Things can go wrong in a perfectly planned program. Our life is more complex than just a program, therefore there are chances that a day may come when a borrower may have difficulty to pay mortgage installment.
Failure to make a mortgage payment without prior arrangement with the lender is a violation of standard charge terms and it forms a mortgage default situation.
If the defaulting borrower had obtained Default Insurance on the mortgage to protect the lender then there are ways to alleviate the situation before evoking a power-of-sale process.
Each lender has its own way to deal with the situation. Following are the general guidelines from default insurers. They are very similar to each other.
Genworth:
- Capitalize arrears – Add the default amounts back to the principle which has to be paid back later along with the p[rinciple.
- Increase amortization period – If there is room to increase the amortization period then that can be an option.
- Partial or shared payment plan – If you can only make a partial payment then that can be allowed and the balance is added back to the principle in the expectation that it will be paid back later.
- Deferred payments – for a short period of time payments can be reduced or deferred.
- Restructure mortgage – this involve negotiating a new terms and conditions with a lender including (but not limited to) amount, interest rate, amortization etc.
CMHC
- Convert a variable to a fixed rate mortgage.
- Short-term payment deferral.
- Extend amortization period.
- Adding any missed payments (arrears) to the mortgage principle.
- Offering a special payment arrangement.
Canada Guaranty:
They will help you with;
- Repayment Plans.
- Temporary Indulgence – skipping or deferring payments for a short period of time.
- Forbearance – This is a contract between lender and borrower to reduce or suspend mortgage payments for a specific period of time.
- Loan or Agreement Modification.
- Capitalization
If you or someone you know is in trouble then the advice is to contact a professional immediately.
