A Strategy for Walking Away from Non-recourse Mortgages in Alberta
Buying a property doesn’t always work out. Sometimes
investors and homeowners alike can’t keep up with their mortgages, and they face
foreclosure from their lenders. This blog post is about non-recourse mortgages in
Alberta and how they sometimes make it possible to avoid foreclosure with
careful negotiation—as long as the lender is understanding.
This Tale is about taking good notes when you appear in court as the buyer of real estate in foreclosure. My client was a creative kind of guy and he found a property in Alberta where the mortgage payments weren’t being made. The seller was still living in the home but trying to sell and get out from under the foreclosure. After some conversation, my client put together a creative deal that the seller and the seller’s lawyer both liked. Now, in addition to being in foreclosure, the seller was in way more financial trouble and he had actually filed for bankruptcy…
Download the audio file HERE. Download the handout HERE. (control click or right click + save as)
The 2007 collapse of Alberta’s real estate boom caught a lot of homebuyers by surprise. There hadn’t been a major collapse in the real estate market since 1980, then triggered by the still hated National Energy Program. Many homebuyers—both owner-occupiers and investors—had little experience in 2007/08 when prices came crashing down. As late as 2012, we were still experiencing 07/08 ‘crash backlash’, which in 2015 has been aggravated again by falling oil prices.
Luckily it’s not as bad as the 1980s, but many folks are still rightly concerned. We get a lot of questions about mortgage default. How long does it take the bank to foreclose? What if the mortgage is now worth more than the property? Can I use a Quit Claim to get rid of the property? A very good client suggested, and I agreed, that it would be worthwhile to discuss some of these issues a little bit more. Following are a series of questions from my client and answers by me. Continue reading →