Mortgage Concerns
I filed a consumer proposal a month ago. Today I received a letter from my mortgage company (GMAC) stating that because I have filed a proposal, my mortgage is now `in a default condition`, and, as such, they have the right to demand payment in full immediately.
They further write that they will waive this right if I send back a signed and witnessed re-confirmation of my obligations to them (this was included with the letter), and pay them an `administraive charge` of $150.
My payment history is perfect, and I expect it to continue so. My trustee says it is not, in fact, legal in Canada for them to cancel my mortgage just for filing a proposal, so their threat is empty (although I will be happy to return the signed paperwork, and will pay the $150 fee just to keep out of trouble).
Further, my trustee says that at my renewal time in 2 years, it may in fact be illegal for them to refuse to renew simply because there has been a proposal. I hope this is the case, but I have been worried about it, as I intend to live here for the rest of my life.
Do many of your clients experience what I have experienced? What are your views on the legalities?
Posted from: Ontario
Your trustee is correct on all counts. Many of the mortgage companies have tried this sort of thing in the past (usually because they hadn’t done their homework so they weren’t aware that the law prohibits this very thing). We determined it was a simple cash grab – a fee for reading the proposal documents.
We advise our clients to call the mortgage company to express concern – in every case were a client has done that the fee was waived…