2009-04-20
What an insured mortgage does is give your bank protection in the event you ever default on your mortgage. They have an insurance policy that they can recover the shortfall from.
For example.....if your home is worth $350,000. Your mortgage balance is $375,000. You default on the mortgage and it goes into foreclosure.
The bank would get a Court Order to sell the house for the $350,000. And the $25,000 shortfall (plus the foreclosure costs) they would recover from the insurance policy, whether it be CMHC, Genworth, AIG.
The insurance carrier (not the Bank) would then proceed against you for the $25,000 shortfall.
If a mortgage is not insured and there is a shortfall, the Bank can NOT pursue you for the shortfall. It is only the insurance carrier who can.
This assumes that this is a typical, conventional mortgage. And not some type of other loan secured by your house.
In the event you have a shortfall on your residence and your mortgage is insured (whether you have defaulted yet or not), the shortfall is one of your creditors that you want to keep in mind when assessing which option is best for you. The shortfall can be included in a bankruptcy or a proposal to your creditors.
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Bankruptcy Consumer Proposal
Losing your job can be frustrating and, even more so, managing your financial wellbeing while you’re unemployed. However, you can successfully navigate the situation with the right budgeting tips.
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Since it’s impossible to predict or prevent most medical conditions or emergencies, the best way to handle them is by planning and preparing for them.
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If you are considering filing for Bankruptcy, it is important to understand the impact on your employment and salary.
