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Foreclosure does not automatically follow a missed loan payment

Buying a house is a substantial commitment, and when a homeowner experiences unanticipated circumstances that jeopardize his or her ability to make mortgage payments, the house may be lost. Foreclosure is a word that no Alberta property owner -- or lender -- wants to hear. It could be as damaging to the mortgage provider as to the homeowner. Unfortunately, it is something that can happen to anybody at any time.

Foreclosure does not happen overnight. If a property owner cannot make a scheduled payment on the mortgage, or if such a payment is late, the bank or lender will not automatically proceed with the foreclosure action. The lender will also want to avoid the costly and time-consuming process that could be damaging to its business. The homeowner will first receive reminders, then letters of demand, and only if he or she does not respond or try to negotiate, the mortgage holder will start foreclosure and file a lawsuit.

The process of foreclosure includes extensive involvement by the Court throughout the process. To recover the debt, the lender will apply for the Court's permission to arrange a judicial sale for selling the property. Such a sale will be conducted under the authority and the supervision of the Court. At the same time, the lender will proceed with filing a lawsuit against the homeowner and any other parties that might be liable.

The process of foreclosure is a negative proposition for all concerned parties, and borrowers in Alberta who are finding it impossible to make mortgage payments may benefit from being proactive, rather than waiting for the lender to start legal action. With the skilled support and guidance of a real estate lawyer, a plan of action could be devised. Through negotiations, a compromise may be reached with the mortgage holder that could make the payment affordable enough to prevent foreclosure.

Source:, "Foreclosure Process in Canada", Navtaj Chandhoke, Accessed on July 7, 2017

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