Want To Learn How To Stop Foreclosure Now?
For the past few months, you’ve been behind on the mortgage payments for your Hawaii home.
Maybe you’ve recently lost your job, are facing extensive medical, can’t afford to maintain the house, or perhaps you’ve experienced a sudden change in your marital status. You may have even inherited a home that you know you really can’t afford to keep.
No matter the cause of your financial struggles, you’re concerned that your home may go into foreclosure. Perhaps you’ve even already received your first foreclosure notice in the mail.
We understand that this is an emotionally stressful, time for you as a homeowner. You may feel like there’s no way out, or you may inadvertently make yourself more vulnerable to common foreclosure scams.
Consider this page your guide to avoid property foreclosure in Hawaii.
Here, we’ll cover the potential consequences of foreclosure and steps you can take to avoid it. We’ll also fill you in on foreclosure scams to be aware of, and we’ll walk you through the best way to sell your Hawaii home in foreclosure.
First, let’s make sure that you understand the basics of the actual foreclosure process.
The first step in any foreclosure proceedings is called “pre-foreclosure.”
This is where you’ll speak to your lender and discuss the options above, and it’s the absolute best time to take action because your credit score hasn’t yet been impacted by your inability to make a payment.
This is also the best time to consider your pre-foreclosure “for sale by owner” option. You may decide to put your home up for sale in the market on your own.
However, be aware that this is a time-consuming and often difficult process. Selling on your own means accepting the very real risk that you may not be able to find a buyer before your home is placed under foreclosure.
The same goes for hiring a real estate agent.
When hiring a real estate agent, you’ll also be responsible for commission and fees, so hiring an agent simply may not be a realistic choice for you financially. However, if you have between 4-6 months, you may be able to make an agent or a for sale by owner situation work.
The Foreclosure Process
You’ll know that the foreclosure process has begun on your home when your lender mails you a Notice of Default. This notice goes into the public records, and states that your home could be seized, your home’s address, and that you’ve missed your mortgage payments.
Depending on the timing of your notice, you’ll have anywhere from 20-90 days before the state of Hawaii can seize, sell, or auction off your home. The state of Hawaii allows lenders to use both judicial and non-judicial foreclosure options. (This post does a great job of breaking down what those terms mean in detail.)
The Consequences of Foreclosure
In the state of Hawaii, uncontested nonjudicial foreclosure can mean that a lender can foreclose your home in just two or three months.
In addition to being evicted from your own home, there are countless other financial consequences to foreclosure:
Your credit score will take a serious hit. Foreclosure drops your credit score by about 250 points. To put that into perspective, lenders want a credit score above 620 points. The damage done to your credit score is only salvageable if you make on-time payments for the next three to five years. This means that you likely won’t be approved for another home loan, car loan, credit card, or other kinds of personal loans until you’ve been able to properly repair your credit.
Also, note that Hawaii foreclosures remain on your credit report for 7 years.
Even after the foreclosure sale is complete, you may still owe your lender a balance. “How am I forgiven a loan when the bank forecloses on my house?” You ask.
Well, if the house should sell for less than what you owed the lender, the balance may be forgiven. The lender notifies the IRS of the deficit by filling out form 1099-C. The IRS then treats the deficit as part of your income, hence taxable.
Let’s put figures to this tax: If you owe $500,000 and your house sells for $300,000, the IRS treats the $200,000 deficit as earnings. Now, do you see what that could do to you?
The only way this tax can be avoided is if the debts are discharged via bankruptcy. If you are thinking that filing for bankruptcy is a good idea, think again. Bankruptcy is detrimental to your credit score and may remain on your credit report for upwards of 10 years.
Additionally, you could even lose relocation assistance.
Hawaii foreclosures can do irredeemable damage to your life. Luckily, there are a few things you can do to avoid the foreclosure process on your Hawaii home.
What You Can Do Now to Avoid Foreclosure
If you’re facing the looming threat of foreclosure, know that there are still things you can do.
First of all, be honest with your lender. Many people make the mistake of ignoring the problem and failing to offer an explanation or work out a solution with their lender. But not letting your lender know you’re struggling is usually seen as a sign of financial irresponsibility.
Ask for your lender to offer you a loan modification. Point to your strong history of making your mortgage payments on time in the past. See if you can tack the missed month’s payment onto future payments or increase your loan term so you can pay the amount you can afford each month.
You may also be eligible for certain government assistance programs that are designed to help homeowners in trouble to avoid foreclosure.
Look into programs like HAMP, which could lower your monthly mortgage payments by as much as 40%. If your home’s value has drastically plummeted in the past few years, consider getting a Principal Reduction Alternative (PRA.) HARP, FHA2LP, and UP are also government options that may be able to help you.
Of course, you could also file for Chapter 13 Bankruptcy, which, though certainly extreme, does allow you to take a bit more time to get your finances in order and potentially save your home. You will follow a unique and customized payment plan that is consistent with your current income.
The best thing you can do to avoid foreclosure is usually to sell your home to a cash buyer in Hawaii.
Here’s the thing: if you’re currently facing the risk of foreclosure, you’re already in a vulnerable place. The people running foreclosure scams in Hawaii know this, and want to capitalize on your fears in the most malicious ways possible.
Knowing that a lender could repossess your home is terrifying, and this anxiety often clouds your judgment and makes you agree to anything that will get you out of this mess as soon as possible. Because you’re so desperate, you may not take the time to do the research and other kinds of due diligence on these predatory scammers offering to “help.”
Common Foreclosure Scams to Watch out For
While there is a lot of foreclosure help out there in Hawaii, unfortunately, there are also a lot of scams.
When you’re stressed out, not sleeping, and facing the possibility of losing your home and entering into financial ruin, you’re not exactly capable of making the best decision.
Predatory foreclosure scammers know this and want to capitalize on it.
The golden rule here is “remember that advice is free.” If someone asks you to pay them so that they can speak to your lender for you, or if they claim they connect you with someone they work with (allegedly) who can magically negotiate you out of foreclosure — as long as you give them cash — it’s a scam.
Remember that you should under no circumstances make out your mortgage payment to anyone else other than your lender. If someone tries to tell you that they’ll make the payments for you “later” as long as you pay them now, consider contacting the authorities.
Also, be on the lookout for equity skimming, another common scamming tactic. These people say they’ll buy your home outright, and that they’ll pay off the mortgage for you.
You’ll be forced to sign the deed to your home over to them. They’ll collect rent, own your home, and never pay back your mortgage — but of course, you’ll still have to.
Sometimes, a scammer may try to convince you to sign paperwork without a third party title company present. This is usually because they’ve served you with paperwork that contains your financial information, or even makes them the owner of your home.
In addition to potentially signing away your home, the scammer may also be able to steal your identity.
Selling Your Hawaii Home in Foreclosure for Cash
We don’t tell you all of this information to scare you.
Instead, we just want you to be as aware of the options available to you as is possible.
Sometimes, the best thing to do is to work with a cash buyer to quickly sell your Hawaii home in foreclosure.
First of all, because the buyer will make you a fair cash offer on your home as-is; meaning that you don’t have to worry about making costly upgrades, staging your home, or doing any kind of maintenance on it.
Plus, especially if the foreclosure process has already begun, you likely don’t have much time. You need to sell your house in order to avoid foreclosure. You can’t risk listing it with a Realtor and letting it sit on the market for several months, because the bank will take your home from you and you’ll walk away with NOTHING.
In many cases, a cash buyer will be able to close on your house in as little as a couple of weeks.
You’ll also save on the extensive fees and commissions of a real estate agent when you work with a cash buyer. The cash buyer will also handle any of the closing costs for you.
Unlike those scammers, cash buyers will work with a third-party title company and walk you through all of your options. Plus, any offer on your home comes with absolutely no obligation to take it.
This is an excellent way to avoid the anxiety of selling your home on your own or working with a real estate agent — plus, you’ll be able to repair your financial reputation.
In Need of Expert Foreclosure Help in Hawaii?
We hope that this guide has made you feel like you have a much better handle on all of your options for foreclosure help in Hawaii.
Make sure to talk to your lender, know the common foreclosure scams to watch out for, and consider getting an offer on your home from a cash buyer.
Selling your house will save you a ton of hassle. You also have the added advantage of having a say in how things unfold.
Are you looking to sell your Oahu, Hawaii home as quickly as possible?
Our incredible team at Crowne Properties is here to help you.
We will make a fair cash offer on your home as it is now, and we’ll use current market data and a tour of your home to determine our price. We have an “A” rating from the Better Business Bureau, and a five-star rating on Google. We’re even members of Hawaii’s Chamber of Commerce.
Above all, our process is fast and simple and we truly want to help you avoid foreclosure.
We want to work with you to find a solution that benefits everyone during this stressful time in your life. Together, we can make it happen.
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