Borrower’s Default on Loan where default interest was 26%

A client came to us extremely distressed as a result ofdefaulting on their home loans.

Our client had mortgaged three of herproperties to three different mortgagees. The client was in the midst ofrefinancing the two loans, however the new loan that was going to pay out thetwo mortgagees on title could not be completed before the two loans matured.

It should be noted that the client was already defaulting on one loan and was paying 26% default interest over a $3 million loan. This meant that the clientwould be defaulting on three loans over three properties.

This was a battleagainst time because when Borrowers are in default, mortgagees have the powerto proceed with enforcement actions, including taking possession of the propertiesand selling the properties.

These circumstances caused significant financialand emotional stresses on the client, so we had to get right to action.

Shortly after our client came to us, she received Notice ofSales from the two mortgagees. After thirty days lapses from issuing thenotices, the mortgagee can enforce a power of sale.

We reviewed the notices andbought a considerable amount of time for the client to proceed with her loanfor the refinance. This was as due to our staff identifying defects on theNotice of Sales which meant the mortgagee’s solicitors had to reissue a validnotice to enforce the power of sale.  

After reviewing all loan documentsfrom the two mortgagees, we contacted their solicitors to negotiate the payoutfigures and default penalties. By this time, our client’s incoming mortgageewas ready for the refinance, however the loan amount could not fully cover thepayouts for the two mortgagees. This was as interest had been accruing daily ata daunting amount.

Through skilful and persistent negotiations with thesolicitors, we managed to reduce the loan payout by $70,000.00. This allowedour client’s incoming financier to fully payout both mortgagees, removing themfrom title. This was a great outcome for our client, and it put an end to thestressful time they were under.

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