A Basic Look at Foreclosures as Delinquencies Soar Around the Country

bank owner property sign on foreclosed home

Just as 2008 was starting to become a distant memory for many and the number of foreclosures around the country and right here in Florida were starting to drop, the coronavirus hit. Predictions were made right from the start about the impact the virus would have on the economy, and the housing market. Now, those predictions are starting to come true.

In April, the number of mortgage delinquencies around the country soared by 1.6 million. It was the largest monthly increase in history. To put that in perspective, during the same month, the national delinquency rate increased to 6.45 percent, double the 3.06 percent rate in March of this year. The increase is also almost three times more than the previous record set during the peak of the financial crisis in 2008. Inarguably, more homeowners are facing foreclosure. As they do, it may be a good time for a refresher on how foreclosures work in Florida.

What is Foreclosure?

Most people understand that foreclosure means they will lose their home, but there is a lot more to it. When a lender forecloses on the home, they seize the property from the homeowner in order to satisfy the mortgage debt. Lending institutions will typically start the process once a homeowner is three months behind on their mortgage payments. Once a homeowner has lost their home to foreclosure, the deed is transferred to the lender or to a new purchaser that obtained the home during a foreclosure sale.

What Is the Legal Foreclosure Process in Florida?

Florida is a judicial foreclosure state, which means that in order to foreclose on a home, the lender must file a lawsuit against the borrower and take them to court. There, a judge will issue a judgment in the favor of either the lender or borrower. However, the legal process actually begins before the lawsuit is filed.

Typically, the lender will first send the borrower notice of their delinquent mortgage payments. If a homeowner does not bring the loan up to date, the lender may then accelerate the note. This means that the lender can ask for all payments relating to the note. At this point, it is not uncommon for borrowers to be unable to pay the entire balance of the note.

When that is the case, the lender will then file a summons and complaint against the borrower. This will officially begin the lawsuit process. Borrowers have a certain amount of time to respond to the complaint and if they do not, a judge will likely issue a default judgment against them. After that default judgment is issued, the lender can then proceed with foreclosing on the home.

Will You Automatically Lose Your Home to Foreclosure?

Whether or not you will lose your home to foreclosure will depend on whether you answer the complaint. If you do not and a default judgment is issued against you, it typically means you will lose your home. If you speak to a foreclosure defense lawyer who can help you answer the summons, raise affirmative defenses, file discovery demands, and make motions, there is a very good chance that you will not lose your home.

A foreclosure defense lawyer can also review with you the many options available. You may consider a short sale, a deed-in-lieu of foreclosure, or bankruptcy. With these options, you may still lose your home eventually. However, it can slow the process, giving you more time to prepare, and keep a foreclosure off of your credit history. A foreclosure will remain on your credit report for seven years, so that is an important distinction.

What Happens After Foreclosure?

Although the thought of losing your home is unbearable, you may find it is even more frightening to consider the unknown, and what might happen afterward. If the lender is successful during foreclosure proceedings, the property is sold at auction and the title is transferred back to the lender. Many people think this is the point at which they have to leave their homes, and that is sometimes true. The lender may send you a notice that you must vacate the property within a certain amount of time. However, this does not always happen.

In some cases, the new owner may agree to rent the property to you under Florida’s Landlord-Tenant Act. To do this, the lender must agree to the rental agreement. If they do not, they can still send notice that you must evict the property.

Is My Mortgage Debt Cleared After Foreclosure?

It depends. If the property is sold at a foreclosure auction or in a short sale, the proceeds from the sale are likely not enough to fully cover your mortgage debt. When that is the case, the lender can pursue a deficiency judgment against you. The deficiency judgment will ask for the remaining amount of the mortgage that you owe.

However, you can stop the lender from pursuing a deficiency judgment. When working with a foreclosure defense lawyer, they can negotiate with the lender. During negotiations, your lawyer can include a provision in any agreement, such as a short sale agreement, that the lender waives their right to a deficiency judgment.

Is it Necessary to Work with a Florida Foreclosure Defense Lawyer?

Florida law does not require that you work with a lawyer during the foreclosure process. However, all homeowners facing foreclosure should speak to an attorney that can help with their case. Many homeowners, in fear of foreclosure, have never been through the process before and do not understand the many defenses available in these cases.

At Loan Lawyers, our Fort Lauderdale foreclosure defense attorneys know how to defend against the lender and give you the best chance of remaining in your home. Even if foreclosure is inevitable, we know how to place you in the best position after the foreclosure process so you can move ahead with your life. If you are facing foreclosure, call us today at (954) 523-4357 or contact us online to schedule a free initial consultation and to learn more about how we can help.

The dedicated bankruptcy attorneys at Loan Lawyers have:

  • helped over 5,000 South Florida homeowners and consumers with their debt problems
  • saved over 2,000 homes from foreclosure
  • eliminated more than $100,000,000 in mortgage principal and consumer debt
  • 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 and find out more about our money-back guarantee on credit card debt buyer lawsuits, and how we may be able to help you.