Jay Singh Sales Representative

Jay Singh Sales Representative

stopping Power of Sales in ontario real estate-how to avoid POS-use home equity

Help and Advice to Stop a Power of Sale or Foreclosure in Ontario 


What is a Power of Sale 

Power of sale is the legal process that allows a mortgage lender to sell the mortgaged property to recoup their investment. A mortgage is a loan that uses real estate as collateral, and if the borrower fails to make their mortgage payments then the lender will sell the property using the power of sale process. After the homeowner is evicted and the property is sold, the lender recoups their investment and gives the remaining money to the homeowner. However, legal fees, property maintenance fees, and real estate agent fees are deducted before the former homeowner gets the money that is leftover from the sale. As the power of sale process progresses, the fees incurred by the lender are added to the mortgage amount and the homeowner starts to rapidly lose their home equity. For this reason, it is important for a homeowner to stop the process as fast as possible and keep the lender’s power of sale related fees to a minimum. 


Stopping the Power of Sale Process 

In order to prevent a power of sale, you need to either pay off the fees outlined in the Notice of Sale or pay the entire mortgage balance. The best source of financing would be friends and family since they are likely to provide the funds at a low cost. There are also private lenders that can provide the financing to stop the power of sale, but they can be expensive. Since most power of sale properties are considered to be high-risk investments, the interest rate can range from 7% to 12% and other fees related to setting up the mortgage are also charged. Lenders can provide this financing in the form of a new mortgage to replace the problematic mortgage, or as a second mortgage which can be used to bring the problematic first mortgage back into good standing. If a private lender turns you down for a mortgage, the next best option is to sell the property yourself. Selling the property yourself allows more control over the circumstances in which you move out and allows you to avoid additional fees from the lender. Additionally, most houses sold under power of sale usually sell for a price under what the homeowner would sell the property for, so there are many strong incentives for the homeowner to sell the property themselves. 


What Happens During A Power of Sale 

The power of sale process official begins 15 days after the mortgage has gone into default. Typically this means that the homeowner has missed a payment, but includes other breaches of the mortgage agreement such as failure to insure the home, failure to pay property taxes, or causing undue damage to the property. After 15 days the lender can send a Notice of Sale which states why the mortgage is in default, and what must be paid to bring the mortgage back into good standing. After the Notice of Sale is sent, the outlined fees must be paid off within 40 days, or the lender can request the entire balance of the mortgage to be paid off. Once the 40 period has expired the lender can submit a Statement of Claim. 37 days after filing the Statement of claim, the lender can file for a Write of Possession, which, once approved will allow the lender to appoint a sheriff to evict the homeowners. After the eviction, the property can be sold by the lender on the open market. 


How is a Power of Sale Different From a Foreclosure? 

Both power of sale and a foreclosure are remedies that are available to Ontario lenders to recoup their investment. The key differences are that foreclosure is a long expensive process that allows the lender to own the property, and power of sale is a faster and cheaper process that allows the lender to sell the property.? Power of sale is the most common process in Ontario, due to it being faster and cheaper to execute. A foreclosure is sometimes used by lenders when there is potential to make more money by owning the property outright. For example, if a mortgage has a value of $100,000 and a property has a value of $500,000, then a lender can take the remaining $400,000 in equity using foreclosure. However doing this is generally discouraged and it is possible to request a judge to change the process to a power of sale. Both a power of sale and foreclosure are urgent problems, but the potential for loss is much greater in foreclosure. 


About Ron Alphonso and Mortgage Broker Store 

Ron Alphonso is a private mortgage lender and the principal broker at Mortgage Broker Store. He started in the real estate industry as a private lender and eventually created his own mortgage team and brokerage that focuses on helping people avoid?power of sale and foreclosure situations. Ron is a recognized authority in the industry and his efforts in stopping power of sales have been the focus of several Toronto Life and Global News stories. Ron also offers free help and consultations to those who request it, and he can be reached at 416-499-2122 or at




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