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Will we see MORE foreclosures come to the market?

Where are all of the foreclosures at? That is what everybody has been wondering for not only weeks, not only months, but years. What is going on, where are they? And if the market really is changing, why have we not seen any yet? There seems to be a consensus that foreclosures are an awesome deal and while that may or may not always be the case, the important thing is we need to be able to see them to be able to buy them.

 So with the current market changing that are currently happening right now, where are they? When can we expect them and what might they look like when they do come back to the market? If that is what you're looking for, this is the video for you. So let's get into it. If you've been wondering when foreclosures are coming back to the market and where they all are currently, this is all about the process and when we should expect to actually see these starting to come to the market. A lot of people think foreclosure is a very instantaneous thing.

 It happens very quickly and it doesn't and probably for good reason. It's a pretty horrible experience for a person getting foreclosed on. Actually, earlier in my career I used to help tons of banks like TD, ScotiaBank and others sell their foreclosure properties. And I'll tell you, the people that were living in those foreclosures, the former homeowners, it was pretty awful. They are typically very nice people that have maybe fallen on some bad times and nobody buys a home wanting to go into this kind of scenario.

 So take that for what it is so it doesn't happen fast and for good reason. The bank wants to give people as long as they can within reason to try and get back on good foot. And part of the other reason, too, is it's actually quite expensive for a bank to enter the foreclosure process. There are lawyers and court and, of course, a ton of other professionals that are involved in the entire process, including Realtors. So they want to try and avoid those fees as best as possible and just get back to the original terms of contract they had agreed to with the person being foreclosed on.

 And that's just the problem. The person being foreclosed on has broken a term of contract. They have agreed to whatever with the bank when they sign their mortgage, whatever those terms might be. And they are not keeping up their end of the bargain. So people can get foreclosed on for various reasons, like, obviously not paying your mortgage is a good one, but there's other reasons as well.

 Like maybe you're not paying your property taxes or you're not paying your strategies. So the process all begins to unfold with something called a demand letter. And a demand letter doesn't necessarily go out right away. That's something that the lender will send to the homeowner at the time and let them know that they have been missing multiple payments. So they don't typically send this right away.

 I mean, they would get notice they've missed payments, obviously the homeowner, but they would send a demand letter, typically after about 2 to 3 months, saying, look, like you are consistently not paying your mortgage and we've got a problem. We demand you settle up with us and get this fixed right away. So you're already a couple of months in at this point. And the next thing that happens is something called a petition for foreclosure. This is a 21 day notice where the bank or the lender sends to the homeowner and says, look, we are going to start the foreclosure proceedings and process on you.

 If you do not settle up with us. Now, the homeowner at that time, the person receiving the letter, they've got up to 21 days to respond to this. And the response obviously can drag out the time period as well. But we've just really added at least another month, if not a few more months, onto the process with this petition for foreclosure letter. After this response is filed, you will get a notice called a notice of hearing. And this is basically where you're going to go have to talk to the judge between you and the lender about what's happening and what the plan is moving forward.

This is when the lender is likely going to ask the judge to start the order NISI. Process. Order NISI. Who makes up these names? Order NISI.

Order Nissy. Order NISI. That's how you spell it. Obviously, getting a court date is not a quick thing. Getting in front of a judge is not a quick thing.

So this can add more time to the process. If and when the court gives the lender an Order NISI. This starts something called the redemption period, which is usually around 6 months. And that's where the court is saying, Look, Mrs. Homeowner, you've got up to six months to repay the lender or get back on track.

So if you can come up with the proceeds of the mortgage to just kind of part ways with the lending company or the mortgage company, this will usually get you out of hot water minus any court or legal fees that have been incurred to that point. Now, while this is typically about 6 months, it can also end up being a little bit shorter or a little bit longer, depending on the scenario. But the kind of common is about 6 months, but typically also to the lender is going to try and push that forward a little bit because every month that you are not paying your mortgage, they're obviously losing money as that redemption period is unfolding. You can either pay off the lender, as we mentioned, or you can sell the home yourself. And this is where you could hire your own real estate professional, list the property and just try and sell it.

This is probably one of the key reasons that we haven't seen a lot of foreclosures in our market in a long, long time. I want you to be cognizant that in the Fraser Valley as an example, which is kind of North Delta all the way to Mission, that the property prices have increased on average about 300% since January of 2015. So that means people have made equity in their property. If you can't make your mortgage payment because you lose your job or if you can't pay your property tax or whatnot, you can still sell your property because likely you've made a bunch of money on it. And this obviously makes the availability of foreclosures a lot less because people can get out of their mortgages and actually pay them off if they actually reach this redemption period phase.

So that's one of the big reasons you haven't seen a lot of foreclosures in the marketplace. If you did sell your home privately, though, you still have to let the court know and get permission to authorize the sale to move forward. If these fictitious sellers in this example didn't have any equity in their home, then they want to try and work with their lender as best as possible. It's not a good idea to bury the head in the sand, but the next proceedings are probably coming pretty quickly. What happens next is the lender applies for something called an order absolute, and this is basically the last line in the sand and the lender will go to the court and the judge and asked to become the new owner of the property.

 If you've gone through the redemption period, there is really nothing else that can be done at this point, and they will take over the home and be the new homeowner, the house now belongs to them. You lose all your rights to the home and can even be asked to leave the property. It may be important to note that lenders don't usually ask for an order absolute on the property. In most cases, they will usually sue you when they start to foreclose and ask the court for an order to sell your home to pay off the loan. If the money from selling your home doesn't completely pay off the mortgage loan, the lender can try and collect the difference from you.

So that's kind of the process of what it's like to go through a foreclosure. And obviously, based on all the timelines I was kind of suggesting throughout the video, it's not a very fast process whatsoever. When the market starts to soften, it's important to note that a loss in equity doesn't suggest that someone is going to go into foreclosure as mentioned at the start of the video, it's really when you stop paying your debts, either your mortgage or your property tax or your strategies or anything like that, which is going to likely push somebody into foreclosure. As mentioned a little earlier, the market has been so productive and so busy since 2015 that we haven't seen a lot of properties going to foreclosure because of all the equity people have been attaining during those huge growth periods. So who knows what's going to happen in the future?

Thanks for reading, my name again is Darin Germyn from the Germyn Group, until next time! Cheers

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Darin Germyn PREC* & Adam Howsam
Macdonald Realty LTD
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