Consumers have strong responses to ongoing threat of foreclosure

Consumers have strong responses to ongoing threat of foreclosure

There's an increasing trend in the country for a decline in the rate of delinquencies and foreclosures as compared to this period last year. The national mortgage delinquency rate, meaning borrowers at least 60 days past due, went down by 26 percent in the second quarter, as compared to same quarter last year, according to the TransUnion credit information service. Florida, however, still has the highest delinquency rates, at 9.9 percent, in the country. This means that the threat of foreclosure continues to loom over homeowners in the Sunshine State.

Rising prices and improved employment figures are helping the recovery. Also, there can be some confidence over the fact that mortgages issued since 2010 are performing well. But the momentum has not been strong enough in Florida to quickly reverse the deep economic deflation of the past several years. Florida in fact still has the biggest foreclosure inventory levels at 8.6 percent. 

To keep a clear perspective, it should be noted that foreclosure and delinquency levels in Florida are much lower than they have been in the recession years and yet much higher than before the recession. During 2000 to 2006, completed foreclosures nationwide averaged 21,000 per month, versus 55,000 in June 2013. According to TransUnion analysts, it may take a few years for delinquency rates to reach normal levels. Furthermore, at this point in time with foreclosure assistance programs more solidly anchored in place, there will presumably be fewer foreclosures in favor of a loan modification or other foreclosure alternatives.

In Florida, some of those other alternatives include filing a defense to the foreclosure complaint. Your counsel can respond with any strong foreclosure defense that you may have. Also, you can speak with your counsel regarding whether the threat of foreclosure should be responded to by a consumer bankruptcy filing. A bankruptcy will automatically stop the foreclosure pending your preparation and filing of a Chapter 13 Plan to clear up the arrearages. Thus, along with short sales and modifications, the mechanisms are available to prevent a foreclosure from being consummated.

Source: 

The New York Times, "Delinquencies on the Decline," Lisa Prevost, Aug. 15, 2013