Foreclosure Filings Are Down, but for How Long?

South Florida homes at risk of foreclosure

Foreclosure filings are down around the country. That is not all that surprising, as the moratorium on federally-backed mortgages is still in place and approximately 80 percent of homeowners hold this type of mortgage. Still, for those in Florida, the news is grim, as the Sunshine State continues to post some of the highest foreclosure rates. Even with the good news throughout the rest of the country, many people are wondering how long it will last, and what will happen once the federal moratorium expires.

Foreclosures Were Down in November

ATTOM Data Solutions has released its U.S. Foreclosure Market Report for November 2020, and the news looks fairly good around the country. In total, foreclosures were down 14 percent in November from the month before, and the foreclosure rate has dropped by an encouraging 80 percent from one year ago. Around the country, there were only 10,042 foreclosure filings in the entire country in November.

One in every 13,581 housing units had a foreclosure filed on it in November of 2020. Florida had the highest number of foreclosure filings in November, with one for every 7,109 housing units. Illinois followed closely with one in every 7,285 housing units. Oklahoma was found to file one foreclosure for every 8,128 housing units. New Mexico had one foreclosure filing for every 9,236 housing units while Delaware came in as last of the top five with one in every 9,310 foreclosure filings.

Metropolitan areas that have a population greater than one million had the worst foreclosure rates in November 2020. Here in Florida, Jacksonville was one of the worst with one foreclosure filing for every 5,877 housing units.

The case numbers seem to be promising. However, as is seen too often, the numbers may not tell the whole story. With the moratorium still in place for federally-backed mortgages, the latest numbers do not indicate that homeowners are not in trouble with their mortgage. They simply mean that lenders on those loans are unable to file many foreclosures at the moment. So, what will happen when that moratorium expires and lenders can start filing foreclosure cases on all defaulted loans?

Foreclosures Will Increase When the Federal Moratorium Expires

Lenders are quite limited with how many foreclosures they are able to file right now due to the fact that there is still a moratorium on federally-backed mortgages. Once that moratorium expires, things are likely going to become a bit more chaotic. The new filings the courts are expecting once the moratorium expires on January 31, 2021 are expected to create an immense backlog almost instantly. Some experts are expecting the backlog to be as bad as it was during the financial crisis. Individuals that will be most at risk for foreclosure are those that are unemployed or underemployed.

The other problem an increase of foreclosure filing will present is the fact that many of those homeowners will attempt to sell their home for less than what it is worth. That may cause future problems for the housing market, as the number of homes being sold for less than what they are worth will increase, bringing down the value of surrounding homes.

Some professionals have estimated that if the moratorium on federally-backed mortgages does expire on January 31, approximately nine months of foreclosure cases will be filed in the month after the expiration. Clearly, that is going to create a massive backlog and judges will have to determine how they are going to deal with it.

The Backlog Will Not Compare to the Great Recession

The Great Recession of 2008 is still fresh in the minds of Americans and Floridians. Clearly, no one wants to experience that again. Fortunately, it is thought that the Great Recession will actually work to the country’s advantage over a decade later.

When the Great Recession occurred, the banks, courts, and homeowners did not know how to deal with it because they had never been through it before. Now, the process is expected to be much more streamlined because the courts and banks have learned how to deal with the foreclosure deluge.

In addition to streamlining the actual system, the Great Recession also cleared up many legal issues and questions that came up during that time. The Florida Supreme Court issued many opinions about topics that were hotly debated and the law has been clarified. That will also help to streamline the process and has cleared up many of the gray issues the state dealt with during the recession.

Foreclosure Moratorium Protection Is Temporary

The statewide moratorium on foreclosures that expired on October 1, 2020 certainly helped homeowners in Florida. There is also very little doubt that the moratorium on federally-backed mortgages has also helped millions of homeowners. However, regardless of whether the federal moratorium expires on January 31 or not, it is critical that homeowners remember that the protection these moratoriums provide is temporary. They do not relieve a homeowner of their debt obligations, and they must continue to make payments if they want to keep their home.

Some lenders are becoming more willing to work with borrowers that have accumulated debt. Certain lenders are spreading that debt out, which essentially increases the principal for the borrower but helps them in the short-term. Unfortunately, this approach does not work for all homeowners. Spreading out the total cost of the loan will not help borrowers that have missed several months’ worth of mortgage payments. A borrower must also show that they can generate enough income to continue making payments in order for a lender to work with them.

Our Florida Foreclosure Defense Lawyers Can Provide the Help You Need

If you are facing foreclosure, it is important to understand that there are defenses available. At Loan Lawyers, our experienced Fort Lauderdale foreclosure defense attorneys know what those are and how to use them to 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 and to learn more about how we can help.

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.