What are my options since my property is losing value?
I purchased a condo for $279,000 in 2009 with a mortgage insured thru CHMC. Due to significant problems in the construction of these condos my condo fees have more than doubled and my property is now worth $125,000!!!! I am struggling with the idea that I am just throwing good money after bad and struggling to stay afloat to save a worthless property….what are my options? Thank you.
Posted from: Alberta
Well your options are going to depend on some more specific information about what you make, what you on top of the mortgage and what you spend each month. In a case like this I usually recommend that you allow the bank to foreclose on the property. There simply isn’t a good financial argument to pay $279,000 for a property that is only worth $125,000. So you let the bank foreclose, they will take the property, they will sell the property and apply the proceeds against the outstanding balance of the mortgage (I am overly simplifying as there will also be legal fees and real estate fees, but they will essentially become something that the bank will cover and will be added on to the total deficiency that you will owe). Once the bank has realized what they can, they will turn it over to CMHC who will in turn pay the bank for the amount of their loss and then look to you to repay them. So you will owe a substantial amount to CMHC. This is where I come in. Together you and I can look at either filing a bankruptcy or a consumer proposal to deal with that shortfall. Which of these options will work best will depend on the what you make, what you on top of the mortgage and what you spend each month, but that is something we should discuss in person. Hopefully this gives you a good overview, but for more specifics please contact me directly.