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 when the lender takes legal action against the person who borrowed money because the person who borrowed money stopped paying back their loan. The foreclosure allows that lender, in certain provinces, to take or sell the person's house with the Court's permission to do so?
So, what actually 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?
You don't automatically lose your house. The foreclosure process is something lenders don't want to go through. Why? The foreclosure process takes a lot of time and money.
You will usually have 3 months of being in default before the lender starts to foreclose, this is called forbearance. The lender will start the foreclosure process if they start demanding payment and you do not respond. If you are missing payments, instead of ignoring the lender, try talking to them to work something out. .
In the next article, we will discuss how to make money in foreclosures as a real estate investor.
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