if you bought a house in Puna in the last 5 years

[Kelena]

I am sorry this is happening to you.

In 2005, only a handful were predicting the following:

* Housing prices would have not only a "hard landing", but the wings would fall off and the engines would be incinerated.
* That Lehman Brothers, a century old financial institution and a symbol of Wall Street, would vanish overnight.
* That Merrill Lynch would collapse, the remainders being snapped up by Bank of America, which would finance the purchase through a midnight raid on the treasury on the eve of an election where the legislation was cast as "do or die".
* That people would begin talking about the Great Depression as if it were in the futre, and not the past. And that it would be worse this timebecause we don't make anything in America, our corn is inedible, our families are scattered, and the family farms that sustained us in the Great Depression are fading into history.

Many of us who were not ready to come over earlier, have missed the slingshot and will have to work our way over.

And no, you aren't the only one affected. I have had a condo for sale in New Orleans since the very first day I set foot in Hawaii in 2006. The value of my home in Southern California is getting very close to what I paid for it and, I imagine, will fall through that floor before this is all over. Anyone with a home has been affected. Anyone with a job could be affected, along with anyone who doesn't have a job who wants one. Anyone with a 401k is in shock right now. I am very lucky to have a very stable job.

You must decide if you want to continue to live in this house and accept the burden. If you do want to stay, then a loan modification is your best bet. With regard to that, it is the Wild West right now and there is an element of arbitrariness to it. Always worth a try with your lender, though. There are also a lot of proposals in this area right now, so you need to keep up on that....or consult with someone who does.

If you don't want to stay, you need to understand the downsides to walking way (credit, possible deficiency judgments). I cannot advise you on that. In California, if the lender chooses to proceed by non-judicial foreclosure, that is to say, a trustee's sale on the courthouse steps, without filing a lawsuit, the lender waives the right to pursue you for the difference between the actual value of the house and the amount of the loan (the deficiency). You have a ding to your credit, but there is no credit to be had anyway right now. And rent is very cheap in HPP! The thing to avoid is the deficiency.

This is not my area of expertise (took a class in law school though and got an A, 23 years ago!), and I cannot advise you on Hawaii law, but a quick consultation with an attorney there may make the options clearer. Bring your loan documents with you. And don't despair. There is a lot of soul searching going on in America. We are wondering where we misplaced them. Hope is on the way.