Homeowners and Renters Need to Know What Happens when the Moratorium Ends

This article has been put off a few times waiting for the Senate to get moving through June and past July as enhanced unemployment benefits and federal protections against eviction and foreclosure expired, and now into August. Mea culpa. I should know better.

Up Against the Edge: What Happens when the Moratorium EndsThe tidal wave of evictions and foreclosures getting ready to swamp the housing markets is no joke, and the lack of federal… well… effort to keep people housed and prevent the economic chaos that would ensue is inexcusable. Political brinkmanship plays games with people’s lives to score political points, while ignoring the very real-world ramifications simply because as a senator or state representative, they do not personally happen to you. In the meantime, private equity is rubbing its hands in gleeful anticipation of yet another property grab that sucks up single family homes and turns them into rental units. Moreover, private equity firms often idle properties in order to keep housing prices high in high-demand markets.

Our governor, Ron DeSantis, has predictably Done Something. While he extended the eviction and foreclosure moratorium for the fourth time, he also made changes to it. I’ll break down those changes below.

1. Mortgage holders must have been affected negatively by COVID-19.
2. Only single family mortgages and renters are covered – no commercial properties, no multifamily.
3. Renters may now be subject to eviction proceedings for such things as property damage and other non-COVID related reasons. Only COVID-affected renters are covered.
4. Eviction and foreclosure proceedings are able to proceed up to “the final action” – a term that has no legal meaning but is assumed to be the judgment in a court of law that permits the eviction or foreclosure to move forward to its conclusion.

This is going to be difficult because the burden of proving that one is affected directly pandemic falls on the renter or homeowner. In the case of contesting an eviction proceeding, the defendant must hand over the entire amount of unpaid rent to the court for deposit in an escrow account until the case is decided. Since there is no right to counsel in housing court, this works out to ‘pay to play.’ Since the federal-level eviction moratorium in the CARES Act expired on July 24 and required landlords to give a 30-day notice, the effective earliest date for eviction is technically August 30.

Federal Level Shenanigans and a Possible Lifeline for Homeowners

It’s hard to say what is and what isn’t in the competing relief bills jousting around in the nation’s capital, but there are funds available via the CARES act to assist tenants in affordable housing, homeowners, and renters in private housing. Further, the FHFA has extended the protections for those holding FHA, VA, Fannie Mae and Freddie Mac mortgages until August 31 and offers ways for renters living in those properties to avoid eviction. Unfortunately, there are so many who need help that the system – much like our EDD – is overloading. It may take time to reach people who can help you, to hear back from them, or schedule an appointment. Please remember that they’re trying to help everyone as soon as possible, and try to be patient.

Getting Help

What happens when the moratorium ends is falling to a variety of nonprofits in Broward County, Miami-Dade, and Palm Beach, but there are ways to negotiate with your landlord or mortgage holder. Just as in the previous recession, you may qualify for a mortgage revision, or may be able to negotiate repaying your back rent. However, if you were having financial difficulties or even facing an eviction filed before the moratorium, what happens when the moratorium ends is even more urgent. It’s time to sit down with your finances and see what you can and can’t do with what you have on hand and what’s coming in.

Rule of Thumb

When you are making minimum payments on your debts and sometimes have to put daily expenses on credit cards, take a payday or car title loan, or borrow money to make ends meet, then it’s time to look at bankruptcy. If you consider that you’d be able to meet your rent and basic expenses on your current income, it might be time to consider filing for a Chapter 7 or 13 personal bankruptcy. For a business, a Chapter 7 or 11 bankruptcy should be considered when debts outnumber receivables, or a significant amount of your receivables are not collectable. What happens when the moratorium ends is that your bills are due and payable – and there may be no realistic way forward without bankruptcy.

How You’re Protected in Bankruptcy

What happens when the moratorium ends is like a car crash. It’s not the speed that kills you, it’s the sudden stop. In bankruptcy, the automatic stay halts all collections – rent, utilities, car note, credit cards, and even – in some cases – your student loans. Suddenly you have breathing room while your case is in progress. Bankruptcy isn’t simple, you’ll have meetings with your creditors, financial counseling, and obligations to meet, but once your bankruptcy is complete and discharged, you have no debts. It will take time to rebuild credit, yes, but many extenders of credit understand someone with a full income and no debts is a better credit risk than someone with a deck of credit cards who is just rotating their debts.

We Can Help!

Since our founding in 2009 Van Horn Law Group has made a specialty of handling debt, both with and without bankruptcy. We have the experienced attorneys and staff to help you through a complex and stressful time. Using a bankruptcy preparer or going DIY is risky, and doesn’t get you the legal expertise you need for a successful filing and discharge. Our offices in West Palm Beach, Miami, and Fort Lauderdale are open for business via phone and teleconference, and your first consultation is free. We’re here to help and will keep you in the loop from day one. Call or get in touch with us today!