Unlawful mortgage costs can trigger a bankruptcy

September 5, 2017

The courts have determined that some costs levied by mortgage lenders in powers of sale and similar circumstances are not lawful.

Some cost awards may include such items as NSF charges – our office has seen such charges on notices of power of sale as high as $500 for each occurrence.  Other costs may include late payment charges and statement preparation costs which have also been found to be unlawful and not consistent with Section 8. of the Interest Act.

What, might you ask, is the problem?  The problem is that in-spite of court decisions to the contrary mortgage lenders continue
to bilk mortgage borrowers who are distressed. They continue to be able to get away with this behaviour because the
borrowers are financially distressed and either unknowledgeable or unable (financially) to defend such charges.

There is little, if any, regulatory oversight of mortgage lenders conducting business as usual and the courts appear complicit in allowing such charges by not applying previously set precedents such as P.A.R.C.E.L. Inc. v. Acquaviva, 2015

The consequences can potentially be quite dire for borrowers who have not only lost their home to a power of sale proceeding but find that after the application of unlawful charges they have deficiency balances that can trigger bankruptcy proceedings.