With the federal moratorium on evictions and foreclosures set to expire, housing experts are predicting a new foreclosure crisis in South Florida.
The crisis began for many last year as COVID-19 forced thousands of Floridians out of jobs. It was not until April 2020 when the Trump Administration and many states hit the pause on all foreclosure and eviction proceedings on federally backed loans. States and the federal government extended these moratoriums throughout 2020 and into 2021. These extensions allowed individuals to remain in their homes and postpone the foreclosure process.
Federal moratoriums offered through three federal agencies, including the Departments of Housing and Urban Development, Veterans Affairs and Agriculture, and the Federal Housing Finance Agency, which oversees both Fannie Mae and Freddie Mac lending programs, are scheduled to expire finally on July 31.
With foreclosures expected to begin again in the second half of 2021, housing experts fear that the courts will now be flooded with a wave of foreclosure cases that will not only clog the courts but will also depress the real estate market for South Florida.
Members of the Miami-based nonprofit, Floridians for Honest Lending, say they worry that with property values going up, banks will have a big incentive to proceed with filing foreclosures. As the courthouses will likely be flooded with cases, pressure will increase to clear these cases from the books, which means that homeowners could be pressured to settle when the otherwise would not agree to do so.
A similar situation was seen in 2008 where the number of cases hitting the courts led to what experts called “rocket dockets” or courts pushing for clearing as many cases as possible, leaving homeowners at the short end of the stick.
After the 2008 recession, reforms were passed to prevent this situation from occurring and ensuring that predatory lending practices were barred, and homeowner rights preserved. Experts believe that the upcoming situation will put these regulations to a true test.
Normally, these cases are either resolved by a short sale or auction, or the owner can work out an agreement with the lender, including a loan modification. The rocket-dockets that were seen in 2008 tended to discourage any type of agreement that would otherwise benefit the borrower in resolving these cases. This risk goes up when prices are up, and banks can get more money from seeking out new customers instead of working with existing ones.
Currently, 2,110 foreclosure cases are pending in Broward County. However, pending cases only tell part of the story. Thousands of other cases have yet to be filed due to the ongoing moratoriums. Thus far in 2021, 468 new foreclosures have been filed in Broward County, which pales in comparison to the 1,365 filings that were pending at the same time in 2020. Miami-Dade County has seen 650 new cases filed by the end of May 2021, as compared to the 2,500 that were pending at the same period in 2019.
Cases are expected to begin coming in after the moratorium ends August 1. In the meantime, homeowners struggling to pay their bills are still recommended to work with their lenders on forbearance measures or loan modifications.
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Choosing the right attorney can make the difference between keeping your home or losing it in foreclosure. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure, please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com