The cost of doing nothing
When a mortgage is in default there is more than one way out. This compares the three that clear the debt: refinance, list it with a realtor, or let enforcement run its course.
The file
Start here. Every assumption behind these numbers is editable at the bottom.
The fileEdit
Details for the printout
The three options
“Let's just hang on until the market comes back”
What the market would have to do
Where the money goes
The gap widens every month
Debt grows while a sale nets less.
Hover across the chart, or focus it and use the arrow keys, to read any month.
The three questions everyone asks
How enforcement runs in
What these terms mean
What these terms mean
Assumptions — every figure behind this illustration
For the broker. Change any of these to match the file in front of you.
Where these numbers come from
The objection you will hear. “A lender has to sell at market value, so there shouldn’t be a discount at all.” The duty is real: a lender has to act in good faith and take reasonable steps to get fair market value. But an appraisal measures market value, and market value assumes two things an enforcement sale does not have: enough time on the market, and a seller who is free to turn down a low offer and wait. The Appraisal Institute of Canada treats a forced sale as its own basis of valuation for that reason, and Canadian lenders already order the two figures separately. The gap is a difference in what the two numbers measure, not a claim that anyone sold badly.
Published sources for the assumptions that do the most work. Provenance is marked on each one: the Canadian material establishes why a gap exists and how the process runs, and the measured evidence on how large the gap is comes from American research and should be read as such. Provincial timelines and costs are Neighbourhood's own planning figures, and every one of them is editable above.
There is still time to act.Every option above gets cheaper the earlier it starts.
