Kona Kohala Blog

I got a call this morning asking about condos for sale under $125,000.  Lo and behold, there are 4 fee simple condos in that range.  These condos typically rent for $900 to $1,000 per month meaning you could make a profit or at lease break even.  That's a first in west Hawaii in a long long time.

How about the "Homeowner Affordability and Stability Plan"?  It turns out to be a 17 page document explaining who's eligible and how each program works.  Essentially, to qualify you must be an owner occupant, the balance of the first lien can not exceed $729,750 and it's okay if you're already in foreclosure or are suing the lender.

If you qualify, the lender is required to reduce something to get your monthly payments down to no more than 31% of your before tax income.  This can be done by lowering your interest rate to as low as 2% or extending the loan to 40 years or a combination of the two.  If neither of those work, you may be able to "forebear" principal.  This means the lender would lower the amount of the mortgage (you'd still owe on the original amount) to a level that would get your monthly payments down to the 31% magic number.  Now, none of these fixes are permanent, everything goes back to where it was after 5 years.

Most people interviewed in a recent poll by Trulia Research agreed that the administration isn't doing enough to help home buyers and that what is being done for home owners will not be enough to be of significance. 

The number of foreclosures in west Hawaii continues to rise but not at the rate they did last year.  Short sales have become common place with just about everyone who gets into trouble going to their lender and asking for a short sale.

The problem for some of these people is that the lender may agree as long as they are still going to get the difference between the sale price and what is owed paid back to them.  This is done through a "deficiency notice".  This is a separate note, another loan in the amount of that still owed by the seller.  In some cases of extreme need, the lenders are forgiving the debt completely and taking a loss on the loan.

It's hard to say what is right.  No one wants to see people thrown out of their homes even if they did something stupid like get sucked into something that sounded too good to be true and turned out to be.  At the same time, what about the people who are busting their butts to make their payments; doesn't that seem a little unfair to them to be saving their neighbor 'cause they did a dumb thing and can't keep up?  I guess the question may be, is there a right thing?  aloha