In short, there is a very high possibility we will experience another wave of foreclosures. Although it won’t be the same as the Great Recession of 2008.
The Cause of the Forthcoming Crisis
In 2008 the real estate market completely collapsed as a result of predatory lending. When the bubble burst a staggering number of homeowners were left in a precarious financial situation. For the most part the real estate market and homeowners have recovered. However, with the recent economic shutdown as a result of the pandemic we may begin to see an economic downturn as moratoriums are lifted and forbearances come due.
Who is at risk?
Florida’s economy relies largely on the travel and different service industries. When the country closed down for quarantine it primarily affected anybody and everyone involved in those industries. In Florida, that means a lot of people were affected. Then when you consider the ripple effect of the economic shutdown and the toll it took on other collateral industries, the number of people affected by the economic shutdown is significant. Consequently, many people that experienced a sharp drop in income opted to go into mortgage forbearance.
Foreclosure moratoriums and mortgage forbearance were federally mandated. This allowed homeowners that found themselves suddenly without income, opted to put their mortgages in forbearance until they could figure something out. Forbearance periods ranged from 3 months to up to a year.
Mortgage Forbearance Comes Due
It is important to note that mortgage forbearance is not mortgage forgiveness. What that means is that the amount that was not paid during the forbearance period must be made up. Homeowners, either pay back the forbearance amount in full and start paying their mortgages again normally or the modify their loan in some way.
It is safe to say that, there will be some homeowners that will not be able to resume paying their mortgages. If they do not they may or may not risk foreclosure. It all depends on the homeowner’s financial situation.
Foreclosures in Florida
In November 2020, Florida was ranked as per RealtyTrac.com’s data as the state with the most foreclosures in the United States. On Decmeber 11, 2020 ATTOM Data Solutions, RealtyTrac.com’s parent company, published Top 10 Foreclosed Housing Markets in November 2020. In that article three Florida counties appeared on the list.
Those counties were Duval County with the highest number, Palm Beach County with the second highest number and Broward County with the third highest number (Top 10 Foreclosed Housing Markets). This is a stark contrast from the same report in 2019 where not one county in Florida appeared on the Top 10 list (Top 10 U.S. Counties with Highest Foreclosure Rates in November 2019).
The report did note that foreclosure filings were down from the previous month but as federal foreclosure moratoriums are lifted and forbearances come due it is reasonable to anticipate that the number will rise. What is not completely clear is how much and when it may happen.
When The Wave May Crash
Based on available information it appears the first wave will crash on our shores late in the second quarter of 2021.
If it is assumed that an X number of homeowners started their forbearance when the quarantine began and they were in forbearance for 12 months, then their forbearance period will end in or around March 2021. Of that X number, Y will be able to resume paying their mortgages but Z will not. And when those that cannot pay default on their mortgage payments, they will have to begin considering what options they have.
Not all homeowners that default have to be foreclosed on. Many think that once you fail to pay you are doomed to foreclosure. But as was mentioned before it all depends on the homeowner’s financial situation. Some may have enough equity to sell and move, while others may have to consider short selling.
Couple this with foreclosures that were on hold due to moratoriums and whose final judgement date might fall around the same time that the defaults could begin and that wave may reach tsunami like proportions. But that remains to be seen, so stay tuned!
What To Do If You Are Behind On Your Mortgage
You may be reading this because you yourself are behind on your mortgage. If you are, I know, it can be particularly unnerving and consume you with worry. But panicking and worrying won’t make the problem go away. Ignoring the problem will not make it go away either and may possibly make it worse. So take a deep breath and prepare to tackle this problem head on.
After you have taken a deep breath work on finding a real estate professional that can help you assess your situation and understand the options you have.
This is not the end of the world, but rather a bump in the road of life. I assure you, you are not alone and there are options for exiting gracefully. So stay calm and take charge! Your future is in your hands.
“Top 10 Foreclosed Housing Markets.” ATTOM Data Solutions™, 21 Dec. 2020, http://www.attomdata.com/news/market-trends/figuresfriday/top-10-foreclosed-housing-markets-in-november-2020/.
“Top 10 U.S. Counties with Highest Foreclosure Rates in November 2019.” ATTOM Data Solutions™, 21 Dec. 2020, http://www.attomdata.com/news/market-trends/figuresfriday/top-10-u-s-counties-with-highest-foreclosure-rates-in-november-2019/
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About the Author
Désirée Ávila has called Oakland Park her home for over 33 years. In addition to publishing LivingInOaklandPark.com, Désirée has been featured in print publications, locally and abroad. Désirée was an award winning teacher for 10 years and has a doctoral level education in Educational Technology. She is currently a licensed Florida Realtor® and is committed to a high-level of professionalism.
Désirée consistently professionally develops herself and has earned several different professional designations and certifications in real estate including the PSA, e-Pro, AHWD, SRS, ABR, and SFR. She was also awarded the C2EX, Commitment to Excellence award by the National Association for Realtors (NAR). This award is given to Realtors® that distinguish themselves for their commitment to excellence in the real estate industry.
She is esteemed by her real estate colleagues and has consistently received 5 star reviews from her clients. Her philosophy about real estate is that being a Realtor® is a way of teaching and helping people, and in the process a real estate transaction may occur, that is to say her foremost priority is and has always been about helping others.
She is dedicated to her hometown of Oakland Park and works consistently on building and fostering a strong community. She is passionate about photography and loves to read books about history ; the more detail the better! In addition to English, Désirée is fluent in Portuguese, Spanish, French and Italian.
Visit her real estate blog at www.DesireeRealtor.com
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