels lenders to observe the following guidelines during the mortgaging process: 

  • Ensure that the mortgage is suitable for you. 
  • Check that the borrower can afford the facility. 
  • Help the borrower to understand the mortgage terms. 
  • Ensure that the home loan is not overbearing. 

The mortgagee sales process also is not simple and takes time. The lender must issue a letter of demand and serve you with a Property Law Act (PLA) Notice before going for the mortgagee sale. If the lender has already issued a letter of demand, here’s more on your rights and what you should expect from the bank or lender. 

The Right to Explain Your Financial Hardships and Negotiate a More Comfortable Payment Plan 

Although it is in your interest, you have the right to talk to your lender as soon as you miss a payment. When you approach the lender you should: 

  • Explain why you are unable to make the payment. 
  • Be clear that you understand you must make payments. 
  • Propose ways to help you avert defaulting. 
  • Request for help from the lender. 

The lender can discuss solutions such as restructuring the loan to help you cope with a prolonged income dip. If you’ve experienced a sudden loss of income or loss of supporting partner (through death or divorce) but you expect to regain financial stability, the lender can consider a repayment break. 

If you move before your mortgage goes in the red, the lender has no option but to work with you to avert a default and mortgagee sale

The Right to A Letter of Demand and A PLA Notice 

Before a lender moves to mortgagee sale your home, the lender must have issued you with a letter of demand. If you don’t meet the conditions of the letter, and cannot agree with the lender, the lender can serve you with a Property Law Act, (2007) Notice. 

The Notice gives at least 20 days after receipt for the homeowner to remedy the defaulted mortgage. 

You can still talk to your lender even at this point

The Right to Legal and Financial Advice 

If you cannot pay, or meet the conditions set out the PLA Notice, and you’ve not agreed on a solution with the lender, you can talk to qualified financial advisors such as mortgage brokers to get alternatives. Also, ensure that you seek legal help from a qualified professional like a lawyer

The Right to Fair Valuation and a Reasonable Rales process 

The last step is the actual mortgagee sale. Before the lender puts up the property for sale, they usually must conduct a fair valuation. Plus, the selling agent must strive to hit the market price. 

Remember, if you’ve been making payments for a while, a portion of that home equity belongs to you. On the other hand, if the home fetches a low price, that doesn’t cover mortgagor costs and the outstanding mortgage and interest, the lender could take recovery action. 

These rights will help you to keep your head high even amidst a mortgagee sale. 

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