2012 Mid-Year Hawaii Housing Status

July 31, 2012 by Michael Borger

Aloha! Ok, we’re about a month past midyear 2012 but it still works as it can take a while for those troublesome stats to kick in. What a first half of the year it’s been for housing and real estate in Hawaii. Let’s look at some key points:

Inventory is tightening up just about everywhere and prices have creeped up. Homeowners are in many instances holding on to properties whereas before they may have considered selling. Is this a sign that the housing bottom is behind us? Perhaps….
….but others still clamor that the banks are holding back about 90% of their foreclosed inventory and we’re about to get whacked back down again, maybe sooner than we thought. Do you agree?
I can tell you from my own experience running my real estate investment company that many homeowners today are also choosing to turn properties into rentals to either cash flow or at least break even and wait out an expected price appreciation to sell down later on the road for more gain.
The controversial Oahu rail project continues on, despite calls for its removal both in and out of the mayoral race.
Speaking of the Honolulu race for the mayor, who do you think is the best candidate for Hawaii’s homeowners? Cayetano? Carlisle? Caldwell? (Apparently your last name needs to start with a “C” to be mayor…)
The banks continue to foreclosure through the courts (judicial) and Hawaii homeowners who were in mortgage default for a year or even longer (yes, it’s happened all around us) are finding out that the time has come to decide how best to move on

It’s my opinion that the temporary tightening of inventory in Hawaii is just that — temporary. Sure, the banks can’t open up the faucet on wide of their shadow inventory and flood the market — we all know that will depress the local housing market to levels possibly even lower than they were a few years ago. But they have to figure something out and that REO pipeline will stay open for, as some estimators predictor, 3 to 5 years.

But here’s thing — it’s still very much tied to JOBS. And while Hawaii’s unemployment rate is very favorable compared to those of our mainland cousins (thanks to encouraging recent tourist numbers), we’re still connected to the national system and all its wonderful nuances.

STAT TIME

Let’s look at some interesting stats courtesy of RealtyTrac…

As this bar chart surely shows, the key point of interest is the steady decline in properties in Preforeclosure. In case you’re not familiar with the term, “Preforeclosure” generally means homeowners who are in default but have yet to be officially foreclosed upon. In other words, they are still the homeowners on title.

To the point, I have a hard time believing that the numbers of homeowners in default went from just under 500 in January to under 100 in June — as is many times the case, stats can be deceiving and not tell the whole story. I suppose there could be a logical reason for this, some mix of increased refinancing and/or successful loan modifications (the latter unlikely). Anyone care to shed some light?

In this chart we can see, unsurprisingly, that the vast majority of homes either headed for foreclosure or already past that point fall in the 300-400K category. Unfortunately, these numbers include all housing types (SFH, townhouse, condo) so making a clear inference is a bit difficult, but it would appear that most homeowners in Hawaii needing help are in the lower end of the price spectrum when compared across the state. However, interestingly enough, the high end luxury homes are represented as well — I guess some people bit off more than they could chew in the good times!

By the way — completely unrelated — but is anyone else enjoying this year’s flowers as much as me and my girlfriend??

Source: via Michael on Pinterest

Options for Avoiding Foreclosure in Hawaii – Part 2

January 31, 2012 by Michael Borger

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

January 25, 2012 by Michael Borger

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 – 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“…..

Occupy for the Hawaii Homeless? Bonus Inside.

December 9, 2011 by Michael Borger

Anyone else follow the story out in Brooklyn on the Occupy Wall Street folks who took over a home foreclosed by Bank of America three years ago and basically handed it over to a homeless family? Wow, it just hits so many chords in every direction. Now I know many people across the country are split on this whole Occupy Everything movement. Part me thinks there’s nothing more American than people assembling for a cause. Hey, that’s basically how we became our own nation, right? At the same time, it also doesn’t take too much to go overboard.

These activists marched around the neighborhood with balloons, brass bands, vuvuzelas and all on the glorious day of the actual occupation. Yes, vuvuzelas, those annoying horns from the World Cup that apparently haven’t realized that they, too, are only welcome once every four years. The police gave them the necessary escort but didn’t escalate the situation by preventing access to the home that Bank of America still legally owns.

“Foreclose on banks, not people!”

The basic premise behind these “liberators”, as they are apparently calling themselves, is that they consider the foreclosure of the house itself to be illegal. “Foreclose on banks, not people!”, read their signs, and in light of the many allegations against the big banks over the past couple of years, it’s hard to find fault with that argument. No one is giving the banks a free pass here at all.

However, does that mean that we all just rise up and take over abandoned properties in our own neighborhoods and start sticking our homeless in them? No doubt we have a homeless problem here in Hawaii. From park closures to scheduled maintenance and cleanup, the homeless are getting shuffled around the islands like a bad Christmas present at a party. But it seems rather illegal as well to storm vacant properties and call them our own. You do it once, you get attention from local and national media for your housing cause. You do it again and again and inevitably the legal owner or police will get involved, especially when a homeless person is injured in one of these unsafe properties and sues the state.

How will it end?

No one would want to be homeless in a New York winter (or anywhere, of course), and on the surface it honestly is a shame that there are vacant properties that could at least provide shelter to people who need it. It’s also heartening to see a community come together so strongly for a cause they believe in. I just wonder how this is going to end — because it has to come to an end in some fashion. This family will not be living there illegally for the next ten years. Love BOA or hate BOA, but they won’t turn a blind eye forever.

What would happen if that same scene played out here in Hawaii? Should we occupy a foreclosed home in Kalihi? Kahului? Kona? Would the community support it or would they squash it before it got started? How do you feel about what’s transpired in Brooklyn? Are you all for it or have the “activists” gone too far?

Extra Feature

Ok, I promised something a little extra. I was recently introduced to a woman that has a very fascinating business. Lisa Simon is a Personal Historian. She interviews older people about their lives, captures it on video and then creates a DVD as a historical memento for the person’s family. How neat is that?? She’s seen people do this before in her previous home in Chicago but found that most people, while having the best of intentions, never got around to doing it until the opportunity was gone. Lisa is also a member of the Association of Personal Historians. You can learn all about her very unique service at: http://www.remember-media.com/.

Aloha,
Mike