Florida Foreclosures Sales Are (Probably) Coming Very Soon
In the wake of the COVID-19 pandemic and its crushing destabilization of the American economy, you would expect mortgage foreclosures to be falling from the trees like during the crisis of the last decade. Instead, the federal government stepped in back in March with its CARES Act (Coronavirus Aid, Relief, and Economic Security) and provided out-of-work employees with emergency unemployment and mortgage protection benefits.
If you’re someone who thrives in a distressed real estate market, the CARES Act has probably dampened your outlook — but it may be time to turn that frown upside down. Although foreclosure rates in Florida slumped in the first half of 2020, the second half is shaping up to be a buyer’s market due to the newly minted recession.
So, What’s Changed?
The CARES Act was signed into law on March 27, 2020. That same day, the state of Florida recorded 717 new cases of COVID-19. Fast forward to July: The virus surged to over 10,000 new cases daily for multiple days.
While the pandemic shows no signs of coming to an end anytime soon, the same cannot be said of some benefits offered through the CARES Act. Floridians who found themselves out of work due to COVID-19 have been receiving a $600 weekly federal enhancement to state unemployment benefits aimed at fully replacing the salaries of people who lost jobs amid the pandemic. That benefit is scheduled to run out on July 31st, 2020.
How the Coming Months May Pan Out
Thanks to a perfect storm of surging virus cases coupled with expiring unemployment benefits, economists are warning of a tipping point in the housing market.
Early forecasts of a 20-30% mortgage forbearance rate haven’t even come close to fruition due to the government’s actions. Instead, the forbearance rate was 8.6% of all active mortgages in June’s final week, according to Black Knight. Will that translate to a 5% or more foreclosure rate?
“The threat that forbearance will transition to foreclosure has regained power because the number of COVID-19 infections is increasing and the CARES Act unemployment insurance benefits will expire at the end of July,” the Atlanta Fed economists said.
Foreclosures are coming in Florida. The eviction moratorium will expire as well.
While this is troubling news for most homeowners, it provides opportunity for investors looking to add prime real estate properties to their existing holdings. More layoffs coming after the resurgence of COVID-19 will force states to re-examine their plans to reopen, and homeowners will turn to the government for funds that might no longer be available.
Will Homeowners Get Additional Relief?
While the House of Representatives passed a bill to extend the beefed-up unemployment payments through January, the Senate left town for a two-week vacation without voting on additional virus relief.
This has led to heavy speculation of a rise in foreclosures. Those of us who are stuck with tenants unable and unwilling to pay rent because of the moratorium on eviction will soon have recourse. Many investors have been feeling a crunch, but that is slated to change in the coming months.
Because of the financial crisis, about ten million American families have already lost their homes. This is only the beginning. As the pandemic drags on, expect more homeowners to default on their payments. This is not ideal for anyone with a heart, but as many of us know, you cannot simply have free housing and maintain any semblance of a free market. The market needs to correct and heal.
Prepare Now for a Flood of Foreclosures
A potential tsunami of foreclosures is coming. You will need to be ready for it when it happens and make sure you are on the right side of that wave. With the moratorium on evictions and foreclosures ending July 31, will our governor let it expire? Or will he step in at the last minute and extend it for another month? Our leaders cannot keep kicking the can down the road forever, and they know it.
2 thoughts on “Florida Foreclosures Sales Are (Probably) Coming Very Soon”
With Florida being a Judicial state, and with the courts being significantly backed up from all of the Covid closures and mayhem, I would not expect to see such a wave of foreclosures hit until at least 2nd Qtr 2021. NORMAL Foreclosure process in FL can easily take 24 months to 60+ months. So with the world being upside-down from Covid and courts being significantly backed up, judges being very liberal in granting defendants more time in the case, these foreclosures could take a long time to work their way through especially if a good defense attorney is involved in which any motion could tack on 3-6 months as court calendars will be backed up. Also if more govt mtg rescue programs are enacted then this will tack even more time on to delaying all of the stated above process from starting.
You have a point, Kevin, however, I have noticed in the Civil cases and quite complicated ones at that, the County Court system is starting to use video conferencing to ease the burden of creating a backlog of cases.
Very recently I was involved in a complex property lawsuit with a lot of argument back and forth,
Depositions were taken, etcetera and the latter part of this process was all done by video conference so much so that last week a judgment was announced and barring appeal this lawsuit will be done and dusted.
Speaking with several attorneys last week, collectively, they felt the local judicial system is comfortable with video conferencing and that it will be employed further, especially in the foreclosure system.
As to Statewide liberalization of judges favoring defendants in foreclosure judgments,
I would say that I would agree with you except that Florida has proven the exception in many regards to this notion. Still, notwithstanding this, I will admit that on a Federal level, the possibility of ‘lifeboat’ rescue packages for those folks who are struggling with mortgage repayments affected by the Covid-19 situation is a genuine possibility. Still, I would suggest it would only apply to Fanny Mae, and Freddie Mac backed notes.
Financial institutions will not allow a 2009 situation again, t0o much lobby power, so although I suspect some help for those struggling, it will not be Carte Blanche.