Foreclosure in Princeville>Question Details

catherine, Other/Just Looking in Princeville, HI

How does the National Moratorium on foreclosures and evictions work? Are home owners no longer required to pay their mortgage?

Asked by catherine, Princeville, HI Sun Sep 9, 2012

Are they allowed to just rent the home, collect the rent and not pay the mortgage? When will all of those homes be released to the housing market?

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catherine’s answer
I think the moratorium on foreclosures needs the job market to improve in order to achieve the desired results of real estate market stablization, or prevention of banks collapsing. If living wages do not support housing costs, it seems to me, the moratorium could lead to a second real estate value decline as the supply and demand equation is artificially manipulated. I'm not clear what the two-or five year plan is for this moratorium is and without that information I do not see how purchasers or renters can make informed decisions.
0 votes Thank Flag Link Sun Sep 9, 2012
Aloha Catherine,

In response to asking specifically if a homeowner is "allowed" to rent the home, collect rent, and stop paying their mortgage, as a REALTOR that is out of the scope of our expertise to advise in such a way. Perhaps a real estate lawyer can answer what the law allows. As for when are the foreclosures going to be released, that's a great question. I think many of us are asking the same question! We have only seen a small trickle so far, not a flood. We'll have to stay tuned.
0 votes Thank Flag Link Sun Sep 9, 2012
Aloha, Catherine.

The state of Hawaii is now a judicial state as far as foreclosures. This means once a person has not paid their mortgage and is in default, the bank will have to start the foreclosure process. Since it is a judicial process, needing court approval, this can take a long tIme. The courts here are backed up. So, what happens, once a person gives up and stops paying their mortgage, it could be up to a year before the bank can officially take back the house. So, some people are taking advantage of this new law.

The questions you pose though do sound more related to what happens during the short sale process. We see this happen. A person who owes more on the home that what it's worth and is in financial trouble. Once they start the process, in done cases, they will need to stop making payments to the bank to approve for a short sale. Them they move out and rent it out and collect money while not paying the bank.

With warm Aloha,
0 votes Thank Flag Link Sun Sep 9, 2012
This is a movement that is on going. My understanding is that people are marching to congress and want the Banks to work more closely at a resolution to allow people to stay in their homes. Such as modifying the loan terms, rolling back house mortgage to current values, and other measures, instead of going directly to foreclosure. No it doesn't mean that people can stop making their payments. They are to be responsible. Responsible doesn't mean taking advantage of a bad situation.

Our housing inventory in California is at its very lowest and the Bank Owned and Short Sale properties have dropped significantly. Banks are acting appropriately by not flooding the market with those homes as they did when our values dropped due to the high inventory of distressed properties. So with that, I expect our inventory to be reasonable.

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0 votes Thank Flag Link Sun Sep 9, 2012
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