Homeowners can encounter many complications that make it difficult, if not impossible, to make their mortgage payments. Many of these complications are unavoidable and can happen to almost anyone. Some of these obstacles are:
- Job loss
- Reduced Income
- Mortgage rate increase
- Medical expenses
- Unexpected second loans
- Serious credit card debt
Regardless of the financial reasons, many Hawaiians find themselves at risk of losing their homes.
Facing foreclosure is one of the most stressful problems you can encounter. Countless question may be running through your mind. You can lie awake at night worrying about these questions, or you can ignore them and pretend they will go away, but neither of these is going to help you. Worrying and avoiding your financial situation is not going to make it disappear. You need to take action, and the sooner the better.
Thankfully, several preventive measures exist for Hawaii homeowners who need to avoid foreclosure. These solutions – like reducing your monthly payment or temporarily suspending your mortgage – can greatly help you if you are now unable to afford your mortgage or are at risk of foreclosure.
The Department of the Treasury offers multiple programs, and your options can range from refinancing to mortgage modifications to short sales.
The first step is to work with your lender and learn what the choices are for your situation. Then you can decide which one might be right for you to help you avoid losing your home and ruining your credit.
Making Home Affordable Program (MHA)
The MHA was established through the Department of the Treasury during the Obama administration to help people in all 50 states who are struggling to keep their property out of foreclosure. For homeowners in Hawaii, the Making Home Affordable Program offers multiple options for refinancing or adjusting your existing mortgage. These include options for:
- Those who are unemployed
- Those who can’t afford their current payments
- Those whose homes have decreased in value
- Those who owe more than their home is worth
- Those dealing with second mortgages
- Those who need to transition to more affordable housing
- Those who need access to lower-rate loans
If you are unemployed and qualify, the MHA can help by temporarily suspending your mortgage. And if you just decide that owning a home is not right for your current living situation, the MHA may be able to help you relinquish your mortgage without long-term credit damage or bankruptcy.
- Home Affordable Modification Program (HAMP)
HAMP is the foundation of the Making Home Affordable program. If you are already facing the threat of foreclosure here in Hawaii, the Home Affordable Modification Program may be your answer. HAMP can make adjustments to your mortgage, taking your monthly payment to 31% of your gross income, making it much more realistic option for many homeowners.
The average HAMP adjustment results in a 40% decrease from your original payment. For many Hawaii homeowners, this decrease can be as much as $1000 a month.
However, if you are still current on your loan, HARP might be the solution for you.
- Home Affordable Refinance Program (HARP) – Expired 12/31/18
HARP was created by the Federal Housing Finance Agency, especially for homeowners who are in good standing with their lending agency, but have little or no equity in their home.If you are up-to-date on your mortgage payments, but haven’t been able to refinance, the Home Affordable Refinance Program may be your answer. If the value of your home has dropped and you owe more than the home is worth, you may also be eligible.
This program can benefit Hawaii homeowners with a loan-to-value ratio of more than 80% by offering affordable refinancing. For example, if you owe $200,000 on your home, but it is currently valued at $160,000, you may qualify.
If your loan is owned by Fannie Mae or Freddie Mac, HARP may also be able to assist you with a lower rate mortgage that isn’t based on a minimum credit score or cash up front.
- Selling Your Home – Short Sale
Another viable option for Hawaii homeowners wanting to avoid foreclosure is the Short Sale. What is this exactly? The Short Sale is working with your lender to sell your property for less than the outstanding mortgage.This is not the ideal choice for either party, but many lending institutions would prefer to take a small loss now rather than have to foreclose later and risk an enormous loss.
The Short Sale allows the bank or credit union to avoid repossessing the home – which is both a time-consuming and expensive process – and allows the homeowner to avoid the negative credit consequences of foreclosure and the subsequent bankruptcy that often accompanies the process.
Hawaii homeowners are not without options when it comes to facing potential foreclosure. The key is to get ahead of the process, learn your options, and take action.
For more information:
- Hawaii Foreclosure Information Center
- ￼HUD Approved Housing Counseling Agencies – counseling on mortgage defaults and delinquencies, foreclosures, credit issues and reverse mortgages
- Legal assistance
- ￼State of Hawaii Office of Consumer Protection
- Veterans Affairs Regional Loan Center – assistance for veterans with delinquent mortgage loans