Once a mortgage has been defaulted on, banks and other mortgage lenders will often charge mortgagors (you-the borrower and their customer) exorbitant and excessive fees, whether it be intentional or not. Time and again, we have seen these fees levied at exponentially greater amounts than lenders are reasonably entitled to charge under the circumstances. The charging of such unreasonably high fees has not been viewed favourably by the courts.
In the midst of Covid-19 related complications and with other financial difficulties remaining on the horizon, many property owners have been unable to continue to pay their mortgages on a consistent basis. One difficulty that presents itself for home owners in this type of situation is the ability of their mortgage lenders to sell their properties via “power of sale” proceedings. A power of sale is meant to pay off secured mortgage lenders for the amount that they are owed under the mortgage.
If you find yourself in the position where your home is being sold via power of sale, you will likely receive a bill from your mortgage lender for its expenses incurred in procuring the sale. However, many of the charges that lenders invoice for are often illegal or exaggerated. For example, lenders often tack on extra interest charges and other fees as a penalty for defaulting on mortgage payments. Fortunately for home owners, section 8 of the Interest Act, RSC 1985, c I-15 prevents a mortgage lender from increasing the interest rate on a mortgage by charging superfluous fees and penalty charges upon default.
Some other fees that lenders typically overcharge for include mortgage discharge fees, legal fees, administrative fees, and property tax, appraisal and inspection fees. Many of these fees are not valid charges and some of them are typically superfluous. For example, courts have specifically disallowed various administrative charges such as fees charged for collection letters.
Among other potential avenues for remedies with the courts, section 43 of the Mortgages Act, R.S.O. 1990, c. M.40 provides the opportunity for home owners to have their mortgage lender’s bill of costs assessed and reduced.
Gilbertson Davis LLP lawyers can represent you in your dispute with your mortgage lender as we have experience in Mortgage Disputes, Loan Litigation, Debtor and Creditor, Real Estate Disputes, Arbitration, Mediation and Civil Litigation matters and can assist you in resolving your legal issues in a timely and cost-effective manner. Your bank or mortgage lender may not take you seriously unless you have legal representation. If you require legal advice, a lawyer or attorney to review your mortgage status and to assist you in dealings with your bank, lender or mortgagee, please request an initial consultation with Gilbertson Davis LLP via one of the below referenced methods.
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