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Understanding Foreclosures

It is an unfortunate commentary, but when economic activity declines and housing activity decreases, more real property enters the foreclosure process. High interest rates and creative financing arrangements are also contributing factors.

When prices are rapidly accelerating during a real estate “bonanza”, many people go to any lengths available to get into the market through investments in vacation homes, rental housing and trading up to more expensive properties. In some cases, this results in the taking on of high interest rate payments and second, third and even fourth deeds of trust. Many buyers anticipate that interest rates will drop and home prices will continue to escalate. It is possible that neither will occur and borrowers may be faced with large balloon payments becoming due. When payments cannot be met, the foreclosure process looms on the horizon.

In the foreclosure process, one thing should be kept in mind: as a general rule, a lender would rather receive payments than receive a home due to a foreclosure. Lenders are not in the business of selling real estate and will often try to accommodate property owners who are having payment problems. The best plan is to contact the lender before payment problems arise. If monthly payments are too hefty, it may be that a lender will be able to make some alternative payment arrangements until the owner’s financial situation improves.

Let’s say, however, that a property owner has missed payments and has not made any alternate arrangements with the lender. In this case, the lender may decide to begin the foreclosure process. Under such circumstances, the lender, whether a bank, savings and loan or private party, will request that the trustee, often a title company, file a notice of default with the county recorder’s office. A copy of the notice is mailed to the property owner.

If the default is due to a balloon payment not being made when due, the lender can require full payment on the entire outstanding loan as the only way to cure the default. If the default is not cured, the lender may direct the trustee to sell the property at a public sale.

In cases of a public sale, a notice of sale must be published in a local newspaper and posted in a public place, usually the courthouse, for three consecutive weeks. Once the notice of sale has been recorded, the property owner has until 5 days prior to the published sale date to bring the loan current. If the owner cures the default by making up the payments, the deed of trust will be reinstated and regular monthly payments will continue as before.

After this time, it may still be possible for the property owner to work out a postponement on the sale with the lender. However, if no postponement is reached, the property goes on the block. At the sale, buyers must pay the amount of their bid in cash, cashier’s check or other instrument acceptable to the trustee. A lender may “credit bid” up to the amount of the obligation being foreclosed upon.

With the recent attention given to foreclosure, there also has been corresponding interest in buying foreclosed properties. However, caveat emptor: buyer beware. Foreclosed properties are very likely to be burdened with overdue taxes, liens and clouded titles. A buyer should do his homework and ask a local title company for information concerning these outstanding liens and encumbrances. Title insurance may or may not be available following a foreclosure sale and various exceptions may be included in any title insurance policy issued to a buyer of a foreclosed property.

Your local title company will be happy to provide additional information.

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Testimonials

5/18/2016 Aloha Lance! Thank you all for your “local kine” support of the Big Island Chocolate Festival this year. It was really very successful and your support helped us keep the ball rolling as we brought tickets in. I will let you know how much was raised for the schools, but wanted you to see this online news story that mentions your sponsorship. Hawaii 24/7 has quite a large readership. Thanks again! http://www.hawaii247.com/2016/05/15/big-island-chocolate-festival-names-top-confections/ Julie Ziemelis-Owner Ziemelis Communications Integrated Communications Expert-PR
2/29/2016 In 15+ years of Hawaii Mortgage Company dealing with thousands of realtors, it is very rare when you come upon agents who really care and love what they do and want to make the transaction as wonderful as possible for all parties involved. Lance and Kimi go above and beyond for their clients and the mortgage professionals (like us!) who they are working with. In a world full of mortgage regulations, Lance and Kimi make sure to keep everyone on track of the timelines to ensure closing on time, which benefits both the sellers and buyers. We are lucky to work with them and look forward to many more transactions together in the future! Maura K. Shannon Manager / Mortgage Loan Originator NMLS #339190 Hawaii Mortgage Company NMLS #232582 443 Portlock Road Honolulu, Hawaii 96825 Tel: 808-988-6622 Fax: 808-988-7722 Maura K. Shannon
1/18/2016 I recently referred a client to Lance and he was spectacular. I refer a lot of agents outside of my market and Lance has by far been the most impressive I've ever had the pleasure to recommend. He has his thumb on the market and he is a master communicator. He is extremely good with follow up and he is one step ahead; just as you are thinking you want to reach out to check in with him, you'll find an email with an update answering the questions you hadn't even asked yet. He is everything you'd expect in a high performing professional and more. Plus his great personality makes him fun to work with. I'm truly impressed beyond all expectations. Jana S. Realtor Seattle WA.
10/14/2015 Lance Owens is the one of the best realtors in Kona. He has done a couple of my real estate purchases and is always above board on expectations and knows the Kona market as well as anyone. He has helped tremendously in getting the right deal at the right price. He is always available and very generous with his time, a gift when you are as busy as he is. Lance is trustworthy to handle your biggest investment. Bop P. Tampa, Florida
10/7/2015 I have personally known Lance for over 20 years... Even before he became a realtor! Lance is not your typical realtor. His ethics, integrity and work ethic are second to none. He and his partner Kimi are dedicated to work hard on your behalf... Not just out to get a commission! I would recommend Lance if you really want to get the best offer on your property and I would definitely use him again as my real estate agent!!! You will not be disappointed! I give Lance & Kimi 10 stars! Vicki Y. Honolulu, HI
Lance gives 100% always...we were lucky and grateful to be able to work with him several times! We liked the fact that he is honest, trustworthy, & always looking out for the best interests of his clients. At times the buying or selling process of a home can be a headache. Lance always has a demeanor that seems to make any situation positive. He exceeded our expectations and along the way gained our friendship. We would recommend Lance to our family and friends any day!!! Thanks ---Lance!!! :) C&D L H.O.V.E. HI
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