The Foreclosure Moratorium has been in place for the past year and a half. It just ended in July 2021. In this video, I ask Matt Weidner, a real estate attorney from Florida, when he thinks the foreclosures will resume and we discuss what this means for the homeowners in forbearance and the market in general.
Resource
Matt Weidner, Foreclosure Defense Attorney – Law Firm
Show Notes
The foreclosure moratorium expired at the end of July. What’s next?
[0:00]
Hello, everyone, my name is Jana Christo. I’m the publisher of Rentce.com. Today I’ve invited Matt Weidner, a real estate attorney who is going to explain what the expiration of the foreclosure moratorium means and when will the foreclosures resumed?
First, Matt, thank you for doing this because I know you’re busy.
The foreclosure moratorium expired at the end of July and a lot of people are wondering what happens now? When are the foreclosures going to resume? I see a lot of headlines that we should expect a tsunami of foreclosures, what do you think?
The Cares Act and FHA Guidance to Servicers
[1:00]
I have been predicting thinking that a tsunami was coming for a year now, it’s important to note that I did a blog post on May 26, 2020. That’s when the Federal Housing Finance administration released their guidance that said, we’re giving forbearances to anybody that requests it. And it just blew my mind. Because if you read that guidance, it’s the scope of it was so broad.
And when you think about where we were in March 2020? The 98% of the people in this country hadn’t heard of COVID? Nobody, maybe one paranoid percent thought that this was something real. And I had just been sensitive to us.
We pulled our kids out of school, early, late mark, I’m sorry, late February, and there were people who thought we were nuts. But I knew people over in China, and I knew people in the military, and I was like, something’s going on here.
But when I saw that guidance, March 26 2020, and I went, Oh, my God, the federal government is telling the servicers in an impact that has 10s of millions of people, consumers don’t have to pay their mortgage. I went something’s going on here, right?
So then you expect it goes a couple of months, three months, six months, whatever. The idea that we’ve got a full 12 months, and now it’s gonna be another 12 months before we’re doing, which is mind-blowing. And keep in mind that, just like the eviction, moratorium, right, it expired, but then boom, yesterday, Biden extends it looks like it’s in October now.
[2:52]
Do we have anything new about the foreclosures? Are there any extensions? I know there was a rule coming from the Consumer Finance Protection Bureau. Is that in force now?
No wave of Foreclosure Until 2022
[3:08]
Yeah, on the servicing guidelines, is what we look to it, I just wanted to type it in. More moratorium ends on July 31, 2021. Um, but the detailed protections in there, I think, still give 120 days after that, before we’re going to see any meaningful foreclosures. Because what the servicers are required to do under the cares act is call outreach over and over again, I think it says they got to do 90 days’ worth of extensive outreach before they can even start foreclosure. So as a practical matter, I don’t think that you’re going to see any wave of foreclosures until 2022.
[4:03]
Yes. And I have spoken to a lot of people who try to do forbearance. And what I’m hearing is that they’re getting letters, they’re responding with applications, some people over 10 applications with no meaningful response. I thought that we’re over that.
Streamline Forbearance and the Cares Act
[4:29]
So one of the requirements of the cares act was what they called streamline forbearance, you’re supposed to consumer supposed to be able to pick up the phone call their service or Bank of America wells, whatever it can say COVID has impacted my income, right? And I want a forbearance and the servicer is supposed to immediately give the forbearance. Okay. I think they’re complying with that largely by my anecdotal experience that It’s working that way. But one interesting thing is there’s such a tiny number that have taken advantage of forbearance.
Really? Yeah, I mean, I’m, I’m surprised. Only 5% were in forbearance 2.1 million mortgages. That’s a tiny, tiny bit.
[5:20]
I’m really surprised, because, you know, so many investors in landlords complaining that they’re in trouble. And at the same time, they’re not taking advantage of this. So I was expecting to, you know, we have more investors who are more impacted by the evictions.
Because again, under the cares act, it’s specifically in the servicing guidelines, they call it, streamline forbearance, picks up the phone says to their bank, I can’t make my payments, COVID is hurting me. They’re supposed to immediately stop requesting payments, and then give up to 12 months.
So let’s say you know, August 2021, to August 2022, no payments, no more taxes, no insurance, and then whatever that accumulated backlog is put on the back end. Okay. It stretches it out over 40 years. I mean, that’s mind-blowing the implications for individual consumers, you’re experiencing a little bit of financial pain, that’s a huge amount of stimulus.
Would the Banks Start Foreclosing and Why Not?
So what happens now, as this expires as the foreclosure would the banks start foreclosing?
[6:55]
No, because of the servicing guideline, the cares act, the servicing guideline prohibits them from moving quickly. So even though it may expire July 31, the amount of the call touches but the amount that the service has to touch the consumer call them, reach out to them trying to work with them. I want to say it’s 120 days, I’m just gonna look at it right now. But, um, that’s a big amount of time.
And I will just also tell you, anecdotally, I talked to all of the plaintiffs’ law firms in the state, the big bank, law firms, none of them have ramped up for any referrals, which is astonishing. If if they were, we kept expecting new, there’s going to be this way, who’s going to be this way. But the law firms don’t have the lawyers don’t have the computers don’t have the office staff. Because they’re getting their communications from Wells Fargo, Bank of America, see Chase in those banks are not telling or telling them do not hire people yet. Don’t get ready, because we are not going to be sending you waves of foreclosures.
[8:19]
That is interesting. You know, what I’m reading is that 3 million homeowners are behind on their mortgages. This is just sound like, it’s not correct. To me, it’s a lot more than that, from, you know, people that I know from what I’m hearing from people, it just doesn’t seem correct, then I think we’ll be surprised and see more, then. Probably You’re right, that is not gonna be now.
[8:56]
I am honestly flabbergasted at the numbers that I read, where, for instance, I read that there are only 2 million people that are in forbearance when 50 billion could take advantage of it by simply picking up the phone and call the bank and say they don’t want to make a mortgage payment. You could do that.
[9:22]
Do you think they’re not reporting it correctly?
[9:29]
I believe they’re reporting it correctly. I just there’s probably Yeah, I think he did a pretty good job of marketing this No, you know what I mean? Like it’s, it’s a quite frankly, if, if you as a consumer haven’t figured it out, I mean, I do. I can find it instantly. I there’s another interesting thing though. So put the mortgage reporting on one side, but also look at the other national reporting and frankly, international reporting, record-high savings of consumers $3 trillion, I think they say in the United States, so all the stimulus money, all the unemployment, all PPP, everything has produced a higher savings rate than we’ve ever seen in this country since World War Two. And I think a lot of people are making their mortgage payments. Um, again, it boggles my mind, but that’s the case.
Homeowners Should Work with Their Bank if They Are Late on Their Mortgage
[10:26]
My next question is if a homeowner is get something from the bank, I mean, you saying it’s not going to be immediately but what is what should they do? What should their next step be?
[10:43]
Start communicating with the bank. Because unlike in prior times, we had a crisis. Now, there are very specific requirements that the banks engage in communication of documents as communications, and the banks are not authorized to file foreclosure until they can document that they had these communications with the borrowers.
[11:08]
Okay, if that does not work, if nothing comes out of this?
[11:16]
Only then is I read the servicing guidelines only after they have you exhausted all these communication efforts is the bank authorized to file foreclosure. But I don’t see that happening until 2022. In any large numbers, I mean, there’s some here and there, but quite frankly, I look here in the Tampa Bay region, and I see almost no foreclosures at all, which is just boggles my mind. I can’t wrap my brain around it.
[11:47]
That’s, that’s interesting, because I also looked at the numbers, since I’m in Tampa Bay too. I also looked at the numbers and the evictions as well. And I did not see any increase in evictions, either. You know, if we don’t have this supply of homes on the market, if there are no foreclosures coming on the market, then I don’t see what’s going to lower the prices of real estate.
[12:26]
Yeah, I gotta tell you, I just did a search here while we were talking. And it just blows my mind to find that there are only, like, 400 foreclosures in total filed in all of 2021. Which is just mind-boggling to me, right. And yet, here we are.
Are Foreclosures on Commercial Real Estate Increasing?
[12:51]
What about commercial real estate?
[12:54]
Now this includes commercial, it just doesn’t make any sense is that? You know, I get it if the federal moratorium says don’t file on homeowners. There’s still a vast number of investment loans out there trust loans and things like that, that don’t have any moratorium. They don’t have any restrictions on them, that they could be filing left and right. When I talk to the plaintiffs’ lawyers, they acknowledge that yes, our clients could be filing but they are choosing not to file. Mentioned. It’s mind-boggling.
[13:30]
Yeah, because they don’t want to collapse the market. That might be one explanation for it.
[13:40]
If you were a private investor, then I would advise you as an attorney file, now you’ve got the right to file, you got to file now. Wait, you’re still not doing it. But you know, like, as an expert, there’s another example and it’s this, you know, the tenant issue.
Eviction Moratorium and Rental Assitance
I’ve read recently that, that in Florida, we’ve used only 2% of the federal money that’s available to keep people in their houses the tenant rent, they eat, can’t explain it. I just had a reporter on the phone. And I thought, well, this is gonna be like the unemployment situation where you can’t get somebody on the phone, you can’t fill out the forms or whatever. So I call the 800 number. And, you know, very quickly, someone answered the phone right there ready to take my call. I’m ready to get any rental assistance.
[14:36]
I‘ve heard, and this is anecdotal, that some landlords are refusing. Yep. I wonder if that’s true. Because I’m hearing this from tenants. Um, I don’t know why exactly, because they can pay you the whole amount. I mean, I think they can pay you up to 12 months I think. So, I don’t know, why would you refuse help?
[15:04]
It makes no sense. If so you’re the landlord, you can get x your own y. If you don’t take x, you’re not getting anything, anything else in the air with these tenants, you know, they will have been in there two years now without making rent payments. Um, and it just, you know, when you walk away once you can live for two years for free and not make a single penny, why wouldn’t the landlord cooperate with the tenant to go and get this federal money, put it into the landlord, and they I just can’t wrap my brain room?
[15:37]
Well, we’ll see. I mean, it’s interesting, because I followed the evictions, I just look at the numbers. And I’ve been following the evictions since April, last year. And I really don’t see any, even when it expired in they had a very short period of time where they could have filed, they didn’t I mean, there was just very small uptick of evictions. And this either is not such a big problem. Or because otherwise, why not use the help that’s available?
[16:17]
I think I heard. Well, I, I saw that there were only like, 34 that were filed in that period after it expired. And yeah. And again, I think we have to look back at the stimulus money that’s out there, you know, this money that’s in people’s pockets. Um, maybe they’re paying the rent. I also know other big commercial landlords, residential ones. You know, when this started, I thought, Oh, man, you’re in trouble. You know, they’re not gonna be paying rent. And especially with this eviction moratorium, people know, they don’t have to pay into certainly not going to pay it all. Even with an eviction moratorium, the default rates were not much different than what they had been prior to COVID, which just, again, boggles the mind.
[17:05]
I know, I was very surprised because I was expecting a market crash and completely the opposite happened. And I have an appraiser who’s a friend of mine. And he always kind of reminds me always look at the numbers and don’t make, you know, personal judgments and opinions before you see any kind of meaningful uptick in some direction. And that’s the only thing because I’ve been wrong so many times.
Well, those are my questions. And this was very helpful. It’s just confirmed what I was reading. And I just wanted to hear it from somebody who works day in and day out and does this for a living. So Matt, I’m going to include your information in the post, I’m going to transcribe this so everybody can read it. If they can watch it, then it’s going to be on our YouTube channel. And I will include your information too, for people to contact you.
And I also wanted before we conclude, I just wanted to ask you because I was looking at your, your YouTube channel, and you do a lot of work with code enforcement. And I’m super interested, I want to do another interview with you about that, too, because I’ve had a couple of cases when I was doing rehabs. And so I just wanted to ask a couple of questions, then, you know, further down the line when you have time.
[18:51]
Let me know it’s a fascinating opportunity nationwide, for people to be paying attention to is literally billions of dollars that are owed. It’s just waiting to be collected. And then the locks you know, these locks that are there ready for people to hold on to.
[19:09]
Yeah, very interesting. So if somebody is interested in that, please subscribe to my channel. And we’ll do another interview on that. Matt, thank you so much for doing this and I’ll talk to you soon, I guess. Bye-bye.
