Are you behind on your mortgage payments? Is someone offering you a way out, perhaps sounding too good to be true? Please read on…
Source: Scotia Mortgage Corporation v. Gutierrez, 2012 ABQB 683
In the 1970s, the Calgary real estate market boomed. In the early 1980s, the economy was hit with a recession and the real estate market crashed. Homeowners defaulted on their mortgages and walked away from their properties. This resulted in a tremendous increase in foreclosure actions. It became the era of the “Dollar Dealers”. Unscrupulous individuals, through numbered Alberta corporations, convinced desperate homeowners, who were fleeing their houses, to transfer their properties to them for a dollar. The Dollar Dealers would then rent the property and collect rents without making any payments on the mortgage debt. The foreclosure process was a slow process and the Dollar Dealers profited.
The Alberta government, in reaction to this practice, amended the Law of Property Act to allow for a speedier foreclosure proceeding where property was transferred or sold while the mortgage was in default or within four months before the mortgage went into default. Eventually the Alberta economy recovered and the Dollar Dealer became a relic of the past.
We now find that history repeats itself. The Calgary real estate market boomed again until the recession in 2008. Homeowners began defaulting on their mortgages and walking away from their properties. Some desperate homeowners sought help to maintain their properties.
A new type of Dollar Dealer has emerged on the scene to take advantage of the unwary and desperate homeowner. This scheme involved a homeowner transferring title to a numbered Alberta corporation with the promise that the property would be reconveyed at some future time. The transferee corporation was to bring the mortgage into good standing. The homeowner was to pay rent. The advantage of this new scheme was that the scoundrel didn’t have to go to the trouble of locating a tenant.
The new scoundrel, while collecting rent would appear in court and make outlandish statements to obfuscate and delay the proceedings. The scoundrel obtained a substantial cash flow from numerous desperate homeowners. While the homeowner was able to remain in the residence, the mortgage debts and legal costs increased substantially because of the activity of the scoundrel. Eventually the mortgage company would obtain title to the property and, in many cases, obtain a deficiency judgment against the homeowner.