The upcoming new interest rate hike is increasing the financial stress for some homeowners – if such a thing were possible. Are those who are stretched thin and suffocated by payments at risk of losing their homes?
First, you should know that lenders, financial institutions, have no interest in ending up with houses for sale on their hands.
“As we have been doing since the beginning of the inflationary period, we will continue to support members and clients who experience financial difficulties,” explains Jean-Benoit Turcotti, spokesperson for Desjardins. Among other things, we contact our members who have a variable rate mortgage and whose payments are no longer sufficient to cover the interest. »
In short, as a first resort, the lender and the borrower will try to find a payment agreement.
If this is impossible, the lender can indeed initiate a foreclosure process. This is possible as soon as a payment is missed – but financial institutions are generally more patient. If there are four missed payments and a communication breakdown, then the banker often loses his patience.
But we are not there yet, says Damien Charbonneau, co-founder and chief operating officer of the online mortgage brokerage agency Nesto.
PHOTO DAVID BOILY, LA PRESSE ARCHIVES
Damien Charbonneau, co-founder and COO of Nesto
“We really shouldn’t be alarmed by the rise in the Bank of Canada’s key rate,” he said, adding that Nesto has no potential recovery situation in its portfolio at the moment.
“We are not facing a disaster scenario,” he said.
For repossessions to increase significantly, a particular context is needed, in which job losses would be combined with a drop in property values. However, says Damien Charbonneau, this is not the case.
A well-structured approach
The process of foreclosure by the bank is called the foreclosure process. If it is triggered, the owner-borrower will receive a notice from his bank or credit union that will notify him that the repossession process has begun.
What can he do?
Challenge in court by presenting a statement of defence.
Sometimes the mortgage loan agreement contains a sale clause if payments are not made. For the lender, this facilitates a recovery: a power of sale allows him to go ahead without going through the courts – since essentially he already has your agreement.
When there is a repossession, homeowners have one month – 30 to 35 days – to vacate their home.
If an owner were to find himself in such a critical situation, he would have every advantage in selling his house himself, reminds Damien Charbonneau. “Most people have equity in their home,” says the Nesto co-founder. With the sale, they will be able to collect their mortgage and buy a more modest property, he says, or find a place to live.