With millions of homes across the country going into foreclosure, it’s important for sellers, buyers and mortgage holders to understand how the foreclosure process works.
So what is a pre-foreclosure in Hawaii anyway?
Many homeowners across America and Hawaii have trouble keeping up with their monthly mortgage payments. We’ve all seen the news, so this shouldn’t be a surprise. If that includes you, then know that you’re not alone.
Usually, when a homeowner misses 3-6 months of mortgage payments, the lending institution (your bank) will issue a warning called a Notice of Default (or “NOD” for short), notifying the homeowner to that they are now on official watch. This period is known as “pre-foreclosure.” If no action is taken, a foreclosure is the ultimate finale to the story.
Banks and mortgage lenders typically provide three months for the homeowner to become current. Of course, this number can vary by bank and situation sometimes.
If a homeowner fails to make the necessary payments, reinstate their loan or work out some other scenario like a loan modification, the bank will proceed to foreclose on the home, take over ownership and evict the homeowner before preparing to liquidate it themselves. It is during this pre-foreclosure stage, that the homeowner really needs to assess their overall situation and understand their options (of which letting it go to foreclosure is rarely, if ever, the best).
Pre-foreclosure Options for Borrowers
If you’re behind in your mortgage payments, you’re likely to receive a “notice of default” from your mortgage lender as stated above.
This “NOD” document will state that you have not made mortgage payments for the last 90-180 days. It’s important not to panic. Yes, you don’t want to pretend things are all peachy, but this doesn’t mean you’re getting kicked out tomorrow.
You have options that can delay or even prevent losing your home or getting foreclosed upon:
- If your mortgage is “above water,” (meaning you have equity in your house, i.e. it’s worth more than you owe) you may be able to refinance your mortgage, receiving lower monthly payments or tack your debt onto the tail end of the loan, extending payments. Check with your local Hawaii mortgage broker or contact us and we can connect you with a reputable one that we’ve worked with previously.
- You may be able to sell your home fast to a local real estate investor on Oahu like us at Oahu Home Buyers, using the cash acquired to pay the deficiency owed — or we *may* be able to negotiate with your lender on your behalf to have that deficiency waived, at no cost to you. We can buy your Hawaii Hawaii area home quickly, often in just a week or two, will pay in cash, and takes the stress out of trying to find a buyer or watching your house sit stale month after month on the MLS.
- You can ask your bank to give you time to arrange a short sale. In a short sale, your lender allows you to sell your home for less than what you owe them. Yes, the bank takes a loss (which they can write-off), but it’s better for them than the legal cost of taking back your property and having to resell it themselves anyway. Yes — your bank does not actually want to foreclose on you. They’d rather just close the books on your loan, even if that means taking a modest loss, so that they can initiate a new mortgage with a new borrower (that’s what banks do).
- You may be able to declare bankruptcy, which can buy you time to pay your debt. Bankruptcy will remain on your credit report for years, and can cause significant damage, so if this is something you’re considering, then by all means speak with a bankruptcy attorney. We’re not giving legal advice here. Bankruptcy is serious, so treat it seriously.
Today’s lenders are very much aware of the financial train wreck that hit real estate markets nationwide, including Hawaii. In most cases, they’re willing to work with borrowers to arrive a solution that works for them and for you.
If you’re honest and communicate openly with your lender, you may find there are options of which you were previously unaware, so don’t try to play games.
A foreclosure can often negatively affect your credit score by 200-400 points and could prevent or seriously hinder you from obtaining a loan of any sort for 5-7 years, so please take a Notice of Default seriously if you should find one in your mailbox. This is a notice that it’s time to take action.
However, if you’re not able to find a solution with your lender by working directly with them, then definitely connect with us. We may be able to help.
Ways We Can Help If You’re In Pre-Foreclosure
- We can help you with a short sale. If you owe more than your home is worth, all is not lost. We have short sale negotiators on our team that will work for you at no cost. Send us your information on this website so we can analyze your situation and see if a short sale is the best course of action. Again – this is at no cost to you.
- We can buy your Hawaii area house – We buy houses in Hawaii and would love to present you with an “As Is” all-cash offer on your house. Just fill out the form here to get started >>
- Contact us for a no-cost consultation and get the resources you need so you can make an informed decision. This costs you nothing, there’s absolutely no pressure or obligation — just free guidance without a catch. We’re here to help.
If you’re in the pre-foreclosure stage, you still have some time but maybe not as much as you think. The most important thing to do today is take action. Talk to us about your unique situation, and let’s see which no-cost options are best for you.
Just connect with your bank to see if they’re willing to work with you or contact us if you’d like to see what we can buy your house for or to tap into our free foreclosure foreclosure resources. We’re waiting to hear from you.