Despite Record Sales Numbers in South Florida, Foreclosure might be Looming
One of the silver linings in this pandemic is that banks are not defaulting mortgages. However, in the next 6-12 months, the pandemic-induced recession could lead to massive foreclosures in south Florida.
One of the critical issues that will affect mortgage foreclosures in South Florida is the job market. Palm Beach County's unemployment rate rose to 11.6% in July, up dramatically from 3.6% during the same month in 2019. The state's unemployment rate was 11.3% in July, also way above the 3.1% rate in July 2019.
"The extremely ... high level of unemployment remain a concern, and are indications of the challenges many households are facing,” said Mike Fratantoni, Mortgage Bankers Association.
The CARES Act provides homeowners affected by the pandemic to forbear their mortgage payments on federally backed loans. The forbearance typically provided in 3-month increments can be extended up to 12 months. Lenders cannot initiate foreclosure proceedings during the forbearance. Lenders that hold non federally backed mortgages have also been working with borrowers to avoid default. The Mortgage Bankers Association estimates that 3.6 million homeowners nationwide are in forbearance plans.
There were 621 commercial and residential foreclosures filed in Palm Beach County from March to July, compared to 1,462 during the same period in 2019.
The underlying economic conditions are only delaying the inevitable massive foreclosure filings next year. Similar to 2007, the expected onslaught of foreclosures could result in transfer of home ownership from individuals to investors, who then convert the homes to rental investment properties.
Unlike 2007, the cause of mortgage default will not be based on poorly underwritten mortgages, but because homeowners are unable to find jobs due to the reduced economic activity.
Homeowners should be proactive if they don’t feel as if they will be able to secure a job or if they believe they will not be able to afford their mortgage payment when the forbearance expires. The Law Office of Eleni Noble Zarbalas, PA worked with hundreds of Florida homeowners in helping them either defend a foreclosure action for as long as possible, discussing options such as a mortgage modification or in selling the property prior to a foreclosure judgment. Discussing a homeowner’s options during a 30 minute complimentary legal consultation can provide some peace of mind in discussing all of the options that are available given each individual's unique circumstances. By being proactive, Florida homeowner’s can preserve their credit and avoid a foreclosure judgment.
If you’re working with your lender on a forbearance program, find out if the unpaid mortgage payments will be added to the end of your loan or if the total amount is due all at once when the forbearance period ends.
This economic downturn and the migration from the Northeast, Midwest and California has created a seller’s market here in Florida and especially in South Florida. There’s never been a better time to sell as record sales are taking place.
Feel free to contact our real estate law firm right here in Boca Raton if you are interested in a complimentary Comparative Market Analysis and assistance in selling your Florida home since Eleni Noble Zarbalas is not only a real estate lawyer but also a licensed Realtor in Florida.
Our inhouse Title Company can also prepare a preliminary Closing Statement so that you can review the costs of selling your home.
Simply call or email, or use our online contact form on our website to get in touch with us!
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