How to Avoid Foreclosure

Although foreclosure in Hawaii is much less common than in other states, many of you may be concerned with the fluctuating economy. Fortunately, there are some steps that can be taken to help prevent this difficult situation.

1. Do not, I repeat, do not procrastinate. If you are finding it difficult to get your mortgage payments met in full or on time, go to your lender as soon as possible. They should be informed immediately if you are having difficulties as many lenders have options that can help you through difficult financial periods. If you ignore the problem, your lender will assume you are just irresponsible.

2. Read your loan documents. Be aware of the terms of the loan. What does your lender have the right to do if you fall behind? Check Hawaii's foreclosure laws and timeframes as they vary from state to state.

 3. Get extra cash. Sell a car? Borrow against a 401K? Get creative about making your assets liquid as you work to increase your income. Lenders want to know the problem is temporary.

4. Get creative about work. If your normal job has been terminated or cut back, consider your abilities. Teach a class perhaps, or get a part time job outside of your primary career.

5. Pay the mortgage first. Have other debts? Putting off other debts is a better idea than putting off house payments. The mortgage should be your first financial priority.

6. Don't involve yourself with foreclosure prevention companies. They cost money that you could use to pay the mortgage instead and you are better off negotiating with your lender than a third party. HUD approved counceling agencies will provide help and information for free.

 7. Scale back on spending. Don't shop for things you don't really need. Don't feel guilty for the economic slowdown. You did not cause it and the best thing for you to do is to take care of your own needs. If you have to buy clothes, go to second hand stores. Food? Buy in bulk. You may even consider planting vegetables!

8. Don't trust foreclosure recovery firms or anyone who claims that they can make the problem go away if you sign their documents. Sometimes you will be signing over your home without your knowledge.

9. Get it in writing. Every response you get from your loan officer should be in writing. Verbal communication cannot be proved unless it is recorded, so the easiest thing to do is to document correspondence.

Check out the U.S. Department of Housing and Urban Development for trustworthy information on issues like these and more.

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