What to do when you cannot pay your mortgage

Red Deer mortgage professional gives key advice on what to do in that stressful time

So the reality is that life happens and we can become unable to meet our obligations. This week and next we are going to take a closer look at this situation to develop strategies to get you through as painlessly as possible. This week will we will start with those who have mortgage default insurance.

There are three mortgage default insurance providers in Canada; CMHC, Genworth and Canada Guaranty. If you put less than 20% down on your mortgage you will have paid one of these three to insure your loan in case of default. The mortgage lender is the beneficiary of this insurance as they have an assurance that in the case you default, they will not incur any losses.

If you find yourself unable to make the mortgage payment the first step is to get into contact with your mortgage provider. Write down what has happened, be able and willing to provide a list of assets and liabilities, and explain what steps you have taken on your end to meet the obligation. Tell them of the expected timeline to catch up. For example, you have lost your job but start another in two weeks. Be proactive and do not ignore their phone calls.

If you are unable to come to terms with the mortgage provider you can opt to contact the insurer to intervene on your behalf. Each of the three has a direct line for consumers. There are many options they have available for you. Their goal is to avoid the expensive foreclosure process. No one want to see you lose your home, that I can promise.

Here is a list of the ways they can help in the short term.

1. Your variable rate mortgage can be converted into a fixed rate to re-establish the amortization schedule

2. If you have prepaid the mortgage you may be able to reborrow those funds.

3. Deferring mortgage payments up to four months.

If your troubles are of a more long-term type:

1. Extended mortgage payment deferral if you need more than four months.

2. Extension of amortization period to a maximum of 40 years to decrease the payments.

3. Special payments arrangements as long as they are reasonable may be negotiated.

4. The bank has the ability to approve a capitalization of up to $20,000 to cover past due principal, property taxes, interest, condo fees, utilities and property repair.

If your situation is more complex:

1. Combination of any of the above.

2. Interest only period which brings the payments within affordability

If all the above will not mitigate the circumstances and foreclosure is unavoidable:

1. Sale by borrower – You agree to stay in the home and maintain it to get the best price. The home is sold and the bank repaid. You will be expected to continue with some payments during this time.

Involve the bank and the default insurer as soon as you can. Early and well-planned analysis of the situation, with financial assistance, can in the majority of cases remedy the default problems. This is also the best way to preserve your credit and future borrowing ability. Life can happen, we will get through it together. Call your mortgage professional today for more info.

Pam Pikkert is a mortgage broker with Dominion Lending Centres – Regional Mortgage Group in Red Deer.

Just Posted

WATCH: Canadian Finals Rodeo only two weeks away

Mayor calls CFR an opportunity to showcase Red Deer

Red Deer RCMP ask for assistance to ID assault suspect

Man stabbed a man in the hand after an altercation at a Red Deer fast food restaurant

Red Deer RCMP charge three with trafficking after search warrants

RCMP seized cocaine, methamphetamine and cash after a four-month long drug trafficking investigation

VIDEO: First legal cannabis purchases as midnight strikes in eastern Canada

Newfoundland and Labrador was the first province to kick off the sale of cannabis, just after midnight local time

U.S. pot firm urges Trump to deny Canadian producers ‘competitive advantage’

The challenge for U.S. firms lies in the fact that while recreational cannabis is legal in nine states and medicinal pot in 22 others, it remains illegal under federal law

How rules for inmate segregation in Canada will change under Bill C-83

Federal government proposing changes to rules around inmates in federal correctional institutions

Canada Post union issues strike notice; rotating strikes could begin Monday

Union says rotating strikes will begin if agreements aren’t reached with bargaining units

Killer-rapist Paul Bernardo set for parole bid after 25 years in prison

Bernardo’s parole hearing at the Bath Institution is expected to attract numerous observers

Defence cautions against mob justice in Calgary child neglect trial

Jennifer and Jeromie Clark of Calgary have pleaded not guilty to criminal negligence causing death

Feds eyeing options to expedite pardons for minor pot convictions

Internal discussions have focused on an application-based process for speeding up pot pardons

U.S. pot firms urge Trump to dominate North American marijuana industry

Cannabis producers claim the U.S. is “rapidly losing” its competitive advantage to Canada

Federal government tables bill to transform prisoner segregation

Administrative and disciplinary segregation will be eliminated by Ottawa

Most Read