Stop Foreclosure Now Before It’s Too Late…

Stop Foreclosure Now

Foreclosure is a stressful and unpleasant experience, not to mention the impact it has on your credit score, your ability to obtain a mortgage and it may even affect your employment for the years to come. No one wants to have to go through the foreclosure process.

But life happens…job loss, divorce, unforeseen illness/disability, death in family, underemployed, business loss, etc.

No matter the situation that brought you to defaulting on your mortgage payment and facing potential foreclosure, we have the solution for you.

Related article: Protect Your Home with Life Insurance

The most important thing to remember is that you always have options.

We’ll help you understand your situation and what options are available and best for you.

What options are available to avoid or stop a foreclosure?

Option #1: Selling Your Home Quickly

This is the simplest option of all if you don’t own more than the home is worth. You can easily sell your home in the conventional way with a real estate agent, listing on the MLS.

Or you can sell your home to us without any agent’s commission, as we’re not real estate agent. We’ll buy your home in “as in” condition.

You’ll get your money quickly as this would be a cash transaction. A traditional home buyer with bank loan would need a minimum of 30 days to close on the transaction.

Option #2: Short Sale

A short sale is similar to option #1, except you owe more than your home is worth. For example, your mortgage balance is $500,000, but your home is now worth only $350,000.

This option is not as easy as the first because when you took out the mortgage initially the bank created a lien on your property.
You’ll need to get the bank’s approval to sell your home for less than what you owe because the bank is losing money.

Many banks would agree to such option because the short sale is a lot easier and less expensive than a full on judiciary foreclosure.

Related article: What is a Short Sale?

Option #3: Loan Modification

If your goal is to stay in your home, a loan modification is what you need. A loan modification can help you work with your bank to modify the loan term to help you stay in your home.

Check out MakingHomeAffordable.gov. Hurry, programs expiring December 31, 2016.

See…you still have three options to stop foreclosure.

Don’t delay…contact us now or fill out the form above.

I am a real estate investor and can buy your home in "as-is" condition as an investor (not as a real estate agent).

Therefore, you pay no commission or service fees to me at all.

Search Short Sale and Foreclosure

Invest in Short Sale and Foreclosure Properties

Hawaii presents a very unique real estate market, not only in that it is super expensive, but the opportunities to build wealth with short sale, foreclosure and bank-owned homes.

Short sale and foreclosure homes provides a unique opportunity for investor to salvage unmarketable homes back to health, and help it re-integrate into the community.

I guess that’s why we call it “rehab” when referring to renovating a real estate property.

Many local residence have bad impression of real estate investors. Many thinks that it is the bottomless pockets of real estate investors who is manipulating the real estate market to the point, where “affordable” housing is NOT affordable to them.

I’m sure there are many crooks out there doing just that.

But, the way I see it is that real estate investors’ job is to help local community by rehabbing poor-conditioned properties back to life and back to sellable condition.

Many short sale and foreclosed properties are in such disarrayed condition that banks would not lend money on. Which means, these properties are only available to cash buyers, who are real estate investors with the cash or connection to money lenders.

They’re the ones with vision and willingness to take the risk and borrow expensive hard money cash to buy and rehab the properties, bringing them back to life putting more available properties back to the market.

Hello…supply and demand…so now more credit-worthy individuals can now qualify for conventional mortgage from banks to purchase these properties.

Browse these Sources of Short Sale and Foreclosure Real Estate Properties:

Auction.com.

Bank Foreclosure Sales.

Bank of America Foreclosure Listings.

HomePath Homes.

Hubzu.com.

HUD Homes.

Star Advertiser Notice of Foreclosure Sale.

Zillow Foreclosure Homes in Honolulu.

Hawaii Foreclosure 101

Hawaii Foreclosure Process

What is a Foreclosure?

A foreclosure is a legal process by which a homeowner’s right to the property is terminated, usually due to default. It typically involves a forced sale of the property at public auction with the proceeds applied toward the mortgage debt.

In Hawaii, mortgage lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure.

In judicial foreclosure or “foreclosure by action”, the mortgage lender files the appropriate documents with the court to rule that the homeowner is in default.

The mortgage lender then delivers the notice of default to the homeowner, or publishes the notice if they have trouble contacting the homeowner.

The homeowner has 20 days to respond. If the homeowner does not respond in 20 days, the court would find the homeowner in default and the mortgage lender can proceed with scheduling the foreclosure sale.

However, the homeowner has 30 days after the notice of default to file a notice of appeal.

A commissioner is usually appointed to sell the property at the public auction, which are usually held at the court house steps. The commissioner publishes the notice of foreclosure sale in the local paper showing the auction dates and open house dates, if any.

Any party may bid at the auction and the winning bidder is required to pay 10 percent of the bid cash or cashier’s check.
Unfortunately, the highest bidder does not automatically get the property. Additional bidding may continue at a confirmation hearing. If the court find the price fair at the confirmation hearing, then the sale is confirmed.

Non-judicial foreclosure or “foreclosure by sale”, does not involve any court action.

The mortgage promissory note usually contain a provision called a “power of sale” clause, which allows the mortgage lender to foreclose on the property upon default to satisfy the unpaid mortgage loan.

In a non-judicial foreclosure, the mortgage lender’s attorney would publish a notice of foreclosure sale once a week for three (3) consecutive weeks in a local newspaper in the county the property is located.

The last publication cannot be less than fourteen (14) days before the sale.

The copy of notice must be posted on the property and mailed or delivered to the homeowner no less than 21 days prior to the foreclosure sale.

The foreclosed property is auctioned off to the highest bidder. The auction maybe rescheduled, which happens frequently. And the notices of sale must be re-sent and re-published.

The homeowner has up to the three (3) days prior to the foreclosure sale to save the default by paying the defaulted debt along with any costs and reasonable attorney’s fee.

Hawaii offers no right of redemption for homeowners once the sale of the property is confirmed. However, homeowners in Hawaii do have up to one (1) year to redeem a tax lien foreclosure.

After the foreclosure sale, a homeowner may still face deficiency judgement if the proceeds from the foreclosure is not enough to pay off the mortgage promissory note IN FULL, meaning the property was sold SHORT.

A foreclosing mortgage lender who completed a non-judicial foreclosure of residential property is prohibited from pursuing a deficiency judgement against the homeowner unless the debt is secured by other collateral.

Read Avoid Foreclosure at All Cost.

Homeowners’ Guide to Avoid Foreclosure at All Cost

Short Sale vs Foreclosure

Homeowners facing economic hardships may have a foreclosure looming, but are often too proud or uninformed to do anything about it, until its too late.  Before considering bankruptcy or allowing the bank to foreclose, consider a short sale.  

Unlike a short sale, foreclosures are initiated by lenders only. The lender moves against delinquent borrowers to force the sale of a home, hoping to make good on its initial investment of the mortgage.

Also, unlike most short sales, many foreclosures take place when the homeowner has abandoned the home. If the occupants have not yet left the home, they are evicted by the lender in the foreclosure process.

Once the lender has access to the home, it orders its own appraisal and proceeds with trying to sell the home. Foreclosures do not normally take as long to complete as a short sale, because the lender is concerned with liquidating the asset quickly. Foreclosed homes may also be auctioned off at a "trustee sale," where buyers bid on homes in a public process.

In most circumstances, homeowners who experience foreclosure need to wait a minimum of five years to purchase another home. The foreclosure is kept on a person's credit report for up to seven years.

Although there is no guarantee your lender will agree to a short sale, here is a list of the benefits of participating in a short sale, versus being foreclosed upon. 

Benefits Of A Short Sale Versus Foreclosure

• Homeowner can apply for a short sale even if they're not behind in payments.

• There in ZERO COST to the homeowner in short sale. The lender pays all the selling costs and real estate commission. Meaning the homeowner has nothing to lose!

• The homeowner receives professional guidance from real estate agent when doing a short sale.

• A short sale may postpone the foreclosure action to allow enough time for house to be sold.

• Homeowner may qualify for financial or relocation incentives from the lender, and receive up to $10,000 for relocation from a government program called HAFA which provides an option for homeowners transitioning out of their mortgage.

• A short sale only affects your credit score between 50-70 points vs 200-400 points with foreclosure.

• Homeowner may qualify for another mortgage loan as soon as 2 years, as compared to 7 years with a foreclosure.

• Doing a short sale avoids foreclosure and waives the full deficiency owed by the homeowner. They can now walk away from the property free and clear.

• Possible tax relief from cancellation of any debt income.

• Short sales are not likely to affect jobs that require a security clearance.

• It is easier to recover financially and emotionally from a short sale than a foreclosure.

If you plan to simply pack up, leave and “let the bank have the property”. This is the worst idea ever for the following reasons:

• If you leave the house, you will still owe the balance on the mortgage plus penalties and late fees (which in many cases is tens of thousands of dollars). This means that by law you are responsible for paying off this balance over the next 10 to 20 years for a property you no longer own!

• If you walk away from the house, the bank will still try to recover the money. They can legally do this by garnishing your future wages and investments!

• If you let the property go into foreclosure, your credit score can be affected up to 400 points. This means that it is going to be hard to find somewhere to rent (if they do credit checks). It is going to be hard to get another mortgage for a very long time with a foreclosure on your record. It is also going to be hard to get credit (in general) with a foreclosure on your record.

• Having a foreclosure on your record can also be a hindrance in getting a job, especially ones that require security clearance.

Read What is Short Sale?.

 

Short Sale vs Foreclosure

Invest in Short Sale?

Short Sale Timeline for Buyers

Read What is Short Sale?.

A short sale can be a good deal for a cash buyer or investor. And it can help the seller avoid having a full foreclosure on his or her credit record.

Because in a short sale, the proceeds from the home sale are less than the amount the seller needs to pay off the mortgage debt and the costs of selling, so for this deal to go through, everyone who is owed money must agree to take less -- or possibly no money at all. This is one reason why short sale can be a very complex transaction that move slowly and often falls through.It is a lengthy and paperwork-intensive transaction that may take up to a whole year to process.

If approved for short sale, the buyer or investor negotiates with the homeowner first, then seeks approval on the purchase from the bank. It is important to note that no short sale may occur without the lender’s approval.

Before you rush in, consider the following issues.

1. Know what you are getting into. Buying a short sale is not a do-it-yourself project. Find a real estate professional (even attorney), who understands the short sale process in your state. Having an experienced and knowledgeable real estate agent (or fellow investor) on your side who knows how short sales work will increase the chances of closing the deal without loosing your shirt. Even under the ideal circumstances, short sales can take a long time to close and may require extra effort on the part of the buyer.

2. Be wary of the condition of the property. If the seller is in financial distress, chances are the home may not be well-preserved. The seller also may be reluctant to reveal serious maintenance issues. Proceed carefully and get the property inspected by a knowledgeable person before you commit.

3. Make sure the deal can close. If you've decided to go for it, the first step is to determine the status of the short sale. Below are items that most lenders require from a short seller. If the seller is unable or unwilling to provide this information, the short sale won't close and any buyer is wasting his or her time.

A hardship letter. The seller must explain why he/she cannot keep up with making payments. The sadder the story, the better. A seller who is simply tired of struggling probably won't be approved, but a seller with cancer, no job and an empty bank account may. The most common acceptable reasons are divorce, bankruptcy, loss of job or some kind of emergency.

Proof of income and assets. It is in the best interest of the lender to recover funds from the home owner. If the lender discovers that the home owner has other assets, including retirement funds, they may prefer to liquidate these assets for payment on the mortgage, and denies the short sale. The proof of income and assets must include income tax and bank statements, going back at least two years. Sometimes sellers are unwilling to produce these documents because they conflict with information on the original loan application, which may have been fudged. If that's the case, this deal is unlikely to close.

Comparative market analysis. This document shows that the value of the property has declined, which essentially means the home owner has no equity in the property, and it won't sell anytime soon for the amount owed. The comparative market analysis should include a list of comparable properties on the market and a list of properties that have sold in the past six months or have been on the market in that time frame and are about to close. This analysis is very similar to the Broker Price Opinion, which is less formal but often more informative than a property appraisal. The prices should support the seller's contention that the property is worth no more than the short-sale price.

A list of liens. The home owner must be at least 3 months behind on the mortgage and has been served a lis pendens from the court indicating that the lender intends to foreclose on the property if they do not receive payment in the near future. There may be more than one lender or liens on the property, and all lien holders have to agree to take less -- or possibly no money at all..

If there are first and second mortgage liens, the question becomes: What's the plan to satisfy these lien holders? If there is a third mortgage lien, reaching any deal is very iffy.

Deal killers include child support liens, state tax liens and homeowners association liens. If they exist and there are no obvious solutions, walk away, Thompson says.

Because a short sale generally doesn't cover the whole amount owed or other liens, it can trigger mortgage insurance. If the property is covered by a mortgage insurance policy that doesn't have to pay off until the home has been in foreclosure for 150 days or some similar length of time, chances are the insurer will hold up the sale because it won't want to pay any earlier than necessary and hopes the foreclosure will just disappear. Often the mortgage insurer will simply go silent. Thompson says: No response, no approval.

4. Be realistic. Short sale is a waiting game. This is not your game, if you're in a hurry.
Part of the slow down in short sale is potential buyers’ lowball offers, which are ultimately rejected.

Another factor is the increasing number of government programs aimed at keeping people in their homes. According to the Mortgage Bankers Association, about 50 percent of defaults never go as far as foreclosure. So lenders see short sales as potentially the least attractive option and aren't willing to expedite them.

To avoid getting stuck in an extended process of negotiation, start by negotiating with the seller and the seller's agent that your offer will be the only one presented to the lender. If the lender isn't flooded with offers, it will be more motivated to move forward.

5. Have your cash ready. Once you have a deal, you should have your money ready, preferably cash. If you're getting a loan, you need bank approval in advance.

As with any deals like REOs, short sales, foreclosure, or auctions -- make sure you have money lined up ready to go. Cash is always the best financing option in all these deals.

Search Hawaii Hard Money Lenders.

What is Short Sale?

What is a short sale?

A short sale in real estate is a voluntary process that happens when the bank or lender allows the homeowner to sell the property for less than what is owed on the mortgage loan. The homeowner closes on the real estate property and the property is “sold short”. This can happen prior to the property entering the foreclosure process. The homeowner receives nothing from the sale.

With both a short sale or foreclosure, the homeowner ultimately loses his/or home. A short sale may allow you to avoid foreclosure and walk away with less damage to your credit score.  While a short sale will not show up on the homeowner’s credit report, the mortgage status will. For those in default, it’s a pre-foreclosure that has been redeemed, which is often reported as “Paid in Full for Less Than Agreed. A short sale, however, does not release the homeowner from the remaining loans, such as second or third mortgages, if any.

One benefit to a successful short sale is that some homeowners are now eligible to obtain a new mortgage loan for the purchase of a replacement house.  That is not possible with a foreclosure, which has a typical wait period of a minimum of 3 to 7 years.

Common Reasons That Result in Short Sale

• The home was refinanced at 100% (or greater) than its present fair market value.
• The home requires too many costly repairs to sell, and the market won't support a sufficient price.
• The home was financed with an interest-only loan, and homeowner is now unable to refinance.
• The home is located in a neighborhood or area with distressed economic conditions.
• The home was purchased at the top of the real estate cycle, and a substantial drop in value has occurred.

Read Short Sale vs Foreclosure.

Why Would a Mortgage Lender Agree to a Short Sale?

A short sale is typically faster and less expensive than a foreclosure. Many mortgage lenders would agree to participate in a short sale because the lender will incur a smaller financial loss compared to a foreclosure or continued non-payment.

How To Qualify For a Short Sale and (possibly) Avoid Foreclosure

A Short Sale may seem like an easy way out of a likely foreclosure, but not every homeowner qualifies for it. Even if they do qualify, the homeowner has to find a buyer, preferably a cash buyer, and the bank has to accept the offer.

A homeowner must meet the following requirements in order for the short sale to be considered:

A hardship letter. The seller must explain why he/she cannot keep up with making payments. The sadder the story, the better. A seller who is simply tired of struggling probably won't be approved, but a seller with cancer, no job and an empty bank account may. The most common acceptable reasons are divorce, bankruptcy, loss of job or some kind of emergency.

Proof of income and assets. It is in the best interest of the lender to recover funds from the home owner. If the lender discovers that the home owner has other assets, including retirement funds, they may prefer to liquidate these assets for payment on the mortgage, and denies the short sale. The proof of income and assets must include income tax and bank statements, going back at least two years. Sometimes sellers are unwilling to produce these documents because they conflict with information on the original loan application, which may have been fudged. If that's the case, this deal is unlikely to close.

Comparative market analysis. This document shows that the value of the property has declined, which essentially means the home owner has no equity in the property, and it won't sell anytime soon for the amount owed. The comparative market analysis should include a list of comparable properties on the market and a list of properties that have sold in the past six months or have been on the market in that time frame and are about to close. This analysis is very similar to the Broker Price Opinion, which is less formal but often more informative than a property appraisal. The prices should support the seller's contention that the property is worth no more than the short-sale price.

A list of liens. The home owner must be at least 3 months behind on the mortgage and has been served a lis pendens from the court indicating that the lender intends to foreclose on the property if they do not receive payment in the near future. There may be more than one lender or liens on the property, and all lien holders have to agree to take less -- or possibly no money at all.

A qualified buyer. A short sale is dependent on a quailed buyer making an offer to purchase. If an offer is not received, it will not qualify for shot sale. Even if tall the other criteria are met, it is possible that no one will buy the short sale. It is also dependent on the lender accepting the buyer’s offer. If the lender rejects the offer, a short sale will not take place.

* Since late 2008, the IRS has been releasing the federal tax lien. The IRS is not forgiving the back taxes that homeowners owe. It no longer requires the tax lien to be paid off before the property can be sold. This is making the short sale process a bit easier with one less lien to deal with.

Tax Consequence of a Short Sale

If the mortgage lender agrees to a short sale, the lender have rights to issue the homeowner an IRS-1099 for the shorted difference, due to a provision in the IRS code regarding debt forgiveness.

The Mortgage Forgiveness Debt Relief Act of 2007 allows taxpayers to exclude income from the discharge of debt on their primary residence. The debt must be secured by a principal residence and the total amount of the outstanding obligation may not exceed the original mortgage amount plus the cost of any improvements. Debt up to $2 million may be forgiven tax-free.

If a borrower, who is still living in the home, is able to make an arrangement with a lender that reduces the principal balance of a mortgage, the amount forgiven will not be taxed.

Read Hawaii Foreclosure 101.

Short Sale Process for Homeowners