The following is a general overview of the foreclosure process as it pertains to homeowners in British Columbia.
When a homeowner stops making mortgage payments, they may initially receive a letter or phone call from their lender to confirm that this is not a mistake and to give them a chance to rectify the situation. After a couple of months, the lender may send a letter requesting that the homeowner pay off the outstanding mortgage balance or arrears by a certain date, and warning that if they do not, a lawyer will be hired to begin foreclosure proceedings.
If the homeowner does not pay the requested amount, the lender will hire a lawyer to file a document called a "foreclosure petition" with the court. The homeowner will be served with a copy of this petition, which will also be sent to other parties with an interest in the property, such as other mortgage holders or tenants. The homeowner should carefully read the petition and follow the instructions for filing a response.
About a month later, there will be a court hearing during which the judge may grant the lender an "order nisi" and typically give the homeowner a period of time, known as the "redemption period," to pay off the mortgage in full, including interest, costs, and taxes. This period is usually six months, but the lender may ask for a shorter period.
After the redemption period, the lender may choose to have the property sold by the court or seek an "Absolute Order of Foreclosure" from the court. If the property is sold by the court, the court will approve the sale and any proceeds will be used to pay off the outstanding mortgage balance. If the sale does not generate enough money to pay off the lender in full, the lender may seek a deficiency judgment from the court against the borrower.
On the other hand, if an Absolute Order of Foreclosure is granted, the lender will become the new registered owner of the property, and all other parties will be removed from the title. Once this order has been given by the court, no further action can be taken against the borrower. This type of order only takes place if the property value is equal to or greater than the debt, and the borrower has no assets to apply toward any deficiency.
It is important for homeowners to understand that they do have some time to address the situation, but it is in their best interest to resolve the issue as quickly as possible. If they feel they are being treated unfairly by their lender, they should seek legal advice. Otherwise, they should focus on finding a solution to prevent the foreclosure from occurring.
**This article is not meant to give legal advise and is a general description. Legal Advise is always recommended.