Foreclosures don’t happen out of the Hawaiian blue sky; the lender or AOAO (many of Hawaii’s condo buildings are aggressive in pursuing foreclosures) has to jump through a lot of legal and notification hoops before finally taking the house back or putting it up for auction. Putting your head in the sand like an ostrich and hiding from your problems to avoid foreclosure is the worst thing you could do if you’re behind in your mortgage and facing foreclosure. Instead, it’s always better to deal with the problem head-on and make the best choice by understanding all of your options. The time to take action is when you receive the first notification; actually, it’s when you realize you’re going to miss that first payment. Otherwise, you risk heading into a dangerous – and expensive – downward spiral.
Not only could you be evicted from the property without much notice, but you could lose a lot of built-up equity in your home. More so, you could still be on the hook for any remaining debt on the mortgages as well, called a ‘judgment deficiency’. As for the damage to your credit, a foreclosure attached to your name could affect many aspects of your life — it could affect a car loan and even future employment opportunities. A foreclosure can also have adverse effects on your housing options, and you won’t be able to qualify for a Fannie Mae mortgage for at least seven years.
Read on as we explore five ways you can stop foreclosure in HI.
Negotiating with your lender(s) before proceedings begin is one way to stop foreclosure in HI if there is still enough time. Your lender may be more open to negotiating with you than you may believe — truth be told, they’re not in the business of owning real estate; they’d rather put the money to use in a new loan elsewhere. Yes, the bank really does not want to take your house back, despite what you hear on the grapevine.
As foreclosures can take years to finalize, especially in Hawaii, lenders have a great deal of leeway in working with borrowers to reorganize their finances and overcome temporary setbacks, if possible. There are also programs in place that you may qualify for that could offer assistance in times of hardship.
If you’re behind on your mortgage loan, you may want to consider a short sale as another way to stop foreclosure in HI. With the lender’s approval, the home is sold for less than what is owed on the mortgage (the ‘short’ position). However, a short sale will still have some impact on your credit (not as bad as a foreclosure, mind you), and you may have to wait a couple of years to get a loan again. You may also need to consult your tax professional, as there may be tax consequences for the debt your bank agrees to write off.
Filing for a chapter 13 bankruptcy may be a way you can stop foreclosure in HI. For example, suppose you’ve fixed whatever life situation sent you down the wrong path, and you’re now able to arrange a chapter 13. In that case, you will be restructuring your debt, making your regular mortgage payments along with payments on the arrearage (amount behind), typically for a period of up to five years. Chapter 7, on the other hand, will give you a little breather while you stall payments temporarily and play catch up.
Deed In Lieu
Signing the mortgage back over to the lender and walking away, known as a deed in lieu of foreclosure, is another way you can stop foreclosure in HI, satisfying the loan. However, you should be aware that junior liens, such as equity loans attached to the property through the deed, are undesirable to the lender and may prevent you from taking this route – they don’t want to inherit any junior debts attached to the property they’re taking back.
In this scenario, foreclosure is preferable to the lender because it will wipe out those existing junior debts. A lender will not act upon this option unless you contact them first and claim you’re choosing this option voluntarily.
Sell Your Hawaii House Directly to Oahu Home Buyers
Selling your Hawaii home directly to Oahu Home Buyers may be the best way you can stop foreclosure in HI. It is critical that whatever action you intend to take is taken quickly to avoid paying the heavy penalties associated with a foreclosure for years to come, and Oahu Home Buyers is poised to step in and help you immediately. We’ve been buying houses in Hawaii for over ten years, and avoiding foreclosure is one of the most common reasons people come to us.
We will provide you with a guaranteed closing date, often in a matter of a few weeks or less. If you are not ready to move just yet, we are happy to arrange a leaseback at fair terms. Oahu Home Buyers will work with you to help make the transition as smooth and efficient as possible for you and your family. Selling directly to Oahu Home Buyers is a quick and easy process; you avoid paying high real estate commissions, the expenses of listing and marketing the property, the hassles of showings, and there is no need to worry about making any repairs – we’ll handle ALL of it for you.
A direct buyer from Oahu Home Buyers will lay out all of the numbers for you because our goal is to be certain you agree that our offer is fair. We do this at Oahu Home Buyers because we want you to feel good about the deal long after closing. Why not learn what Oahu Home Buyers can do for you? Contact Oahu Home Buyers today at (808) 333-3677. phone].