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We live in Maui and are possibly facing foreclosure. I know some people feel like we should do everything we can to hold onto our house in Hawaii but we don't want to. When we first moved here my hubby and I were both working and able to make the mortgage payments. We also thought it would be a short time here as we knew this is where we didn't want to end up raising a family. Well, now we have 2 kids, I am unable to work and pay for decent child care, my husband works 60 hours a week and is not around to help out as much, and most of our family lives on the east coast where we want to move so we can be near them. Maui is beautiful but living here has been really stressful on our family and quality of life. Also, we bought our house as an investment since we were never planning on staying here forever...now with the market being what it is, our house is worth almost 100,000 less than what we owe on it. The point is, we want out and are even willing to deal with a foreclosure if that's what it entails...anyone going through this or something even remotely similar. Any suggestions or stories would be great!
Can you do a short sale? Will the mortgage company refinance and give you a lower rate and/or drop the principal amount as well? Have you contacted them? Don't do "nothing" and wait for a foreclosure.
Actually we thought of doing a short sale but not sure which is the better idea. Houses in our area have been on the market for a very long time and we've talked to realtors twice about putting our house on the market. One told us "don't bother" and one said we'd have to go real short. The point is, we WANT to move almost as much as we need to move so refinancing (which the banks won't do for us anyway) is not something we are even considering....we are paying on interest only loan right now so basically the principal has barely been touched. The only equity we have in the house is our down payment and we are even willing to risk that! I see this thread has a lot of views and only one response so either nobody is in a similar situation, they don't care or nobody "gets" why we would even want to walk away from our house in Hawaii!! This is paradise, right? Well, paradise does come with a cost...one that we are no longer able and willing to pay anymore. I just can't wait to get back to the mainland where my family is and the cost of living is so much cheaper! And no, I'm not exactly looking forward to a foreclosure but it sure would help to hear of anothers stories....Anybody? Anybody at all?
Some mortgage companies will allow you to move out, give them the keys and give you cash for "not trashing" the place. It is called Cash for Keys in mortgage company talk. It can range from as low as $1000 to as much as $10,000 dependent upon how much the property is worth. They will give you an amount and a date you have to be out by. They will document what the property looks like while you are still there and again on the day you vacate. If everything is OK, you are handed the check by the mortgage company agent - usually the real estate agent that will then be handling the sale after you vacate. The plus is that no foreclosure goes onto your credit and you won't owe anything else. The downside is that the money they pay you is taxable.
Wow...thanks mdand3boys! I had never heard of that so that is good to know! We had never planned on trashing the place anyway....even though it is too expensive and we are ready to move on, this has been our home for over almost 4 years now. Anyway, I will tell my husband!
Md, is that correct that it doesn't ding you? I know a couple who did that but they couldn't get that deal until the home was in forclosure. They made the offer and the bank was willing but they said the bank couldn't enter into that agreement until they officially started formal forclosure.
Be carefully taking a forclosure over other options as it goes against you. You may find it hard to rent a place when they do a credit check. Some employers won't hire with a forclosure on record. Your credit card company could jack up your rates or terminate your card because of it.
You have to balance all the negatives with the positives. I've seen a friend facing the same situation but worked for a financial company and couldn't afford a ding on his record, so instead of doing something that would go against him, he rented out the house for a price that covered most cost. he was out a hundred or so each month, but it's a better choice over a forclosure.
You will want to check if Hawaii has a deficiency clause. This lets the mortgage company file a judgement against you for the amount they got at sale and the amount you owed. So in addition to the forclosure ding, you got a judgement for the balance of what you owe.
We lived in our house in CA and have an investment house in Mississippi. It couldn't rent and my husband lose his job. We had contacted the mortgage company to ask for reassessment of our loan. They wouldn't even talk to us until we were late 3 months. We applied for deed in lieu. It is basically like foreclosure but instead of having the bank spend thousands on paperwork you give them the deed to your house. You walk away from it with no profit but it will not be as bad on credit as a foreclosure. You don't have to pay any money. Just apply with your mortgage company and if qualify they basically take the keys and you are done. We did this after having our condo on the market for over 18 months. The end result is the same you have no house and the bank now has it, but it is better for you to give it to them instead of them taking it. The process is lengthy and takes 30-60 days so I would apply and call them now to start., Also your house has to be listed on market, for them to see you made an effort of trying to sell it. You should list with an agent anyway because if you can sell it even short sale that is better than foreclosure.
I can tell by your eagerness for a response that this is causing you a lot of stress and pressure, and sympathize with you in the situation.
I bought my home from a family that was about to go into foreclosure. As a matter of fact, they didn't disclose that until I put in an offer, and it caused a lot of extra expense on my part, for an attorney. It also seemed to cause a lot of unnecessary complication on the sale. All of this wasn't because of the foreclosure, but because of the timing of it. Because we didn't know of the looming foreclosure, our close date was set to AFTER the date the house would have gone into foreclosure, which makes no sense at all... the house would have been sold at auction and the homeowners would get no money at all.
Anwway, my advice to you, if you decide to sell, is to be sure to disclose everything to a potential buyer, and to work with them in having the information they need to contact the mortgage holder, know the dates, etc. If the lending bank knows that someone is going to buy your house, they may hold off on any action.
Also, are you sure you are about to go into foreclosure? The family that had our house hadn't paid their mortgage payments for nearly a year, and then the bank finally took action. I am sure there were a lot of threatening letters, but in fact a foreclosure is one of the last things any bank wants right now. They will have a hard time selling your house too, and will likely have to do so at a very discounted rate. If you can show that you are trying to hang in there until you sell, they may give you more time.
As far as whether you should short sell or take foreclosure - that's going to be hard for any of us on the outside to advise. We don't know your whole situation, as far as other debts, or how you see yourself settling elsewhere. You say you can't work because you have 2 kids, but then you would have family in ME. Are they really going to help you out by either taking you in, watching your kids while you work, or lending you money? If so, then perhaps going where you have more support structure is a good idea. But only you will know the reality of that. It could be that your family is in an equally hard position, and then what will you do?
I am not advocating you stay in Hawaii just because. I'm saying that you will need to be hard-case realistic with yourself about your next plan. I agree that Hawaii is more expensive, certainly more than ME. I don't know if you or your husband can find a job or if it will pay more where you are going.
Is there real potential for work for your husband where you are going?
Last thought - I have no legal or professional background for this, just my opinion, but I would say that if you do foreclose, it may not affect your credit as much as it would have done 2-3 years ago. So many people are facing hard economic times, I would think that credit agencies will be awash with similar situations. In the years ahead, when you are ready to try to buy another home, or otherwise need credit, it is possible the lender will look back to this time period and not ding you as much, because you won't be so different than many others.
To make sure you have the best chance of re-establishing credit, I would advise you to be in very open and good communication with your lender and all other parties. Send letters, keep copies, and be professional about everything. Later on you can show that you co-operated, disclosed everything, and did what you could. It will count. But if the bank has to pry things out of you, or you didn't respond to calls & letters, or left them with a mess (physical or paperwork) to clean up, that will likely hurt your chances in the future.
It's a tough emotional situation, and again I offer my symphathy. It's the kind of time when many people would shut down, be defensive or depressed, and not handle the communications. But if you stand up to the situation, and forgive yourself, and realize that the bank is just doing what they need to do to survive too, then perhaps it will give you the strength and clarity to make the right decisions for you and your family.
I wish you the best. Please keep us all informed, and let us know how it goes for you. Your posts will help others in the same situation.
Actually, due to the government bailout programs for mortgage lenders, the banks come out better if they foreclose than if they make a deal with/for you. They get paid for the difference between foreclosure sale amount and the residual of the amount owned. That is why the foreclosure rates are not going down. The banks don't want to make a deal with you since they make more money if they take the house and sell it later, even at a supposed loss.
Yet another time that the government's response to a crisis makes it even worse.
I have lived in Hawaii
I have lived in Maine
I have just completed a mortgage restructure (in Washington State).
Hawaii is definitely a 'love it / hate it' relationship in my experience
Maine is a "LOVE IT" relationship for me (though MUCH to miss in HI).
(All said, however, I will stay in Puget Sound, Washington)
"Upside down" in a mortgage in a place where you don't want to continue living? You'd be nuts to stay if you have a better place to be. The mortage re-structure process is a grueling odyssey, but worth it if you are so attached to your property that it is the only place you want to call home. As I am sure you know, you can own a LOT more in Maine for the money you'd pay to stay in Hawaii.
Credit issues? Regardless of what you hear the pundits *** about on tv news morning shows, your credit will be seriously compromised, at least, if not totally destroyed, by ANY actions you take: foreclosure, short-sale, restructure, deed-in-lieu of foreclosure. The fact (true) that foreclosure will drive your credit lower than any of the other options, does not translate to the other options leaving you credit-worthy. In the current credit climate, only exceptional credit scores will get you ANY (I repeat ANY) credit, at any cost. Even scores that were considered acceptable a year or so ago are no longer valuable. If you move on back to Maine, you will have to rent or find a contract sale with private party. And guess what? Maine has those things.
Go be happy. Live. Love. Spend time with those you care about and who care about you. Thrive on the oceans and forests and solitudes of the wonderful state of Maine. Boot through the spring thaw mud for a few weeks .. then battle the black flies for May. The rest of the year is yours in magnificence! What beats a Maine summer? How could ANYplace (in the entire universe) - even Hawaii - beat a Maine fall?! And even those longish winters are crisp and wondrous ... I am almost envious of your choice - except that my family is here in the next best spot on earth as I live in the San Juan Islands.
Good luck. Swat a couple of those B-52 sized mosquitoes for me, will you?
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similiar situation
What beats a Maine summer? How could ANYplace (in the entire universe) - even Hawaii - beat a Maine fall?! And even those longish winters are crisp and wondrous ... I am almost envious of your choice - except that my family is here in the next best spot on earth as I live in the San Juan Islands.
