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We checked in again with Mississauga real estate lawyer Gord Mohan, looking for an explanation of foreclosure, and how it differs from power of sale.
Gord told us foreclosure, in contrast, is a legal process initiated by the lender to gain full ownership of the mortgaged property. Unlike the Power of Sale process, in a foreclosure proceeding, if the value of the mortgaged property falls short of covering the outstanding mortgage balance, the lender cannot pursue the borrower for the remaining deficit. Similarly, if there is ample equity in the property or proceeds left from a subsequent sale, the lender is not obligated to provide an account to the borrower for the equity or the proceeds. Lenders commonly opt for the Power of Sale process rather than foreclosure, as foreclosure is often considered less favorable, especially when property values are on the decline.
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