The number of properties that went into foreclosure, or were seized by mortgage lenders because of non-payment of debt, fell by 15 per cent in Quebec last year to 2,356.That compared with 2,782 properties seized in 2009. The findings were reported recently by economist Paul Cardinal of the Quebec Federation of Real Estate Board
That’s good news for the real-estate market and tells us that relatively few Quebecers are overextending themselves with mortgage debt to the point where they lose their homes. I’m even willing to bet that the vast majority of those foreclosed properties did not belong to “mom and pop” borrowers, but to speculators who miscalculated the risk and reward when they purchased a fixer-upper or launched a development project.
It stands to reason, right? The law of market economics say that a purchaser who bought a property two years ago for a normal market price ought to have been able to turn around a resell at a higher price last year
How does foreclosure work? If you have a mortgage, you are bound by the terms outlined in it. Your lender will expect payment according to the agreed-upon schedule. If you fall 30 days behind in payments, the lender will send a letter threatening action if the payments are not brought up to date. They have to warn you before beginning foreclosure proceedings.
Here's the thing. Bankers are not sitting in their money-filled towers eagerly waiting for you to default on your mortgage. They really would much rather keep you in your house and paying them regularly. If you're having temporary problems paying a mortgage because of ill health or a work stoppage, it's better to tell your bank up front. Chances are they'll work out an arrangement of some sort. The worst thing you can do is duck your lender.
If after 30 days you haven’t brought your payments up to date, the lender will move to the next step by asking the court’s leave to begin foreclosure proceedings. The bank must publish a notice in the Quebec Land Registry notifying the borrower that his or her property will be seized if the outstanding balance is not repaid within 60 days. The 60 days gives the borrower time to get his poop in a group. That could mean scaring up the cash to pay back the arrears. Often it means putting the property up for sale to pay off the debt and walk away with whatever equity has built up.
The bad news: Once the bank has begun foreclosure proceedings, that will necessarily mean extra legal costs – thousands if not tens of thousands of dollars depending on the file and the number of legal manoeuvres involved. Eventually that comes out of the defaulting party's end of the sale.
In Quebec last year, 7,288 mortgage holders received foreclosure notices, vs. 8,809 a year earlier, a 17-per-cent decline in notices sent out.
A notice does not necessarily translate into a foreclosure. About 58 per cent of those served managed to repay their arrears and hang onto their homes. That left the unfortunate 12.5 per cent who couldn't and didn't. Those 909 had their property seized and sold. About eight per cent, or 597, were able to sell their properties and repay their debts. Another eight per cent, or 607, repaid their defaulted amounts and at least temporarily got their lenders off their back, but then received second notices a few months later.
In Montreal, 175 mortgage holders lost properties to foreclosure last year, a 29-per-cent decline compared with the 247 of 2009. The hot spot in the province was the Montéregie region south of Montreal, where 488 foreclosures took place, down from 586 a year earlier. In fact, the number of foreclosures fell across the province except for in four regions, the Mauricie, Gaspésie-Îles-de-la-Madeleine, Centre du Québec and Abitibi-Tèmiscamingue.
If I had a nickel for every time a buyer client asked me about how to get the inside scoop on bank repossessions, I’d be driving a way nicer car than I do! The truth is that there are relatively few bank repos in Montreal, when you consider that 14,872 properties were sold through the MLS system last year.
A jump in foreclosures is often a sign of trouble ahead for the real estate market. In Quebec, one out of every 278 sold properties received a so-called 60-day notice last year. That compares with one in 59 in the U.S. One out of every 860 Quebec properties was foreclosed upon, vs. 1 of 45 in the U.S.
More significantly, foreclosures accounted for between two per cent and 2.5 per cent of all residential sales in Quebec last year. That stacked up against 26 per cent in the U.S.
A strong Quebec real estate market helped absorb those foreclosed properties efficiently. Overall, property prices rose eight per cent in the province last year, meaning that even those who were forced to sell their homes because of financial difficulties had at least a reasonable expectation of selling for more than they paid. I guess that’s cold comfort to those who lost their properties but it is better than the kind of real estate apocalypse seen in many parts of the U.S. where not only are houses worth less than they were when purchased but where no one wants to buy at