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Tag: power of sale

Registering a Notice to try and save a Power of Sale

Often, borrowers loosing their home to a power of sale will take any advise they can get to stop the process. Borrowers are sometimes led to believe that if you register something on title to the property that you can possibly thwart the lender’s ability to physically transfer it. As with most registrations on title if it has nothing to […]

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Private Lending: Do not Rely on Someone Else’s Appraisal!

Often private lenders will receive a brief term sheet with an email introduction from a mortgage broker or agent trying to place a mortgage deal.  Included in this package may be an appraisal that was used perhaps to satisfy a prior lender on the property, or if looking for a second priority mortgage it may have been used for the first mortgage lender on the property.  What this means is that the appraisal was not commissioned for you, the private lender.  Its very easy to skim through an appraisal, see if it was ordered for a Big Bank, and rely on it as accurate and reliable.  How often do you read every single page, the assumptions, disclaimers and conclusions?  Most readers are ill-equipped to understand how the appraisal was prepared, under what requirements and circumstances.  Finally, its believed that if  you are relying on an “opinion” any damages by way of gross inaccuracies could result in a claim to recover against the appraiser.

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Can a borrower redeem their mortgage under power of sale?

The answer to this question is constantly evolving, with new and conflicting case law addressing specific facts released almost yearly.  The old adage of being able to redeem your mortgage (payout your mortgage) during a power of sale proceeding so long as the mortgagee in possession (being the seller) has not yet entered into a firm or unconditional agreement of purchase and sale with a buyer is no longer clear cut.Today the way I understand it is that there are two issues once the mortgagee in possession (being the seller/mortgage lender) enters into an agreement of purchase and sale with a potential buyer, and whether or not the borrower/mortgagor can still redeem (payout) his mortgage and keep his property:Agreement of purchase and sale has conditions that must be satisfied prior to the agreement becoming “firm”; and

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What If A Mortgage Goes Bad In A MIC? What are the Investment Benefits In A MIC?

Management of the MIC must be vigilant and selective with whom they lend to, and investors can inquire about whether the MIC in question will allow investments within various percentage brackets ranging from low to high risk. This option would provide investors with the opportunity to select an investment according to their level of risk (this option does exist with certain MICs). Also, investors that are researching potential involvement in MICs should be aware that there are some MICs in limited markets, such as smaller towns, that concentrate on specific industries. Considering the location, economy and possible market downturn is essential for investors to decide if they feel that risk is not an option.However the Benefits of Investing in a MIC include:

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Can a lender charge a mortgage pre-payment penalty under Power of Sale proceedings or once the mortgage term has matured, regardless if it is an Open or Closed Mortgage?

Under section 17 of the Mortgages Act, and pursuant to relevant case law the answer is “Yes” the lender can.  Subject to the wording in the original mortgage commitment/agreement, you will often find that lenders will charge 3 months interest pre-payment penalty if they have to enforce the mortgage via a power of sale proceeding or if you neglected to renew the mortgage once the term has expired and have failed to pay the lender out (within the time allotted pursuant to the lender’s notice).  Also, often enough, the original mortgage commitment/agreement will have qualified wording for “Open” mortgages stipulating that so long as the borrower is not in default, the borrower will be able to pre-pay the mortgage in whole or in part without a penalty or bonus.  However, once in default, a lender can demand the penalty payment of three months’ worth of interest calculated on the then outstanding principle balance, even if your mortgage is an Open one.In relevant case law the courts have often ruled in favor of the lender on disputes over its right to charge penalties pursuant to section 17 of the Mortgages Act, where the borrower was found in default of payment of any principal or interest money. 

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Mortgage Enforcement: What Can Go Wrong?

Notice of Sale and RequisitionsIf a purchase is made under power of sale, it is necessary to ensure that the vendor is authorized to conduct the sale and that the power of sale proceeding has been properly commenced. A requisition, in this respect, by purchaser’s legal counsel is expected to bring forth a statutory declaration attaching evidence of service of the notice of sale.  The usual practice is to attach to the statutory declaration evidence of service of the notice of sale by registered mail, including the registered mail receipts. The Court of Appeal ruled in CIBC Mortgage Corp. v. Chopra that service by registered mail to the address provided for in the mortgage would be quite adequate for the purpose.Typical Schedules to APSVendors of properties under power of sale more often than not include a schedule to the agreement of purchase and sale which significantly alters the usual terms of a sale/purchase transaction.

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Mortgage Enforcement: Issues for Discussion

IntroductionCommon issues expected to arise and confront legal counsels in mortgage enforcement practice, whether from the mortgagor’s perspective or from the lender’s perspective are under discussion here. Divided into ten sections, each of which addresses a discrete point, the purpose is to assist counsels in identifying the relevant issues, the common problems, and the usual solutions.Entitlement to 3-Months InterestAccording to Section 17(1) of the Mortgages Act:“Despite any agreement to the contrary, where default has been made in the payment of any principal money secured by a mortgage of freehold or leasehold property, the mortgagor or person entitled to make such payment may at any time, upon payment of three months interest on the principal money so in arrear, pay the same, or the mortgagor or person entitled to make such payment may give the mortgagee at least three months notice, in writing, of the intention to make such payment at a time named in the notice, and in the event of making such payment on the day so named is entitled to make the same without any further payment of interest except to the date of payment.”

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MORTGAGE DEFAULT: Power of Sale or Foreclosure?

Although generally the real estate market in Ontario has been robust, the frenzied market of the past has caused an increase in mortgage defaults as a result of an overall weakened economy and a tighter lending market.  Many clients of Levy Zavet PC are both lenders (“mortgagees”) who make investments in mortgaged property and borrowers (“mortgagors”) who are making real estate investments.  When

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