Are you needing to defer your mortgage? With COVID-19, people that had always paid their mortgage on time are now struggling.
People are getting laid off, fired, or might be ill, either physically or mentally.
Because of this, there is going to be a massive amount of foreclosures once CERB stops in the fall.
People that won’t be able to pay their mortgages should investigate mortgage deferrals.
In Alberta, 20% of mortgages are currently being deferred. People in Saskatchewan are also having a hard time paying their mortgages. A high number of these deferrals will end up in foreclosure.
People in Quebec and PEI, on the other hand, need mortgage deferrals the least.
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The government of Canada has done a great job of preventing foreclosures with CERB and payroll assistance programs.
However, with Canada now being over $1 trillion in debt, it’s unlikely that the government can afford to keep dishing out money.
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It might be possible that some people are deferring mortgages even though they have the cash flow to pay it.
They might be concerned about what the future holds, and they want to hold on to their money as long as possible.
How To Defer Your Mortgage Due To COVID-19
Others might think that they can pay interest on the interest, and earn a better rate of return somewhere else, like the stock market.
I run a company that handles people’s divorce, and I noticed that a lot of people are putting off their divorce. This is because they want to hold onto their cash.
Many people applied for mortgage deferrals in June 2020. They were most likely given six months. Therefore, most people are going to have to start paying their mortgages again in December 2020.
I predict that there will be a wave of foreclosure actions that start at the end of 2020.
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What Losing Your Home Looks Like | Defer Your Mortgage
I’ve spent a lot of time in the Supreme Court for hearings. On certain days, like Thursdays, all the foreclosure applications are heard by the court. Lawyers sit in the court all day, waiting to get heard by a judge or master.
The bank’s lawyers normally go first because their “arguments” only takes around five minutes. The lawyer for the bank will pass up documents to the judge, and the judge will often allow for the six-month redemption period to start, or for the home to be sold.
The TD Bank lawyer might do five foreclosures in around 25 minutes. Then the lawyer for Scotiabank will do another five foreclosure applications.
Sometimes someone who owes money shows up to argue for themselves, but it rarely goes well. There was one guy who lost the home that has been in his family for eighty years.
I went downstairs to the parking lot a few hours later and saw him resting his head on his steering wheel. I guess he wanted to avoid going home.
On Thursdays, there are real estate auctions in the court as well. Real estate investors will make offers to the judge on foreclosures. The judge will normally accept the highest offer if there are no conditions.
The courts are open to the public. If you want to know what it feels to be foreclosed on, go to court (once they reopen after COVID-19.)
What is mortgage deferral?
A mortgage deferral is when you agree with your bank or mortgage lender not to pay your mortgage for a period. This period is normally three to six months.
You need to have a great reason why you cannot pay your mortgage. An example is that you were laid off from work for three months.
Once the mortgage deferral period is over, you need to continue paying your mortgage as usual.
You will have to pay interest on the interest and principal that you didn’t pay.
If you are not paying your mortgage, you should cut all other spendings.
Do not go out for dinner, do not spend money on Netflix, and don’t buy beer. You should only be spending money on the basics.
It’s Time To Be Realistic
When your home is on the line, it’s time to start making some tough decisions.
This article hopefully opened your eyes to how serious a mortgage can be. Sometimes you simply might have to sell your home.
If you want to learn more about how to avoid foreclosure, speak to a real estate lawyer, or contact your bank. However, keep in mind that your bank is not your friend. They are the ones you owe money to.
Alistair Vigier is the CEO of ClearWay Law and has watched hundreds of people lose their homes in the Supreme Court. If you need to defer your Mortgage, reach out to a lawyer or your bank.