Local HI homeowners who are facing a financial challenge may find themselves facing foreclosure or worried that they soon will.
Foreclosure is when the mortgage loan doesn’t get paid back and the bank begins the process to take ownership of the property to recoup its losses. Generally speaking, your bank doesn’t want to foreclosure, but they view it as a final option to move forward with their loan that isn’t getting repaid.
If you find yourself entering the foreclosure process, you might wonder if there is anything you can do about it. The short answer: yes, but only if you take action.
In this blog post, you’ll read about a few foreclosure prevention measures in Hawaii that you can take to keep your home from foreclosure.
Foreclosure prevention measures in Hawaii HI
These foreclosure prevention measures might not all work in your situation but we’re telling you about them so you can make the decision for yourself. Education and action are your best assets right now:
1. Pay off your mortgage / sell your property. The quickest and easiest way to end the foreclosure process is to pay off your mortgage. After all, this is all the banks wanted in the first place so they would be happy to let you stay in your home and they get their money back. Of course, this is not always possible, which is perhaps the reason that you’re in foreclosure in the first place. We get that – we’re just stating it here for the record.
2. Work out a deal with your bank. Sometimes you can work out a deal with your bank where you sit down with a mortgage or foreclosure specialist and talk to them about changing the structure of your mortgage, called a loan modification or forbearance. Perhaps your payments get spread out so they are lower each month, for example, with added amounts or payments tacked on at the end. Just make sure that the deal works for you — you don’t want to just repeat the process and end up here all over again. Need help modifying your loan? Ask us how our loss mitigation department can help.
3. Pursue a short sale. A short sale is when you sell the property and use the proceeds of the sale to pay down or pay off your outstanding amount with the bank. This keeps a foreclosure from impacting your credit score and it gets the bank off your back! While your bank takes a loss (the ‘short’ in a short sale), deficiencies are typically waived during the negotiation process.
4. Give your deed in lieu. Another option would be a deed-in-lieu-of-foreclosure, which basically means that you will hand over the deed to your house back to the bank and they agree not to put you through foreclosure (although technically this is still a form of foreclosure). This will often only work if your house is worth approximately the amount owing on the mortgage. If not, the bank may pursue the difference (or ‘deficiency’).
5. File for bankruptcy. In some ways, a bankruptcy is far more dramatic than a foreclosure because it impacts your whole life. However, once you file for bankruptcy, the foreclosure process has to stop so it’s still a foreclosure prevention measure. Note: bankruptcy is a serious legal matter and you should consult a bankruptcy attorney if considering this course of action. Nothing here should be considered legal advice.
If you’re not sure which one to do, consider this: If you can afford payments and you want to stay in the house then a foreclosure workout arrangement or loan modification (#2) is probably your best option.
If you want to put everything behind you and move on with your life then consider selling your home and paying off your mortgage with that money.
Considering selling your HI house?
We buy houses in Hawaii for cash and would love to see if we can help you during your short sale or buy your house outright for cash. Contact us by filling out the form on this page and we’ll see if we can work with your situation.