As a full time Canadian real estate investor, we must be continually creating massive and passive income for ourselves. Canadian Foreclosures can be a source of many deals for us, where we are helping people who have gotten themselves into a situation and allow them to downsize with dignity and with money in their pocket.
What is a foreclosure?
In some provinces in Canada we have foreclosures; in other provinces we have power-of-sale. A foreclosure is when the lender takes legal action against the person who borrowed money because the person who borrowed money stopped paying back their loan. The foreclosure allows that lender, in certain provinces, to take or sell the person’s house with the Court’s permission to do so?
What is a mortgage ?
A mortgage is a loan that involves the borrower and the lender (mortgagor and mortgagee) for the borrower to pay back the loan to the lender. When you get a mortgage, you borrow money which you pay back in regular installments.
So what happens if you miss a mortgage payment, or you can’t make a payment?
Do you automatically lose your house? Lenders don’t want to go through the foreclosure process. Why? The foreclosure process takes a lot of time and money.
You will usually have 3 months of being in default before the lender starts to foreclose, this is called forbearance. Normally, the lender will start demanding payments as soon as they realize that you have missed one, but if you don’t reply, the lender will start the foreclosure procedure. If you are missing payments, instead of ignoring the lender, try talking to them to work something out. .
In the next article, we will discuss how to make money in foreclosures as a real estate investor.
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