What are the Consequences of Foreclosure in Florida?

Two Florida Democrats in the House of Representatives proposed a bill recently that would provide relief to renters and homeowners in the event of a natural disaster. The protection is important, as foreclosure has many consequences for homeowners.

The first repercussion that comes to mind, of course, is the fact that you will lose your home. Unfortunately, that is only the beginning and there are many other harmful impacts of a foreclosure, as well. It is for this reason that the new legislation is so hopeful for homeowners, and why you should speak to a Florida foreclosure defense lawyer any time you fear you may lose your home.

The Federal Disaster Housing Stability Act

This week, U.S. Reps. Val Demings and Al Lawson championed a bill that would enact an eviction moratorium automatically for all rental properties, and federally-backed mortgages in the event of an emergency. Demings introduced the Federal Disaster Housing Stability Act, which would automatically freeze evictions from rental properties and foreclosures on federally-backed mortgages in the event that the federal government declared an emergency.

The moratoriums would only affect the geographical locations included in the declaration of the emergency. The moratorium for renters would protect them for at least 90 days, while homeowners would have six months of protection from foreclosure.

The Act has been touted as a way to help people during one of the worst times of their lives when a disaster strikes. Given that hurricanes and other devastating tropical storms are not uncommon in Florida, it would eliminate the risk of someone losing their home during an already difficult time. It would also allow thousands of homeowners to avoid the consequences that come with a foreclosure.

Losing Your Home

Your home is much more than just a house. It may be the place where you raised your family, became part of a community, and made memories. You were likely hoping to make many more. Losing your home is devastating, and it also has a financial impact. You will also lose any equity you have in the home, which you have likely spent years building. Unfortunately, losing your home is not the only consequence of foreclosure.

Finding a New Home

Not only will you lose your home during foreclosure, but you may also face difficulties finding a new place to live. You will not be able to purchase a new home immediately after the foreclosure process, particularly if you need a federally-backed mortgage. Most people find they have to rent a home at least for a year or two after foreclosure, but landlords are sometimes hesitant to rent to people who have just been through a foreclosure. Although finding a place to rent is not impossible, you should prepare for higher security deposits, and you may have to pay the first and last month before you move in.

The Impact on Your Credit Score

A foreclosure will cause your credit score to take a big hit, and it will start even before you lose the home. When you miss mortgage payments, your credit score will likely drop anywhere between 70 and 135 points. If the foreclosure proceeds and you do lose your home, your credit score will drop even further, anywhere between 85 to 160 points. Even if your credit was perfect prior to missing mortgage payments, your credit status will still drop to fair or poor.

A low credit score will hurt you for some time to come. You may be denied loans or credit cards, and if you are able to take out credit, you will pay a much higher interest rate for it, costing you much more in the end.. Fortunately, your credit score is updated every month so over time, you can start to rebuild your credit.

The Financial Impacts

No one goes through a foreclosure when they are in a solid financial position. However, you will also face additional financial consequences associated with the foreclosure process.

According to the Florida foreclosure laws, this is a judicial foreclosure state, which means to foreclose on the home, lenders must file a lawsuit against you and take you to court. If the judge rules in the lender’s favor during the trial, the lender may then pursue a deficiency judgment against you. This will mean that you are responsible for paying the remaining balance on the home. The lender may even pursue an order for wage garnishment or bank levy to make sure you repay the debt.

It is important to work with a foreclosure defense lawyer in Florida who can help you avoid deficiency judgments by reaching an agreement with the lender. Still, even if an agreement is reached, the discharged debt is considered taxable income, which means you will have to declare it and pay taxes on it. A lawyer can also advise you on ways you can avoid these consequences.

The Emotional Impact

Losing your home is devastating, and the foreclosure process is often long and exhausting. You may also have to significantly downsize, and you may face a social stigma afterward. Even if you do not face any backlash in your personal life, you may feel embarrassed or ashamed about losing your home. It is important to remember that foreclosure can happen to anyone, and it does not mean that you are financially irresponsible or bad with money. While keeping these things in mind is helpful, a foreclosure is still likely going to take a big emotional toll on you.

Our Foreclosure Defense Attorneys in Florida Can Help You Avoid These Consequences

While federal legislation may provide protection for homeowners facing foreclosure during difficult times, a Florida foreclosure defense attorney can also advise on possible legal remedies. At Loan Lawyers, we have helped thousands of Floridians stay in their home, and we will put our experience to work on your case, too.

Whether you looking to stop foreclosure in Hialeah, or have just received notice of foreclosure in Ft. Lauderdale, we are here to fight for you.

Contact us today by calling (954) 523-4357 or by contacting us online to schedule a free consultation with one of our skilled attorneys and to learn about the available defenses to foreclosure.