We have always presented short sales as the honorable alternative to foreclosure. A new act signed into law in early May should help to make short sales easier for banks and homeowners (and condo owners).
Under the old law, most foreclosures in Maui were non-judicial foreclosures. Banks and other lien holders tended to prefer the non-judicial route to foreclosure because it was comparatively fast, comparatively cheap and didn’t involve the courts. It seems that some homeowners didn’t fight them because they couldn’t make their payments and, if the property was foreclosed, there was very little chance of the lender pursuing a deficiency judgment.
However, many homeowners did try to work something out with their lender in the way of a loan modification, a short sale or a deed in lieu of foreclosure. Many, many of those failed for one reason or another and a lot of those homeowners complained loud and hard that their lender either didn’t listen, wouldn’t work with them or worse, intentionally made it impossible for the homeowner to work something out. We even heard of cases in which loan mods were completed, it seemed everyone was happy, and the bank still foreclosed. How could that happen?
So, the state of Hawaii responded with Act 48. It is a very complicated act, and at the very real risk of oversimplifying it, here’s what it does.
Owner occupants, not investors, who feel that their lender is not working with them in a reasonable way, and is pursuing a non-judicial foreclosure, may demand a face-to-face mediation meeting. It's not free, the bank and the home owner must pay fees. The bank is required agree to the mediation, but there is no guarantee that the mediation will be successful. In that case the foreclosure may still go forward. If it does, the bank can foreclose, but in a non-judicial foreclosure the bank is not allowed to pursue a deficiency.
With Act 48 the non-judicial process just got more complex, expensive and time consuming, so, most lenders have stopped pursuing non-judicial foreclosures. In April for example, before Act 48 was passed, there were pages upon pages of non-judicial foreclosure notices in the newspaper everyday. In the last week I didn’t see any.
Instead lenders, including Fannie Mae, are switching to judicial foreclosures. Judicial foreclosures take a very long time (some experts estimate up to 3 years or more), they are expensive to execute for the bank, they do involve the courts and the homeowner is wide open to a substantial deficiency judgment.
With lenders feeling forced to turn to the more expensive, time consuming process and property owners exposed to large deficiency judgments, short sales can provide a simpler process and be a better solution for all parties.
To find out more about Maui short sales and get a free report to help you determine if you can qualify for a short sale go to Aloha Potts Helps Maui Homeowners.
Contact the Aloha Potts team. We are dedicated, compassionate and help steer you through the available alternatives.
Aloha Realty Group is not associated with the government and our service is not approved by the government or your lender. Even if you use our service, your lender may not agree to change your loan.
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