As Floridians continue to feel the fallout of the ongoing pandemic, Governor Ron DeSantis has been asked by two advocacy groups to extend the moratorium currently on mortgages in the state. In late September, the Florida Housing Justice Alliance, along with Connected in Crisis, collectively wrote to the governor asking him for an extension on the moratorium, as well as a freeze on utility shutoffs. Currently, both of these pandemic relief solutions are set to expire on October 1, 2020.
The governor has not yet responded to the request that would bring relief to millions of homeowners in Florida. For those that are facing foreclosure, and do not think there is any chance of keeping their home, it is easy to focus on the negative aspects of the process. As difficult as it is to think though, there are some benefits to simply letting the bank foreclose.
When to Walk Away From a Forclosure
Before getting into the benefits of letting the bank foreclose, it is important to know when it might be the best option. A number of defenses to foreclosure are available in many cases; you really need to weigh your options and determine if the risks outweigh the rewards.
When a home is underwater, it may be a good idea to simply walk away and let the bank foreclose. An underwater home refers to when the mortgage loan is for more than what the home is worth. During the housing crisis of 2008 and 2009, this happened all around Florida and throughout the rest of the country. Borrowers were underwater on their mortgage and even though they could pay their home loan, they simply decided not to.
It is generally not recommended that homeowners walk away from their property simply because their mortgage is underwater. When borrowers are able to repay the loan, doing so will cause much less harm to their credit report than a foreclosure.
If you are eligible for a short sale or a deed-in-lieu of foreclosure, these are also better options than simply walking away and letting your lender foreclose. You will still unfortunately lose your home with either of these options, but you will also feel fewer negative impacts once the process is over.
Benefits of Letting the Bank Foreclose
If you are behind on your mortgage payments, or the lender has already started the foreclosure process, you are likely thinking the worst has happened. Although the thought of foreclosure is a nightmare for any homeowner, there are some benefits that you may not expect.
Once the lender has started the foreclosure process, you may be able to save more money. Many people stop paying their mortgage payments once the lender starts the foreclosure process and instead, they set that money aside so they can save for an apartment or other housing accommodation.
If you do qualify for a short sale or a deed-in-lieu of foreclosure, your attorney can include a clause within the agreement that the lender is prohibited from seeking a deficiency judgment. If successful, this means that the lender cannot pursue the remaining amount on the mortgage. In the event that you do not qualify for a short sale or deed-in-lieu, it may not be wise to stop paying your mortgage. In these instances, you will not draft an agreement with the lender and so, they may still be able to pursue a deficiency judgment, meaning you will still owe the outstanding balance.
When facing foreclosure, it is easy to think that you are out of options. Fortunately, you may find that the process actually gives you more options than you would have first thought. Lenders are very willing to work with borrowers early in the foreclosure process. They don’t really want the burden of taking your home and reselling it, because that takes time and money. As such, you may find that your lender is more willing to negotiate with you. You may be able to negotiate the interest rate, the term of the home loan, and perhaps even the principal left on the mortgage. These are options you may not have available until foreclosure becomes a reality.
Even with how hard the foreclosure process is, once it is over you will have a fresh start. You will no longer have the immense burden of a mortgage you cannot pay, or of trying to find a buyer for a home you do not think you can sell. Although you will be unable to buy a home for some time, once the foreclosure process is over, you can find a new home you can actually afford, and enjoy living in it, too. With the heavy burden gone, you may find you enjoy your new home even more.
Lastly, you will learn many valuable lessons throughout the foreclosure process, and likely even beforehand. While it is a difficult process to go through to learn those lessons, they will be invaluable to you as you move forward in your new life.
For example, if you had to foreclose on your home because you lost your job and could not pay the mortgage, you can start to create a contingency plan in the event that it occurs again. You may start that emergency fund you have been putting off, so that you are prepared for any future financial challenges.
Want to Keep Your Home? Our Florida Foreclosure Defense Attorneys Can Help
Although you may reap some benefits when simply letting the bank foreclose, you may still have options that will allow you to stay in your home. At Loan Lawyers, our Fort Lauderdale foreclosure defense attorneys know the defense strategies available to homeowners. After reviewing your case, we will advise on the defenses available to you, effectively negotiate with the lender on your behalf when possible, and give you the best chance of keeping your home.
Call us today at (954) 807-1361 or contact us online to schedule a free consultation with one of our skilled attorneys.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.