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Nonjudicial foreclosure bypasses the courts in a foreclosure, and is the source of most complaints by consumers, who feel they were not given adequate opportunity to save their homes.
Many homeowners who have lost their homes in a nonjudicial foreclosure still must pay the unpaid balance of their mortgage after the foreclosure.
Levins said the proposed reform would not only ban deficiency judgments, but it would allow homeowners to choose to go through judicial foreclosure, which is overseen by a circuit court judge
more: http://www.kitv.com/news/26653497/detail.html
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Hawaii is one of the easiest states to foreclose. And then go after the person who loses their home for the rest of their assets if they don't get enough money for the property. Everyone should have the right for their day in court. The banks should have to show a judge the paper that says they own the note and can lawfully foreclose, not the case right now. Sure hoping this goes through. Its only fair.
Bullwinkle, are you following the Mers mess?
I am 100% supportive of foreclosure reform in Hawai'i. Hawai'i is a bad state to face either foreclosure or bankruptcy. It's really failed to follow the lead of other states that have responded to the national crisis.
This article confuses me, because any site you use to look up deficiency judgments with non judicial foreclosure in Hawai'i will say that it's already not allowed.
Here is a legal article on the topic that's Hawai'i statute specific.
http://www.attorneyinhawaii.com/Nonjudic...sures.html
It clearly says there cannot be a deficiency judgment. For one thing, a judgment is the product of a court case, so without a court case, how can there be a judgment? Second, it says that the non judicial foreclosure documents will specify that the debt is fully satisfied with the foreclosure alone.
It's a good article, and not long or full of legalese, recommend reading it.
I am aware that homeowners who pursue short sale alternatives do typically retain liability for the unpaid balance of the note, as well possible tax liability for forgiven debt.
Maybe Bob Orts will offer his legal expertise on this one?
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You're right, Kathy, according to the article. Hope legal person comments on this.
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Homeowners that pursue a short sale will not necessarily be subject to tax liability provided the property is their primary residence, and they can prove it's their primary residence. There are also other reasons for using this IRS form, but most use it for short selling their primary residence. It it highly advised you use an accountant or CPA to file your taxes for the year you completed your shortsale. A link is provided to print out the form, but again, see your accountant or CPA. Link provided: http://www.irs.gov/pub/irs-pdf/f982.pdf
Concerning homeowners retaining liability for the unpaid balance of the note, that's one of the reasons it's called a short sale. The bank is being "shorted" the monies due them. However, whether the lender seeks monies from you to pay back the "balance of the note" depends on many factors. If they feel they can get money from you, the lender at closing may make you pay money at closing. This can vary from a few thousand to perhaps $13,000; the highest I've seen but that home closed for $450,000. They purchased it for nearly $800,000. I've also seen money paid at closing (a few thousand) and the seller required to sign an unsecured promissory note for say $3000 to $7000 (pennies on the dollar compared to the balance) at zero percent interest payable over five years to seven years. In the short sale approval letter, it will indicate whether or not there will be a required seller contribution, promissory note, or other monies required of seller. If not, the lender, investors, and MI company (mortgage insurance company)are satisfied with the amount of money they are receiving at closing. This can apply to primary and/or investor owned homes.
These are based on my experiences in Florida. Please contact a REALTOR experienced AND nationally certified in short sales or a real estate attorney specializing in short sales.
Pua`a
S. FL
Big Islander to be.
Pua`a
S. FL
Big Islander to be.
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quote:
Originally posted by Nancy Fryhover
You're right, Kathy, according to the article. Hope legal person comments on this.
Kathy is correct. While I'm not a "legal" person I went to a seminar conducted by a Honolulu real estate law firm on foreclosures last year. My company also has a real estate attorney on retainer to advise our clients facing foreclosure. If the mortgage note contains a Power of Sale than the lender has the right to foreclose without the involvement of the court and there is no deficiency judgment.
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Thank you for the additional info, oink and John. Nancy, I appreciate your passion on this topic! [  ]
I had read that there was a law passed regarding IRS liability on forgiven debt on a mortgage, something about the exemption being specific to a couple years, but I didn't have it in front of me, and I read it a while ago, so I thought it best not to mention it.
IIRC, the form that makes a person liable for any forgiven debt is a 1099C issued by the debt holder. Before a person starts to negotiate any kind of debt forgiveness, it is good to get be clear that no 1099C will be issued.
You can clear a mortgage debt in bankruptcy, but you cannot clear a debt to the IRS!
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Correct, there is no deficiency judgment under Hawaii law in a non-judicial foreclosure. That doesn’t mean you can't get legal looking papers for it, if you get my drift.
Foreclosure proceeding and tax consequences are different matters but often are confused as the same or part of the other. Many politicians also confuse them and are really talking tax consequences as if it’s the foreclosure. Even when they know the law, it makes for good citizen protection PR that may amount to nothing in the foreclosure process.
Any person facing non-judicial foreclosure can (according the requirements of HRS 667) move for a judicial foreclosure, but that could trigger a deficiency judgment,
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Bear in mind that with a judicial or non-judicial foreclosure your credit is dinged hugely, whereas in a short sale, it's dinged a bit. If you can keep your credit clean after a short sale, you'll be eligible to purchase another home with a mortgage in two years. With a foreclosure, it will be many, many years before you can.
Keep in mind too that if you are considering filing bankruptcy prior to your residence being short saled, please talk to a bankruptcy attorney first. Here in Florida, if you file bankruptcy first, an attorney for the lender will ask the bankruptcy court to set aside the home and then foreclose leaving you with a deficiency judgment. If you short sale first here in Florida, you can then take any deficiency judgment with you into bankruptcy, and most times, leave with a cleaner slate.
Pua`a
S. FL
Big Islander to be.
Pua`a
S. FL
Big Islander to be.
Posts: 548
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Any rumors of a class action lawsuit pertaining to mortagage fraud brewing in Hawaii?
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