Considering everything that is going on in the world right now, selling your home can seem like a challenging task. To help you understand the ways circumstances outside of your control may impact the sale of your home, let’s see what the end of the foreclosure moratorium will mean for home sellers in Westfield, Cranford, Clark, Scotch Plains, Fanwood and Mountainside Areas.
What Is the Foreclosure Moratorium?
On March 18th, 2020, the United States federal government temporarily halted both new and existing real estate foreclosures on single-family properties financed through mortgages insured by the Federal Housing Administration. In addition Governor Murphy signed Executive Order 106 which suspended evictions until February 22,2021 unless further action is taken.
The order is part of the Coronavirus Relief and Economic Security Act, or CARES Act, and was specifically designed to provide help to individuals and families under increased financial stress due to job loss or other factors and the continuing challenges of the ongoing pandemic. Originally scheduled to expire earlier in 2020, the foreclosure moratorium was extended through December 31st, 2020.
It’s important to note that the foreclosure moratorium states that any individuals able to continue paying their mortgage or rent should continue to do so, or at least to the best of their ability. The Federal Housing Administration also strongly urges distressed tenants and residents to clearly and thoroughly have a good-faith discussion with their lender or landlord to work out the best payment plan moving forward.
How Is the Market Affected?
With the foreclosure moratorium scheduled to expire at the end of the year, some current home sellers are trying to complete sales prior to the expiration due to the potential for market changes and the uncertainty that may follow.
When the moratorium expires, there may be a jump in foreclosure court filings. There recently has been an increase in foreclosure court filings for homes not covered by the moratorium in some areas. This includes a 21% increase nationwide in October.
In the event that the moratorium expires and foreclosures increase rapidly, you can expect a real estate market populated by properties for sale under the ownership of the mortgage companies. These companies are not in the business of homeownership and all the responsibilities that come with it. Typically, the mortgage companies will want to reduce their losses on the properties as much as possible, while also selling the properties as quickly as possible.
The potential danger to the local market in this situation is if the mortgage companies are lowering prices to it may create downward pressure on the entire market. This has the potential your create a downtown in property values.
A scenario like this can have long term local consequences since home prices, property values, and even individual property taxes are eventually in part determined by the recent sale prices of equivalent homes in your local area. But, the ongoing recovery would hopefully support prices as well.
However, keep in mind that in order for the moratorium to expire it has to be allowed to expire, Hopefully the government can help limit the number of foreclosures with new moratorium or another program to support people financially impacted by the pandemic.
What Can I Do?
As an individual home seller in a much larger market, the best thing you can do is what you should always do when trying to sell your property: Take excellent care of the property, price it reasonably, listen to the recommendations of your agent, do your best to accommodate showings, and be willing to both give and take during negotiations.
The foreclosure moratorium is currently in place to assist those finding themselves in need due to circumstances unprecedented in modern history. Our local market is doing well but ongoing uncertainty has the potential to impact the market anytime.
Help Selling a Home in Westfield, Cranford, Clark, Scotch Plains, Fanwood and Mountainside Areas
If you need help selling a home or understanding the foreclosure moratorium, contact us today at 917-608-7277!
additional resources on the moratorium: