Profiting from Foreclosures in Canada Part 1
As a full time Canadian real estate investor, we must be continually creating massive and passive income for ourselves. 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.
So, what actually is a Foreclosure?
In some provinces in Canada we have foreclosures; in other provinces we have power-of-sale. A foreclosure is a legal action that a lender can take if the person who borrowed money or got a mortgage stops paying back that mortgage. 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 contract between a borrower and a lender (or mortgagor and mortgagee) for the mortgagor to pay back the loan to the mortgagee. When you get a mortgage to buy a house, you borrow money, and you promise to pay back that money 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 foreclose on you. Why? Because it is expensive and it takes a lot of time.
So the lender mat give you forbearance, which means that they probably won’t start to foreclose until three months after you are in default. 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. It is best, if you are missing payments, to contact the lender in order to try and work something out. That is much better than not replying to anything.
In the next article, we will discuss how to make money in foreclosures as a real estate investor.
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