Power of Sale Case Study: How We Helped a Homeowner Stop the Sale and Get Reinstated With Their Bank Using a Second Mortgage

When someone is facing a Power of Sale, the first instinct is usually panic.

And honestly… fair enough.

Most people think their only options are:
• Sell the house fast
• Refinance the whole mortgage somewhere else
• Or lose the home

But there’s a 4th option that can be the smartest move in a lot of cases:

Keep the bank mortgage, reinstate it, and use a second mortgage to stabilize the situation.

This is a real example of how we helped a homeowner do exactly that.

The Situation: A Good Mortgage… But a Bad Moment

Our client had a mortgage with their bank that was actually solid:
• Reasonable interest rate
• Normal amortization
• A payment structure that made sense
• A lender they wanted to keep long-term

The problem wasn’t the mortgage.

The problem was life.

They fell behind on payments and the situation escalated quickly. Eventually, the bank started the Power of Sale process, and now the timeline was working against them.

This is the part most people don’t realize until it’s too late:

Once the bank starts enforcement, it becomes a different game.
It’s no longer “let’s catch up over time.”

It turns into:
• Pay the arrears
• Pay the legal fees
• Pay the lender’s costs
• And do it fast

Why Refinancing the Whole Mortgage Was the Wrong Move

A lot of brokers (and lenders) jump straight to: “Let’s refinance everything.”

But in this case, refinancing the full mortgage would have been a mistake.

Here’s why.

1) No bank wants this file right now

Even if the client has decent income and decent equity, banks don’t like:
• Missed payments
• Active collections activity
• Power of Sale proceedings
• High stress timelines

So if someone is mid-crisis, the best bank rates are usually off the table.

2) Replacing the first mortgage gets expensive fast

If you refinance the full mortgage away from the bank, you often end up with:
• Higher interest rate
• Lender fees
• Broker fees
• Legal fees
• Appraisal fees
• Higher monthly payment
• Sometimes shorter term / tougher renewal

And it can lock you into a situation that’s hard to escape later.

3) The bank mortgage is usually the “gold” you want to protect

This is the part most people miss:

If your bank mortgage is a good product, you want to keep it.
You don’t throw away a good mortgage just because you had a rough 3–6 months.

The Strategy: Second Mortgage to Reinstate the Bank Mortgage

Instead of replacing the bank mortgage, we structured a plan to save it.

The goal was simple:

Bring the first mortgage back into good standing, stop the Power of Sale, and give the client breathing room.

That’s exactly what a second mortgage can do when it’s used properly.

Here’s what the second mortgage covered:

• Mortgage arrears
• Legal fees
• NSF / penalty charges
• Any immediate debts that were causing payment stress
• A small buffer to prevent this from happening again

Once those items were paid, the bank mortgage was reinstated.

Meaning:
• The first mortgage was back on track
• The enforcement pressure stopped
• The client stayed in the home
• And the bank relationship stayed intact

Why This Works: It’s a “Stabilize First, Optimize Later” Move

A second mortgage in this situation isn’t meant to be forever.

It’s meant to:
• Stop the bleeding
• Protect the property
• Buy time
• Reduce stress
• Create a plan

Because once you’re reinstated and stable again, your options improve.

And then you can do the smarter long-term moves like:
• Paying down the second mortgage over time
• Improving credit and getting back into prime lending
• Refinancing later when it’s not an emergency
• Selling on your timeline (not the bank’s timeline)

The Biggest Lesson: A Power of Sale Is a Timeline Problem

A lot of people facing Power of Sale aren’t “bad borrowers.”

They’re just stuck in a situation where:
• Something happened
• Payments fell behind
• Stress piled up
• And now the bank wants everything corrected immediately

It’s not always a long-term affordability problem.

It’s often a short-term cash flow problem that spiraled.

And that’s why the right solution is often:
a short-term second mortgage that fixes the timeline issue.

Why Keeping the Bank Mortgage Matters So Much

This is the key takeaway.

If you can keep the bank mortgage, you should.

Because when you refinance away from it during a crisis, you usually trade:
• A good long-term mortgage
for
• a high-cost emergency mortgage

And that’s a tough hole to climb out of.

By using a second mortgage to reinstate, you keep:
• The low-cost first mortgage
• The better terms
• The long amortization
• The lower payment
• The ability to recover properly

Final Thoughts

If you’re facing Power of Sale, you don’t have time for guesswork.

The wrong move can cost you:
• Thousands in fees
• A higher long-term payment
• Or the house itself

The right move can buy you time and protect what you already built.

If you’re behind on payments and the bank has started enforcement, the first question isn’t:
“Who can refinance me?”

It’s:
“How do we stop this and keep my bank mortgage in place?”

That’s what we do.

Need Help Stopping a Power of Sale?

If you’re in Ontario and you’re facing Power of Sale (or you’re close), reach out before it gets worse.

Sometimes the difference between saving the home and losing it is just having the right plan fast enough.

Rick Bettencourt
Chartered Finance | CentumCF
Private Mortgages • Second Mortgages • Power of Sale Solutions

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