The Personal Costs of Foreclosure in Alberta

The Real Costs of Foreclosure

For a homeowner in Alberta, the personal costs of foreclosure can be extremely important to understand. These costs include not just the obvious financial costs, but the substantial implications it can have on ones financial stability and personal credit rating, but more importantly, the devastating impacts on ones overall psychological health and well being. The key to surviving the ordeal is educating and empowering yourself about the process to help you make positive decisions.

When a homeowner finds themselves behind on their mortgage payments and facing the daunting prospects of trying to catch-up on their overdue mortgage payments and avoid foreclosure, it can be emotionally and physically challenging ordeal. Stress occurs within the family, with loved ones, relationships, work-life balance and ones happiness. The family unit could tend to feel the effects more prominently, causing what seems like an energy draining black cloud to settle overhead. Worst of all, this type of cost is mostly unseen by outsiders. Even close family could remain ‘in the dark’ as homeowners remain silent of the financial chasm that opens beneath them.
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Right of Redemption – A Homeowner’s Rights After the Redemption Period!

By Alberta Foreclosure Info

Right of Redemption Explained

To help you understand your right of redemption, let’s look at it’s definition.

Definition: Equity of Redemption – the right of a borrower to redeem (i.e., buy back) his or her property by paying off the outstanding mortgage debt in full.

Don’t confuse this term with the Right of Redemption of a borrower. The Right of Redemption is the ability of the borrower to bring the mortgage back into good standing and recover title to their property at any time. This right exists at any time, before or after the court imposed redemption period expires, up until such time as the property is sold on the open market to a 3rd party.

After the borrower has been identified as in default, the borrower retains an equitable right to redeem the mortgage and discharge the property from encumbrance. The Law of Property Act provides periods of redemption, typically 6 months for residential property, but this is heavily dependent upon the amount of equity available in the property.

The redemption period set by the courts outlines the time period the courts have given the borrower to act before the court orders the sale of the property or affords the bank title ownership. Title ownership by the bank can be achieved either through a transfer of title to the lender or a direct sale of the property to the lender. In the latter case, the borrower no longer has rights to the property.

What is important for you to know is that if the court assigns the ownership to the bank only through a transfer of title, the borrower still has rights over the property.

Therefore, as part of the right of redemption, the borrowers rights to redeem the property do not end at the time the court appointed redemption period ends, but rather, remain in force as long as the bank still holds that property and has not sold it to a 3rd party.

The borrower still can come back, pay all arrears and legal fees, get title back and continue with the original mortgage!

For more information about the Redemption Period itself, check out the following video,

Using Home Equity to Reduce Bad Debt

By Alberta Foreclosure Info

Used properly, home equity can be very useful for homeowners wanting to get out of debt. What? You say I should go into debt to get out of debt? Well, actually, Yes! If done correctly, leveraging debt can work to your advantage. Now this doesn’t necessarily work for everyone and depending on your credit situation it may not be an option.

If you are considering leveraging equity to pay off bad debt, there are several options you should consider before taking this big step. Among others, some options include taking out a 2nd mortgage on your home-sweet-home, equity refinance, Home Equity Line of Credit (HELOC) and an unsecured LOC. We’ve touched on the advantageous and disadvantages of 2nd mortgages in a previous article (Going Into Debt to Get Out of Debt: The Dangers of Second Mortgages), so here we will focus on equity Refinancing.

Before we can talk about debt leveraging, though, we need to have a basic understanding of ‘good’ versus ‘bad’ debt. ‘Good’ debt is investing debt, or using borrowed assets, used to purchase items that appreciate or goes up in value. Examples would include using borrowed money to invest in real estate, starting a business, or replacing higher interest rates on credit cards with lower rate options.
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