Foreclosure Questions?

Foreclosure fears?
CMHC has tips to keep your home News Staff

The Canada Mortgage and Housing Corporation has launched a campaign to help recession-hit Canadians find ways to avoid foreclosure signforeclosure and keep their home when money is tight.  The campaign was launched in the same week that Statistics Canada reported a marked increase in consumer bankruptcy rates and Employment Insurance benefit recipients in Canada.

The study shows that the number of Canadian on E.I. rose 4.4 per cent in January, and a 21 per cent increase in bankruptcies between January 2008 and January 2009.

While those statistics paint a gloomy picture of the Canadian economy, Mark McInnis of the CMHC told CTV’s Canada AM there are options for those struggling to pay the mortgage.

“Get in to see your lender at the first sign of financial difficulty and get things going. And the second message really, is understand your financial situation, clarify it with your lender so the two of you can work together to come up with a solution.”

Here are four potential alternatives to foreclosure:
Skip a payment

Many mortgages have a built-in feature that allows borrowers to occasionally defer a payment when times are tight — especially if previous lump-sum payments were made or if an accelerated payment plan was previously chosen, McInnis said.

“If you are experiencing short-term financial difficulties you can go in and discuss with your lender and they can simply skip one or more payments to help you through a short term financial shortfall. And once you get back on track then you continue with your regular mortgage payments,” McInnis said.

Extend your amortization period

Although most people want to see their mortgage amortization period shortened, rather than lengthened, extend the amortization period can mean more money in your pocket each month.

“If you extend the length of time you pay a loan, the payments go down,” McInnis said.

“So if you had a $250,000 mortgage and there was 20 years left to go on the loan — if you extended it to 30 years that would save a couple of hundred dollars or more a month to your home income.”

Add a missed payment to the balance of the mortgagemort due

The message, McInnis said, is that if you’ve missed a payment it may not be too late.

“If you go to your lender they can make an arrangement where they add those missed payments to your mortgage balance and you pay it off over the life of the loan. It just gets you back on track and helps you out.”

Negotiate a special payment plan

Every financial situation is different. However, if you’ve been laid off temporarily, for example, your lender may be willing to have you make partial mortgage payments for the duration of the layoff.

“They can go into the lender, sit down and arrange that partial payment. And once they get back on track they would go back to a full payment. So whatever meets the individual circumstances, we have options to help them up there as well.”

McInnis admits most of the options he mentioned are up to the individual lenders to embrace. If they’re not written into the mortgage contract, they’re not required to offer them as possibilities.couple relaxing

The best advice, he said, is for borrowers to understand their financial situation clearly, and to be willing to present options to their lenders and to show the motivation to keep their home.

In most cases, he said, banks want to avoid foreclosure as much as homeowners do.

“It is just good business. Nobody wants anyone to lose their home.”


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