Facing Foreclosure in Hawaii But Don’t Know Your Options?

You don’t have to lose your house to the bank! We talk to homeowners here all the time who feel the pressure of the world closing in around them, wondering what’s going to happen to their credit, their house and, more importantly, their family. With all the improprieties and questionable practices of the banks over the last few years, it’s homeowners who have really been hurt.

But we’re here to help. The first thing is to UNDERSTAND YOUR OPTIONS so you can decide how to move forward. Got a notice of default (NOD) from your bank? Auction date set? Or just know you can’t keep up your mortgage payments? The following list of foreclosure options may not be available in every scenario, but we at least want you to know they exist:

Sell Your House Direct for Cash

This option is really only feasible if you have equity in your property. If you do but have still found yourself behind in payments and facing foreclosure, then we may be able to buy your house directly at no cost to you. This would prevent a foreclosure on your credit report and put cash in your pocket as well. However, most homeowners facing foreclosure are in upside-down mortgage scenarios and should choose from one of the other options below…

Short Sale

A short sale occurs when your lender agrees to let you sell your house for less than what is owed on the mortgage. They are taking the ‘short’ position on the loan, even though the sale itself could take 4 months or longer. Short sales require a level of expertise and skills beyond basic real estate knowledge and training. (click here to read more about short sales and how we can help)

Loan Modification

A loan modification is an adjustment of the terms of your mortgage, usually a lowering of the interest rate. Usually homeowners are accepted on a trial payment basis of roughly 6 months after which they are kept in the modified mortgage or their application is denied. Unfortunately, the current system in place gives little incentive to lending institutions to successfully grant loan modifications and most homeowners find themselves right back where they started.

Reinstatement

Reinstatement means to bring your loan “current”, meaning you pay all the arrearages to restore your mortgage to good standing. This is usually only helpful for homeowners who suffer a temporary hardship but have since been able to make financial amends. For those who lost a job or continue to be unable to keep up with their regular payments, securing the funds for a reinstatement is usually not an option.

Forbearance

A forbearance is when your lender rolls your arrearages into the current loan, increasing the monthly mortgage payment and/or extending the life of the remaining terms to account for the increase in the balance owed. An advantage to a forbearance is that it may keep your loan in good standing, however it may also just extend the life of an already difficult mortgage.

Bankruptcy

You can file bankruptcy in Hawaii Bankruptcy Court if you wish. Filing a bankruptcy is sometimes used to immediately halt a scheduled foreclosure. There are different bankruptcy filings (“chapters”) and each affect your present and future financial situations differently. Consult a bankruptcy attorney if you wish to proceed — just be sure it is the option that best suits your situation and objectives.

Deed-in-Lieu

A deed-in-lieu of foreclosure occurs when you give the deed to your house back to your lender. It is still essentially a foreclosure, but your lender may be willing to work with you (re: negotiate) on your exit strategy since you are likely saving them signifiant attorney fees.

Foreclosure

Of course, you always have the option to let the bank foreclose on your house. It’s rarely ideal, but it is ultimately your decision.

Disclaimer: The information presented here is strictly informational and should not be considered legal advice as no member, manager or employee of Big Rock Investments, LLC is an attorney or certified public accountant. Homeowners are entirely responsible for researching the full effects of each option described before proceeding as there may be negative effects on both credit and livelihood.