Toronto Faces Rising Wave of Forced Home Sales
Toronto is experiencing a significant rise in forced home sales due to economic pressures. A recent case highlights the struggles many homeowners face in this challenging environment. Yvonne Morrish, a long-time resident of Scarborough, found herself in a dire situation after missing a mortgage payment.
Power of Sale Trend in Toronto
The power of sale process occurs when a homeowner defaults on their mortgage, allowing the lender to take over the property. This trend is becoming increasingly prevalent in the Greater Toronto Area (GTA), especially in suburbs like Brampton and Scarborough. Data reveals that the number of properties listed as powers of sale has surged.
- Highland Creek in Scarborough has the highest rate, with 9.9% of new listings categorized as power of sale.
- From January to September 2023, nearly 1% of new listings in Toronto fell under this category.
- Suburban areas like Brock and Brampton report even higher figures, at 2.87% and 1.38%, respectively.
These increases indicate that more homeowners are under financial stress. Many are facing higher mortgage renewal rates as they transition from lower pandemic-era rates.
Factors Contributing to Forced Sales
Several factors are contributing to the rise in forced home sales:
- Higher interest rates making mortgage payments less manageable.
- Climbing unemployment rates and escalating living costs.
- Homeowners who bought properties at inflated prices during the pandemic are now seeing their property values decline.
Morrish’s case is one of many, with her owed debt climbing to approximately $792,000 as of January. No longer able to make her mortgage payment of about $6,200, she faced the possibility of losing her home.
The Lender’s Role and Response
RiverRock Mortgage Investment Corp. initiated the power of sale after Morrish defaulted. The company’s president, Nick Kyprianou, mentioned they cannot discuss specific cases due to privacy regulations. However, he emphasized the importance of mortgage payments and the process of power of sale.
He also highlighted that private lenders like RiverRock differ from major banks. Institutions like BMO or Scotiabank often provide a grace period of up to three months for borrowers, while private lenders can pursue a power of sale two weeks after a missed payment.
Current Market Conditions
As of June 2023, more Ontarians are missing mortgage payments than at any time since 2012. Major banks report observable spikes in delinquency rates:
| Bank | Delinquency Rate (2023) | Change Over Two Years |
|---|---|---|
| BMO | 0.37% | Up from 0.15% |
| Scotiabank | 0.25% | Up from 0.14% |
| CIBC | 0.36% | Up from 0.17% |
This alarming trend underscores the growing number of homeowners trapped in precarious financial situations. Many are struggling to maintain their homes while also being impacted by rising costs elsewhere, leading to a surge in forced home sales.
A Call for Better Support
Experts suggest that addressing these issues requires a comprehensive approach. Borrowers need assistance in navigating financial hardships, while lenders may need to implement more flexible solutions to prevent unnecessary foreclosures.
Morrish’s situation serves as a reminder of the emotional toll these housing crises can take. As she continues to fight to keep her home, many others are hoping for solutions that will allow them to remain in their properties amidst this rising tide of forced home sales in Toronto.
