Power of Sale Properties
What is a Power of Sale Property?
In Ontario when a borrower defaults on a home mortgage, the bank/lender most often attempts to recover its losses by selling the property using the Power of Sale clause contained in the mortgage. Due to legal fees, foregone interest and other property expenses, the estimated losses to the bank for Power of Sale properties can range from 10 percent to 30 percent of the outstanding loan balances. There are other variables that can affect the losses or costs when a property is sold via power of sale such as the deterioration of the property and the time it takes to process the paperwork.
Definition of Power of Sale Clause: A clause commonly inserted in a mortgage and deed of trust that grants the creditor or trustee the right and authority, upon default in the payment of the debt, to advertise and sell the property through any means at it's disposal, usually MLS in Ontario or at public auction, without resorting to a court for authorization to do so.
Once the creditor is paid out of the net proceeds, the property is transferred by deed to the purchaser, and the surplus, if any, is returned to the debtor. The debtor is thereby completely divested of any interest in the property and has no subsequent right of redemption (recovery of property by paying the mortgage debt in full).
Mortgage Remedies.
Tax Sales
Pre-Foreclosures
Pre-forclosure's are properties that have not been foreclosed upon yet, but are heading that way if the homeowner does not come up with a solution to catch up on the mortgage payments that are in arrears. They also include properties that have been foreclosed upon and are going up for sale at an auction. There are just about as many sources for foreclosure information as there are for leads for other sellers that may want to sell their home. With Pre-foreclosures however, there are some even better (specialty) sources of this information. You will find that there are far more pre-forclosure properties available in the US compared to Ontario.
