by footloose » Mon May 28, 2012 09:06:30 AM
Any time that you are dealing with a foreclosed property in which CMHC has insured or guaranteed the mortgage to the mortgagee and the sale of the property results in a shortfall, the mortgagor(s) ( that's you and your husband ) are responsible to CMHC for the shortfall.
What, in effect happens is that CMHC makes an application to the Federal Court for a Mortgage Insurance Fund Deficiency Judgment. But, like any other judgment, it is only a piece of paper and nothing happens until CMHC decides to execute the judgment.
CMHC is prepared to negotiate an offer in order to settle the judgment. But before they are able to do this, being a Crown Corporation, it becomes mandatory that both you and your husband complete in detail a Statutory Declaration. Unless a Statutory Declaration is completed and submitted to CMHC, they will refuse to discuss any proposed offer to settle. The sole purpose of completing the Statutory Declaration is to determine both your and your husband's ability to repay the shortfall either in part or in total.
If both you and your husband are able to make an offer that is acceptable to CMHC, this will NOT save your credit. Your credit took a major "hit" when the mortgagee foreclosed on your property. Only time will help to improve your credit and your Credit Score.
In B.C., as you have indicated, there is the SEIZE or SUE rule. I am not entirely sure if that rule applies to Federal Crown Corporations or
only applies to Provincially-regulated corporations, and private businesses and individuals. If I had to guess, I would say that Crown Corporations would be exempt from that provision of the law.
I would recommend that you consult a lawyer who deals with CMHC and foreclosure matters to get a legal opinion. While there may be a legal fee involved, at least you will know exactly where both you and your husband stand.
P.S. When you find the answer to this question, please report back on this forum as to the answer. To my knowledge, that question has never been raised before and I and others would be curious as to the answer.
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