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.
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,
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.
Why do you ask?