What the Borrowers in Alberta Can Do When Facing a Foreclosure

Losing property is an unpleasant and distressing experience. It often makes the borrowers run into more profound losses than ever before. Moreover, with over two thousand nine hundred mortgage arrears in 2021, foreclosures have become common concern in Alberta, a Canadian province. As a result, the homeowners often wonder how to stop foreclosure in Alberta and prevent their properties from being seized by lenders.

There are ways in which borrowers can avoid the complex and lengthy foreclosure process. The list below contains the most typical of these ways that residents of Alberta use to deal with foreclosure.

a foreclosure process in Alberta

Enter a repayment plan

Unemployment in Alberta exceeds that of the national average, making it one of the province’s prime reasons for property foreclosure. However, you can consider a repayment plan if your payment default is not due to unemployment and a situational problem is a reason. The best way to qualify for this is to not be too far behind on the payments.

You can speak with your lender and arrange to make the outstanding payments over time while continuing to make regular payments as usual. A typical repayment schedule in Alberta lasts between three to nine months.

Seek a loan modification

Several Alberta lenders are flexible enough to accommodate borrowers who have defaulted on their payments due to extenuating circumstances. They generally agree to a “loan modification” that allows the homebuyers to clear all the outstanding payments. The goal of such modifications is usually to lower the amount of money paid every month.

Generally, a loan modification in Alberta involves the following.

    • Adding outstanding amounts to the loan balance
    • A reduced interest rate
    • Extending the length of the loan (for instance, from twenty to thirty years)

Some lenders in Alberta agree to set aside a portion of the outstanding dues as “principal forbearance” as part of the modification plan. This amount does not accrue interest and is payable as a balloon payment at the end of the loan term.

Sell the property

When wondering how to stop a foreclosure in Alberta, the ultimate and most effective solution is to sell the property. Homeowners facing the dilemma of making payments and letting go of the property will find this an intelligent solution. There are scores of dependable real estate companies in Alberta that buy properties that are facing foreclosure. Moreover, real estate owners purchase these properties at a fair price.

Besides, local real estate agents might pay for any repairs the property may need before reselling it. They may also bear additional costs that may come along the way of selling.

Consider a forbearance agreement

As a last resort to foreclosure, many borrowers in Alberta sign forbearance agreements with their lenders. Under this agreement, the lender permits the homeowner to make reduced payments or no payments at all for a stipulated period. This period is typically around six to nine months in Alberta but can be extended depending on the loan amount, lender’s guidelines, and other circumstances.

At the end of this period, borrowers will need to resume regular payments plus the missed arrears. Alternatively, they can ask the lender to repay  the outstanding amount in a lump sum at the end of the term.

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