When discussing the Florida foreclosure process timeline on our blog, we have repeatedly highlighted the positive externalities of an extended foreclosure process in Florida when compared with, say, a non-judicial foreclosure state in which homeowners can be evicted after just a few months. Notably, we have cited empirical evidence that shows that keeping families in homes eliminates the crime, blight, and depressed home values we often think of as being associated with the foreclosure process in Florida. Thus, we have argued that court administrators, legislators, and other bean counters should be less concerned with speeding up the Florida foreclosure timeline and should be more concerned with how to keep occupied homes occupied.
Today we can point to even more positive externalities of an extended foreclosure process: helping families get their balance sheets back to even. Economists at the Federal Reserve Bank of Philadelphia have completed a study showing that homeowners experiencing a longer foreclosure process are more likely to become current on their credit card debts. Thus, they are in a better position to cure, reinstate, or modify their home loans in the future, making the community they live in less likely to face the negative side effects of a vacant property.
This is yet another empirical study that shows that the Florida foreclosure timeline should not be our paramount concern. Again, we have already pointed to studies showing that it is vacancy, and not a foreclosure case itself, that causes crime and blight. Here, then, is even more evidence to show that a longer foreclosure process can help families remain in their homes with a better chance of keeping their properties. Families keep homes, communities don’t deal with vacant bank owned homes, and everyone is better off. We can only hope, yet we are skeptical, that legislators and court administrators, in their blind rush to set every foreclosure case for a quick judgment, actually pay attention to what empirical data says, rather than chasing what merely “feels” like the correct course of action.