MORTGAGE CHARGES AND DISPUTES:
Often mortgage lenders charge extra charges such as penalty for default in making monthly payments, NSF charges of $150 or $200 per NSF, increasing interest rates on default. etc.:

The court in 2088300 Ontario Ltd., at paragraph 21 said that such charges offend the provisions of the s. 8 of Interest Act.:

"The only reason for the [non-payment] charge was to effectively increase the interest rate. It is not the situation of costs incurred by a non-sufficient funds cheque. Here, every month the debt is not paid, the debtor is charged a "penalty". These charges could only be justified where the debtors "bounced" a cheque, resulting in costs to the lender. These charges, without valid basis, must be deducted from the debt as they offend s. 8 [of the Interest Act] by increasing effectively the rate of interest on default."

CASE: 2088300 Ontario Ltd. v. 2184592 Ontario Ltd., 2011 CarswellOnt 3214, 2011 ONSC 2986

The court goes on to state in paragraph 23 that “where there is no actual cost to the plaintiff attributable to the failure to provide a cheque each month, the amounts charged of $300.00 per month are the very type of penalty prohibited by the Interest Act and are not recoverable by the plaintiff”. 

The court at para. 51, referring to the following passage from Falconbridge on Mortgages, s.34:40, p. 34-6, said:
"A mortgagee may be deprived of its costs, or even ordered to pay costs, if the mortgagee resists the right to redeem, makes unfounded claims, improperly refuses to account, causes vexatious delays and unnecessary costs, or is guilty of vexatious or oppressive conduct."

If your lender charges you excessive charges upon default and power of sale, such charges could be set aside by the court, but you must pay the funds UNDER PROTEST to the lender or into court (preferable) if closing has to be done. Thereafter, you will need to bring an action immediately to seek the return of the excess charges.

YOU could also "assess" the legal fees charged (on default or power of sale, etc.) under the Mortgage Act., and this can be done by you without a lawyer.  

DURING OF POWER OF SALE proceedings, many lawyers or lenders charge excessive fees and costs. Recently Jiwa obtained $30,000.00 in punitive damages against a private lender who had charged excessive charges  on defaults in addition to return of all extra charges. 

PUNITIVE DAMAGES:

In deciding the ordering of punitive damages, the court in the case Windy Ridge Developments Inc. v. Norris, 2006 CarswellOnt 2435, 43 R.P.R. (4th) 268 said that the conduct of the defendant was outrageous and awarded $40,000.00 in punitive damages.  In addressing the conduct the court held that "the defendant continued to press ahead with the charges even after being told that the charges were incorrect, continued to increase costs, continued to demand payment  of the escalated costs", and found the conduct as reprehensible. The court said that the  defendant’s deliberate acts were to the disadvantage of the plaintiffs, “and the only way to pay back this egregious conduct is an award of damages that punishes the conduct, and it cannot be met with compensatory damages."

NOTE:
When people fall into financial difficulties, it is natural to stop paying mortgage and realty taxes. Mortgage default proceedings will very quickly erode most, if not all, of your equity. The best course of conduct is to sell the property as soon as possible, because you might be able to sell it at best value, but if the lender takes over your property, first they will charge thousands of dollars for various items such as for cleaning, for security, legal costs, and to add insult to injury, the property can and often is sold at well below what you might obtain on an open market, with the result that you might suffer a lot more than you selling the property yourself.

If you or anyone you know has been charged excessive charges (interest, penalties, costs, etc.) upon defaulting on a mortgage or other loans, please seek legal advice as early as possible as delays might prevent them from obtaining redress from the lender or its lawyers.