“When do you need a foreclosure attorney?” was one of our highest performing videos last month. That has motivated me to prepare a series of blogs, guides and new videos to help consumers learn about their options and what they should be aware of when they are behind in their mortgage payments. This information is not intended to help someone represent themselves in a foreclosure action. That can get complicated and most people are not well suited to litigation. But this information should help a homeowner know what options are available, where to turn, timelines, and likely outcomes. All of that is necessary whether you are planning to keep a home or letting it go.
So why is this coming up now?
As of August 2023, many covid-19 related moratoriums have expired and have unplugged the pipeline of distressed properties. We are now at about 100,000 foreclosures nationwide, where in 2008 through early 2010 we had over 900,000 homes in foreclosure nationwide.
Keeping the number of foreclosures low for now, borrowers today are typically more qualified and less likely to default.
That being said, Florida has the 3rd highest number of foreclosures in the country. Texas and Calif hold the top two spots.
Home prices are leveling out, down in many areas of the country and recent home purchases may actually be under water where the borrower owes more than the home is worth. Homes are holding their value pretty well though due to the limited inventory of homes for sale.
Escrows are increasing with home insurance rates escalating. This is looking to be a serious problem for Florida homeowners.
Anyone unfortunate enough to have a variable interest rate, I’m sure you know it’s been going up rapidly over the past year.
The average 30 yr mortgage rate is 7.76% now.
Who wants to downsize or move when the new home will have a much higher mortgage rate? Many are afraid to make a move and give up low 3-4% rates for rates that are almost double. But at the same time, the current home no longer fits their needs or they simply cannot afford the payments any longer.
As a practical matter, what does all this mean:
Loss mitigation departments are preparing for more defaults, more foreclosures. Thankfully, there is no expectation of a downturn similar to that of 2008 which was enormous, particularly in states such as Fla.
But we do have a higher cost of living without wages to match. Covid savings are deteriorating. Student loan payments are re-starting. People are beginning to borrow from 401ks just to make ends meet and credit card delinquencies are at an all time high. Vehicle loans (both payments and interest rates) are outrageous. There isn’t enough money left over to make a full mortgage payment.
What is most likely to cause a foreclosure in Florida?
Wages not keeping up with the increase in cost of living.
Insurance premiums are going up two or three fold.
Jacksonville and Orlando are feeling the pressure more than the Tampa Bay area.
High interest rates have locked home sales and new mortgages.
Why can an attorney help with all this?
First, you may need an objective viewpoint as to how to weather this particular storm. Do you let the house go, seek a modification or perhaps use a bankruptcy to discharge other debt and let you catch up on the mortgage payments to avoid a foreclosure? These are just some of the questions that we can help you answer.