These posts are meant to help other current or potential Real Estate investors to be aware of what is currently occurring out in the market. I’m a big boy and I have done quite well in the market over the years, but many of the rules change when the economy isn’t as robust. So sometimes you win big, sometimes you lose big, the important point is to be sure you know what is going on, try to prepare as well as you can for problems and just to be aware of the big picture!
To recap the previous post about my foreclosure problem, I had a profitable rental property that a lender (Xceed Mortgage) decided not to renew the mortgage when it came due. Initially they had provided me the option of renewing for a year at a crazy rate of 8.1% (effectively double the going rate!), but then with only six weeks left before the mortgage was due, they pulled this offer as well.
In most cases in Alberta, a foreclosure involves the property owners falling behind on payments. In our particular case, at no time ever during this mortgage did we ever miss a payment or were we late with a payment. The lender in this case simply didn’t want to continue lending money for rental properties, most likely since it wasn’t as profitable and they felt it had become riskier due to the economic slowdown. The reality is, the rental market seems to be getting more and more solid with more people returning to the rental market as they lose their homes or come here for work.
In the end, they did finally inform me they would extend me another 60 days to sell the property which gave me until the first week of September to sell the property. With the incredibly slow summer Real Estate market, we had some significant issues. To help the process along, we initially under priced the property to entice it to sell quicker, but there was such little action as time wore on, our pricing became closer to market value. Near the end of the sixty day period, the property still remained unsold, so the lender began the foreclosure process.
Now the standard length of time for a foreclosure to get processed in Alberta is usually six months, but in the case of a property with minimal or zero equity this time frame can be shortened to days or weeks, depending on the circumstance. Unfortunately, we were in a negative equity situation, so we understood the foreclosure process would likely be quite short for us.
Finally, near the end of September, someone came through the property that felt it was ideal for them and we ended up with an offer on the table. Initially the offer was much lower than we hoped, but we were able to negotiate it up to a point that although not ideal, we could make work. Additionally, it had a closing date of just over a month which was ideal. We just had to wait one week for the conditions to be removed for it to be official.
As it turns out, it was while we waited we found out our court date for the foreclosure hearing was just five days after the conditions were supposed to be removed. Condition day also happened to be a Friday and as we waited through the day, it wasn’t until early Friday evening we received verbal confirmation that conditions were removed and the next morning that our Realtor had the faxed documents available.
So Monday came and once I had all the sale and waiver documents in hand, I contacted the foreclosing lawyer’s office and had to leave a message as the person I needed to talk to was unavailable. By the end of the day, still no reply, so now I was rather anxious. First thing Tuesday I again call in and finally get a hold of the person I needed to talk to chat with.
After updating her about the sale, the waiver of conditions and how we can now cancel the hearing, she requests copies of everything and has to confirm some things and will get back to me. Hours later, she calls me back and informs me that since there is still a chance the sale could fall through if the purchaser cannot close for some reason. Due to this, they won’t cancel the hearing, so now I know where I have to be Wednesday morning!
Watch for part three next week! I’ll discuss some of the aspects of attending foreclosure court, some of the aspects of why the system is designed to actually make it harder for homeowners to recover and how it is a fantastic cash cow for the lawyers doing the foreclosing.
To read part three, follow the link
Bill
You’ve always got a shoulder here to cry on, if you need. Tough spot to be in, especially since you were a good paying customer! Important to understand everyone’s perspective. Thanks for posting the ‘insiders scoop’ on the foreclosure process in Alberta.
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