Hawaii Housing News

News, Tips and Opinions About Hawaii Real Estate and Housing

March 2012 Hawaii Foreclosure Info

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In the wake of news that former “Friends” star Jennifer Aniston just sold two of her New York City condos at a loss of over $500 million, we’re sometimes reminded that the drop in housing affects everyone. Now, I’m sure none of us are crying for Jennifer or other celebrities like Nicholas Cage and Jennifer Lopez who are being foreclosed upon or losing money on their mega-mansions. In fact, I’m sure there are more than enough people overjoyed to see the rich folks take their share of the housing mess!

However, watching the big guys take a fall doesn’t really do more for those of us in Hawaii than provide a nice diversion and maybe an “I told you so”. So with that being said, let’s look at the March foreclosure info for Hawaii.

Looking at the data, it’s no surprise that most of the foreclosures were on Oahu. However, the Big Island had the highest foreclosure rate with 1 out of every 460 housing units in foreclosure, mostly in Kona. Maui was right behind with Lahaina and Kihei contributing to the 1 out of 514 foreclosure rate. Statewide, bank repossessions (REO) more than doubled from 102 to 214!

Yet at the same time, inventory is dropping under the 6-month mark and prices have creeped upwards. It remains what will be done when the statewide moratorium on non-judicial foreclosures comes up for renewal in July , but it seems obvious that this will have a tremendous affect on the future of Hawaii housing and real estate.

With Bank of America, a major provider of home loans to Hawaii residents, revamping their short sale process this past week, now might be the best time to get out from an over-leveraged mortgage if it’s crippling your family’s budget, especially with the 2007 debt forgiveness act still in effect through the end of the calendar year.

Will the Hawaii Foreclosure Moratorium Be Renewed?

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The one year anniversary isn’t too far off when last year’s moratorium on non-judicial foreclosures was enacted. The question I’m starting to hear from agents and other folks in the local Hawaii real estate industry is: Will the foreclosure moratorium be renewed?

Magic 8 Ball

Magic 8 Ball says....

Well, I wish my crystal ball held the answer to that but alas all I have is an old Magic 8 ball and it’s not very reliable about anything. But it’s certainly a topic that is going to start getting increasing attention in the next few months.

The initial voices for the moratorium were adamant about stopping the illegal foreclosures in light of the robo-signing and other mortgage impropriety scandals. They also wanted to give homeowners with underwater mortgages a greater opportunity to agree to a loan modification with their lender. Understandable.

However, the cons stated a clogged up inventory of overleveraged mortgages and the ill-advised encouragement of homeowners with bad mortgages to try and salvage their sinking ship. “Just because they CAN stay in the house doesn’t mean they SHOULD” was (and still is) a common sentiment.

No matter which side of the coin you’re on, it’s safe to say that the question of policy renewal is an important one. The most important question to ask is:

Has the moratorium been effective?

That itself is a trick question. How do you define “effective“?

Is it the number of homeowners kept in a mortgage who would others have been foreclosed upon? I might buy that, although some of the mortgage terms are still likely exorbitant. Or is it the % of homeowners previously denied a loan modification that now find themselves with modified terms? That might work as well. The problem is that you can’t measure the outcome until you clearly define your criteria for measurement, and that alone can be very contentious. Generally speaking, the objective would be to determine how the situation has changed since the enactment of the policy and to what degree those changes are a result of the policy or would have happened had it not been in effect at all. There’s no right answer. Hey, that’s what we elect politicians for, right? (insert pun below)

If you’re in the industry or following the housing market closely, you’ll notice that there’s no shortage of new REO properties being released out of inventory. Everyday it seems there are a few new foreclosure properties hitting the market as the banks continue to try and unload some of their stockpile. A renewed moratorium would likely make this drag on a bit further (not that it’s going to end anytime soon) keeping prices (and equity) low, however if it’s preventing people from being kicked out on the streets, well then there’s that argument as well. Again, it’s a contentious issue.

And before people think that stopping all foreclosures is good, remember this is only for non-judicial foreclosures. I’m working with some homeowners on the west side of Oahu right now on a short sale who were recently served judicial foreclosure papers — this is not one big parachute for all.

This post is just food for thought. I’d love to hear from others on whether they’re for or against renewal or even modification of the policy enacted last year.

Share your thoughts below!

Options for Avoiding Foreclosure in Hawaii – Part 2

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In the last post, we went over some options to avoid foreclosure. Today I want to go over a few more. Of course, you should consult an attorney and/or accountant to fully understand the legal and/or tax implications of each method. The material presented here is strictly intended to be informational and should not be considered legal advice.

Reinstatement — Reinstating your loan means bringing it current. You’ll do this by paying off the arrearages (how far behind you are) and possibly some accrued attorney fees. Your lender will give you the amount. Your loan should then go back into a ‘good’ standing with your bank. The caveat? If you had the funds to reinstate your loan, you probably wouldn’t be reading this article. But maybe you have a relative or other source of funding you didn’t have beforehand (like a new job) and can now get back on track.

Filing Bankruptcy — Ok, filing for bankruptcy is a bigger deal than just stopping foreclosure, but it does halt the process in its tracks until you get your affairs in order. By all means, consider the consequences, both temporary and long-term of filing “BK” as there are different “chapters” with different schedules and intended outcomes (ex. wiping out debt versus reorganization). Consult a bankruptcy attorney if you have any questions as it can be a tricky legal process.

Deed-in-Lieu — A deed-in-lieu of foreclosure is when you voluntarily deed your property back to your lender. It’s still a form of foreclosure, but you’re potentially saving your bank thousands or more in legal fees by not forcing them to take your foreclosure to the end. In return, they may be willing to offer you incentives for a smoother “exit”. This is something you’ll have to negotiate with them. Again, just be sure you are clear on the legal and/or tax consequences.

Facing foreclosure in Hawaii or any other state sure isn’t fun. The current moratorium in force only affects non-judicials directly, but judicial foreclosures are still proceeding, so there’s no time to lose. Getting educated is the first step in moving forward in the best direction possible. Hopefully you’ve found the information here and in the last post informative and helpful. There are other sites out there as well, so take it all in and proceed in whatever direction you feel suits your situation and objectives the best.

Have you been down the foreclosure road already? Any insight to share as to what’s worked and what hasn’t? Share your experiences here!

Options for Avoiding Foreclosure in Hawaii – Part 1

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STOP FORECLOSURE

About a month into 2012, the Obama administration has recently come out with news of new initiatives to both punish banks for mortgage improprieties and help homeowners stay in their homes. Sounds great on the surface, but there are still folks in Hawaii staring down the barrel of a judicial foreclosure. What kind of help is there? Let’s look at the different options:

Loan Modification — A loan modification is when your lender changes the terms of your mortgage, usually by lowering your interest rate. Homeowners are normally given a trial period to show the ability to make modified monthly payments for 3 to 6 months, after which the new plan stays in effect or they are rejected from the “loan mod”. Unfortunately, banks today have very little incentive to grant a successful loan mod. A colleague of mine and former REO broker recently informed me that banks make only about $500 per successful modification. Think that motivates them at all? Neither do I. This means the homeowners often find themselves back where they began. I’ve talked to people right here in Hawaii who went through THREE loan modification trials only to be rejected.

Avoid Foreclosure in Hawaii

Avoid Foreclosure in Hawaii – CLICK HERE…..

Short Sale — A short sale occurs when your bank or lender allows you to sell your property for less than the mortgage balance. In this situation, your lender is taking a ‘short’ position on the transaction, even if the sale itself could take 4 to 6 months or longer as your agent or short sale processor negotiates with the bank on your behalf to accept an offer. Short sales are a different breed of real estate transaction and are beyond the skill set (and patience!) of many professionals, whether agents or investors (I don’t mind them, though!). Ask any homeowners who’s attempted a Hawaii short sale, and they’ll likely tell you horror stories of being routed through 10 people at the call center and faxing in the same stack of paperwork, only to see it collapse at the last second because a BPO (broker price opinion) came in too high and the buyer left, or they were working with someone who didn’t understand the intricacies of a short sale. Make sure you work with a pro.

Forbearance — A forbearance occurs when your bank or lender takes your past due amount (arrearages) and rolls it into the current loan. This increases your monthly mortgage payment and/or extends the life of the mortgage. You’re not getting debt forgiveness — you’re essentially getting a form of loan modification or restructuring. A forbearance may reinstate your loan into good standing, although you may be putting lipstick on a big if you’re saving a mortgage you’re better off not keeping around for the next 20 years, like an adjustable rate mortgage (ARM) that was popular not too long ago.

Remember, just because you can save a house and mortgage doesn’t mean it’s best to do so. That’s a personal decision to make with your family (and your attorney and/or CPA) after weighing all your options.

Sell Your House (non-short sale) — This is really only an option if you have equity in your house, which is not the case for most Hawaii homeowners caught in the foreclosure process. However, if you have equity but just haven’t been able to keep up with your mortgage payments, then you may have the option of selling it outright with the help of a realtor or directly to a Hawaii real estate investor. Depending in your debt to equity ratio, you might even profit well from the sale. The primary advantage, however, is that you keep both a foreclosure and a short sale from your credit history.

Click here for “Options for Avoiding Foreclosure in Hawaii — Part 2“…..