You’ve been making all your mortgage payments, paid all your property taxes, and kept the home properly insured and maintained. And you’re still being foreclosed on. How would you feel? How can you avoid it happening to you?
Unfortunately, this isn’t a hypothetical situation. It’s happening here in Alberta, now. Bill Fric, with Fric, Lowenstein & Co. LLP explains:
How can this happen? It happened because the mortgage came up for renewal, and the mortgage company refused to renew.
They had mortgaged their house through a mortgage broker and the Lender was GE Money. GE Money told them that it no longer wanted to renew.
The clients are self employed. They are not able to qualify for a mortgage at this time. Also, the house is valued at no more than what is owed on the mortgage.
This may be a one shot instance. However, in the 1980’s many small mortgage companies refused to renew mortgages in Alberta. Basically they were pulling their money out of Alberta in light of the property devaluation that occurred here at that time. I have heard rumors that more of the small lenders are doing that now.
As home buyers, you should be looking for a mortgage that guarantees the right of renewal so long as you are in good standing under the mortgage. Most major banks guarantee that right in their mortgage but some of the smaller lenders do not. Getting the lowest rate isn’t all that matters when shopping for a mortgage.