Most people picture a big bank when they hear "power of sale." The data tells a different story: roughly two-thirds of Ontario power of sale filings since 2022 have actually been initiated by private lenders, not traditional banks. Understanding why changes how you should think about the current wave of listings.
How Private Lending Fits Into the Picture
During the 2021-2022 market peak, a significant number of buyers used private lenders — often for second mortgages — to bridge financing gaps, cover down payment shortfalls, or close deals that traditional A-lenders wouldn't approve. These loans were typically structured as short-term products, meant to be refinanced with a conventional lender once the borrower's situation stabilized or the loan term matured.
Why That Plan Is Falling Apart in 2026
The refinancing assumption behind many of these private loans depended on property values holding steady or rising. With values in several GTA segments having pulled back from the 2021-2022 peak, borrowers who took on private financing now often can't refinance with a traditional A-lender — the math simply doesn't clear underwriting standards when the property's current value doesn't support the outstanding debt.
Private lenders, unlike large institutional banks, generally have less capacity and less institutional patience to carry a defaulted loan for an extended period. When a borrower can't refinance and falls behind, private lenders tend to move to enforce their security — a power of sale — more quickly than a bank might in a comparable situation.
What This Means for the Listings You're Seeing
Timelines can move faster. Private lenders' process and motivations differ from institutional lenders — properties in this category can sometimes move through listing and closing more quickly than a bank-initiated sale.
The underlying debt structure matters. A property with layered financing — a primary mortgage plus a private second mortgage — can mean more complexity behind the scenes, even though the sale itself follows the same "as-is" power of sale rules as any other. Understanding how power of sale actually works in Ontario matters regardless of which type of lender is behind it.
This isn't concentrated in one segment. Private lending was used broadly across property types and price points during the 2021-2022 peak — this dynamic isn't limited to entry-level properties or any single city.
What This Means for Buyers
The lender type behind a listing doesn't change your due diligence. Whether a bank or a private lender is selling, the property is still sold "as-is, where-is," with no seller disclosures — a full inspection remains non-negotiable regardless.
Move decisively but carefully. Private-lender-driven sales can move on tighter timelines, which rewards buyers who already have financing and inspection resources lined up before they make an offer.
Confirm redemption period status with your lawyer, exactly as with any Ontario power of sale — the previous owner's right to reclaim the property applies the same way regardless of lender type.
What This Means for Homeowners Facing This Situation
If you took on private financing during the 2021-2022 market and are now struggling to refinance, understanding that private lenders typically move faster than banks is exactly why early action matters more, not less. Reaching out before a Notice of Sale arrives gives you meaningfully more options than waiting until the process is already underway.
The Bottom Line
The "bank foreclosure" narrative around power of sale misses a genuinely significant piece of what's actually driving the current surge — private lending from the 2021-2022 peak is playing at least as large a role as traditional bank mortgages, and understanding that distinction helps both buyers and struggling homeowners make better-informed decisions.
Want to understand what's behind a specific power of sale listing you're considering, or facing your own financing challenge? Contact our team — we track both bank- and private-lender-driven listings across the GTA.
