As a homeowner, facing a Power of Sale is perhaps one of the most stressful things that you can go through. As it is, you are probably already facing some financial challenges, and now the prospect of losing your home can feel overwhelming. The good news is that there is help available. You can stop a Power of Sale so that you don’t have to lose your home.
What is a Power of Sale?
A Power of Sale is a legal action that your mortgage lender can take if you default on your mortgage payments– it allows them to take possession of your property and sell it to recoup the money they are owed, plus any legal and admin fees. It is essentially a form of insurance for them, which makes lending a little less risky.
People often confuse Power of Sale with Foreclosure, and while these are similar, there are some important differences. However, the most important difference is perhaps the fact that, unlike in a foreclosure, the title of the property is not transferred to the lender in a Power of Sale. This means that after the home is sold, any proceeds from the sale that are leftover – after the lender recovers their money – go to the borrower. It also means that the lender MUST sell the property for a fair market value and not at a deep discount just to make a quick sale. If the lender were to sell below market value, the homeowner could sue.
How Does a Power of Sale Work?
In order for a Power of Sale to be legal, the lender must follow some very strict rules. There are processes and timelines that must be followed. This is good news for anyone facing a Power of Sale because it means that they have time to stop the Power of Sale.
In fact, in most cases, the lender wants you to stop the Power of Sale because that means they get their money without having to go through all the legal steps and the hassle of selling your home.
So how does the process work? It starts with a notification that you are in default on your mortgage and a 15-day timeframe for you to bring it back into good standing. If you do not pay what you owe on your mortgage, the next step is for the lender to send you a Notice of Sale, which gives the homeowner another 35 days (known as the redemption period) to bring their mortgage back into good standing.
Following this, if there is no payment, the lender can seek permission from the Court to evict the homeowner and sell their home.
What Can I Do to Stop a Power of Sale?
Your best option for stopping a Power of Sale is to simply bring your mortgage back into good standing. For this, however, you may need to get a loan – and that’s where your mortgage broker comes in. Your mortgage broker can help you find the best solution for your situation, which may include:
- Refinancing your mortgage with another lender.
- Getting a second mortgage with another lender.
- Getting a Stop Power of Sale loan (the amount of this loan is based on your home equity, but it does not further jeopardize your home as your home is not used as collateral).
In the direst of circumstances, your best option may be to sell your home rather than get a loan – however, it is still worth consulting with your mortgage broker first to make sure you have considered all your options.
Is it Too Late for Me to Stop a Power of Sale?
Even if your home has already been put on the market, it is not too late to stop a Power of Sale. In fact, you can stop it right up until closing day – as long as the buyer has not yet taken possession. However, the earlier you take action, the easier it is to stop a Power of Sale.