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What is Pre-Foreclosure?

If you live outside of Ontario, New Brunswick, Newfoundland, and PEI and your lender is unable to go through Power of Sale, you risk facing foreclosure. With an increasing number of homes across the country going into foreclosure, it’s important for both buyers and mortgage holders to understand the process. Since foreclosure is a process, all is not lost after missing one payment. Pre-foreclosure is the window of time to prevent foreclosure and massive damage to your credit.

What is pre-foreclosure anyway?

Many homeowners across Canada are facing difficulties making their monthly mortgage payments. When a homeowner misses at least one payment, the lending institution will issue a Notice of Default. This notice informs the borrower that they are delinquent, along with the amount owing plus any fees.

After this notice has been issued, the lender will file a “Statement of Claim” through the court and serve you with a copy of this document.  In reply, you will have about 3 weeks to file a “Statement of Defence”. If no Statement of Defence is provided to the lender, this will communicate to the court that you’ve chosen not to fight the foreclosure process. Your lender will then apply for a remedy with the court to recover the money they loaned out to you to finance your home. If the court has reason to believe you can repay your loan plus all fees,  a “Redemption Order” will be issued, which gives you an amount of time to repay the amount. If you can repay the loan, this will stop the foreclosure process.

This period, from Notice of Default to the last day of the Redemption Period is known as “pre-foreclosure.”

This pre-foreclosure timeline however, is not always guaranteed. If the court has reason to believe that you cannot repay the loan, it can go straight to issuing an “Order for Foreclosure” without even bothering with a Redemption Order. In this case, the property will be directly transferred to the lender. The court may also decide on an “Order of Sale” instead, which involves a sale of the home under the court’s control. You’ll then have a maximum of 30 days to vacate the home after the lender (or a new buyer) has over possession.

Thankfully, in more common cases, pre-foreclosure allows a mortgage holder the opportunity to take advantage of several options to prevent losing their home.

Pre-foreclosure Options for Borrowers

If you receive a “notice of default” from your mortgage lender, this document will state that you have not made mortgage payments for the last 90-180 days. It’s important not to panic.

You have options that can delay or even prevent losing your home:

  • If your mortgage is “above water,” (meaning you have equity in your house) you may be able to refinance your mortgage, receiving lower monthly payments.  Check with your local Ontario mortgage broker… or contact us and we can connect you with a reputable one.
  • You may be able to quickly sell your home to a real estate investor that’s reputable in the Ontario like us at True North House Buyer , using the cash acquired to pay the months of back-payments owed (or we *may* be able to work out something with the lender that relieves all or part of your back payments.We can buy your Ontario Ontario area home quickly, often in just a week or two, will pay in cash, and takes the stress out of trying to find a buyer.
  • You can contact the bank and ask them to permit a short sale. In a short sale, you’ll sell your home for less than it’s worth, and the bank will take the loss as a tax write-off.  In some short sales you may still be required to pay the difference to the bank if the house doesn’t sell for what is owed on the loan.
  • You may be able to declare bankruptcy, which can buy you time to pay your debt. Bankruptcy will remain on your credit report for years, and can cause significant damage.

Lenders are very much aware of the widespread financial troubles across the country and they’re willing to work with borrowers a lot of the time.

If you’re honest and communicate with your lender, you’ll often find that there are options that will allow you to remain in your home, or at least salvage your credit rating.

A foreclosure can often negatively affect your credit score by 200-400 points and can prevent you from obtaining a loan of any sort for 5-7 years, so be very dutiful if you’ve received a Notice of Default from your lender.

But if you’re not able to find a solution with your lender working directly with them… connect with us. We may be able to help.

Ways We Can Help If You’re In Pre-Foreclosure

  • We can potentially help with a short sale – Submit your info on this website so we can evaluate your situation to see if we can help.
  • We can buy your Ontario area houseWe buy houses in Ontario and would love to make you an all-cash offer on your house too. Just fill out the form here to get started >>
  • You can ask us questions and we can provide you FREE guidance and resources so you can make a well educated decision. This costs you nothing, there’s absolutely no pressure, no obligation… just free guidance without a catch.

If you’re in the pre-foreclosure stage… you’ve still got time to fix this situation.

Just connect with your bank to see if they’re willing to work with you… or contact us if you’d like to see what we can buy your house for or to tap into our free foreclosure foreclosure resources.

Want To Discuss Your Pre-Foreclosure Options? Call Us at


Or, Submit Your Info Here To Get A Cash Offer On Your House >>

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