Florida’s Foreclosure Moratorium Has Ended. What Now?

Florida’s moratorium on residential foreclosures expired at midnight on Sept. 30, 2020, when Gov. Ron DeSantis did not extend his previous orders that stopped both foreclosures and evictions that were related to COVID-19. This ends a long period of uncertainty for lenders and landlords that began with the governor’s first order in April.

Since personal bankruptcies stop foreclosures, it’s likely we will now see an uptick in those filings as people try to save their homes. At the same time, foreclosures are likely to get caught up in the logjam of all types of cases in the courts. The average uncontested foreclosure in Florida takes about a year to work its way through the system – and may take months longer while the judicial system recovers from operating on reduced schedules during the COVID-19 emergency. Evictions remain on hold, following a Centers for Disease Control and Prevention order that forbids forcing someone out of their home through the end of the year if they can prove they were unable to pay their rent or mortgage because of the pandemic.

Uncertainty Held Up Foreclosures for Much of the Year

For much of 2020, lenders were unsure what actions they were allowed to take against borrowers who defaulted. The confusion began with the governor’s first order on the subject in April, which suspended and tolled mortgage foreclosure actions for 45 days, as well as residential evictions where tenants were unable to pay rent because of COVID-19. The order, subsequently renewed, added that tenants still were expected to make mortgage and rent payments.

Lenders were unsure what this broad and sparsely worded order meant. Did it ban new foreclosure filings or only taking final action on foreclosures? How would someone know or prove that the inability to make mortgage payments was due to COVID-19? Out of an abundance of caution, most lenders stopped all foreclosure actions. Courthouses across the state were closed or only partially open for much of this period, so they could not have effectively advanced foreclosures even absent the order.

On July 29, DeSantis clarified the moratorium with a new executive order. This time, more precise language added that he was suspending “final action at the conclusion of a mortgage foreclosure.” Being impacted by COVID-19 was defined as loss of a job or income. The order also said evictions unrelated to nonpayment of rent could proceed. From the renter or mortgagor’s standpoint, the hammer blow was the concluding clause of the order that said all payments, including tolled payments, are due when the individual is no longer adversely affected by the COVID-19 emergency.

Foreclosures could again be filed and could proceed all the way to final judgment. And with no other relief, it meant that financially stressed borrowers would be unlikely to catch up on thousands of dollars of missed payments. It was clear that the moratorium was only a speed bump in the foreclosure process that would not alter the inevitable outcomes for those in default.

While lenders knew that foreclosures could again be filed and move through various stages, it still was unclear what the governor meant by “final action,” and different judges came to different conclusions. Some interpreted the order to mean a certificate of title could not be issued, while others said a title could be issued but not a writ of possession. Again, rather than create additional litigation, many lenders didn’t press the issue, knowing that the outcome still remained certain when the order was lifted.

The Way Forward

While the moratorium is history now, the courts will be slow to catch up with foreclosures and all actions. There is a backlog of almost 1 million cases of all types in Florida courts, and the judiciary is seeking extra money from the legislature to clear it. Most of the foreclosures in Florida that are approaching final judgment now were filed before the pandemic. COVID-related foreclosures didn’t move into the pipeline before DeSantis’ July order, which means that even if the courts find a way to address the backlog, these foreclosures are unlikely to get to final judgment before summer of 2021. If the economy doesn’t recover soon, it’s possible we’ll see a wave of foreclosures in the months ahead, which will only add to the backlog.

Nonetheless, lenders and landlords should make every effort to return to business as usual. Borrowers who are thousands of dollars behind are unlikely to catch up, and, unfortunately, lenders must start the foreclosure process.