Homeowners with federally backed mortgages received one final lifeline in late June, when the federal government extended the foreclosure moratorium until July 31, 2021. This extension gives affected families the opportunity to either get current on their mortgage by the deadline or enter a forbearance program, for which the enrollment period was extended until September 30, 2021.
However, despite this moratorium, national data shows that properties with foreclosure filings in May 2021 were up 23% from the year before, with foreclosure starts up 36% from the previous year. When protections expire, it is unlikely that lenders will continue holding off on foreclosing on properties where homeowners are simply unable to make their mortgage payments. Distressed homeowners need to take a hard look at where they stand and decide their best course of action now before their lender decides for them.
California is home to some of the nation’s most expensive housing markets. In the years leading up to the pandemic, an imbalance between housing supply and demand drove home values up even higher. It is not unusual for housing costs for California homeowners to exceed the recommended 30% of household income, according to the California Budget and Policy Center, and many households rely on two incomes in order to be able to afford a mortgage. This cost burden made California homeowners especially vulnerable when COVID-19 shutdowns resulted in job losses and underemployment.
While the California economy is beginning to recover, with 104,500 jobs added in May, the state has only replaced 51.8% of the jobs lost since the beginning of the pandemic. The rate of joblessness is not even across the state, either; Los Angeles reported a seasonally adjusted unemployment rate of 11.1% in May, higher than the state average of 7.9%. For some families struggling with the economic impact of a long period of unemployment, this recovery may be too little, too late.
Homeowners struggling to make their payments should not assume that a standard foreclosure is an inevitable result if they can’t get current immediately. In fact, there are a number of other possibilities, including a loan modification, forbearance, or repayment agreement, depending on your circumstances. If there is no reasonable way to continue paying your mortgage, it may be that a strategic foreclosure may be the best option for your family. No matter what you decide to do, you must act as early as possible, as more options are available before the foreclosure process has advanced.
Just as importantly, you should enlist an experienced foreclosure attorney to help you negotiate an agreement or guide you through the foreclosure process. At Sternberg Law Group, our attorneys are ready to help you frankly evaluate your individual situation, lay out your options, and pursue the course of action you choose. We will give you an honest assessment of your situation and work on your behalf to secure the best possible outcome. Facing a foreclosure is stressful and expensive—expert legal representation reduces the expense and the anxiety compared with trying to handle it alone.
Since 2009 and the aftermath of the Great Recession, Sternberg Law Group has been representing Southern California families at risk of losing their homes. We offer a complimentary initial consultation to anyone needing to learn more about their options to deal with a potential foreclosure. We serve Los Angeles and Orange Counties, and our services are available in both English and Spanish. Our experience in the range of choices available for financial relief ensures that we can advise you on the pros and cons of every approach, giving you the information you need to decide what option is right for you.
Don’t wait until your choices are gone. To find out more about what Sternberg Law Group can do for you, or to schedule your free initial consultation, contact us here.
The cost to handle a foreclosure can be found here
Second mortgage foreclosure guidance can be found here