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.
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).
Definition of an Estate Sale
The sale of property left by a person at his or her death. An estate auction can involve the sale of personal and/or real property
What's a Fixer-Upper property?
Many buyers when asked about the type of house they are looking for and many will reply "We are looking for something we can fix up and live in or resell at a profit. We like the idea of gaining some quick money from our sweat equity." This is what we would call the classic "fixer-upper" home.
Unfortunately, there is a bit of fantasy in the notion of the fixer upper.
Your thinking for this fixer upper investment
Definition of Foreclosure:
A situation in which a homeowner is unable to make principal and/or interest payments on his or her mortgage, so the lender, be it a bank or building society, can seize and sell the property as stipulated in the terms of the mortgage contract.
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Power of Sale and Tax Sale properties - questions and answers
Read more about TAX SALE Properties
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