· A 3-year Mortgage Foreclosure Dispute Resolution Program will be in operation no later than October 1, 2011, for nonjudicial foreclosures of residential real property occupied by mortgagors who have been owner-occupants for at least 200 days immediately before the initiation of a foreclosure proceeding.
· The purpose of the program is to reach an agreement that avoids foreclosure or mitigates damages in cases where foreclosure is unavoidable. The program is not intended to provide a bail-out for owner-occupants or prevent all foreclosures.
· If an owner-occupant elects to participate in the Program, the foreclosing mortgagee must participate.
· Under the program, the owner-occupant and mortgagee, or their representatives, must meet in at least one dispute resolution session with a neutral.
· Initial funding for the Program will be provided from the Compliance Resolution Special Fund which amounts will be reimbursed from various filing fees. The Program will then be sustained by continuous funding from these filing fees.
· The DCCA must report to the Legislature prior to the 2012 and 2013 Regular Sessions on the operations and outcomes of the Program.
· Owner-occupants who elect to participate in the Program cannot also convert their nonjudical foreclosure to a judicial foreclosure.
· The Program will sunset on September 30, 2014.
· More information is available on the DCCA website at: http://hawaii.gov/dcca/oah/mfdr/mortagage-foreclosure-dispute-resolution-mfdr-program.
· Until December 31, 2012, there is a stream-lined procedure for an owner-occupant of a residential property subject to nonjudicial foreclosure to convert to a judicial foreclosure except:
o In cases of foreclosures of association liens for condominiums; and
o If the mortgagor has elected to participate in the Mortgage Foreclosure Dispute Resolution Program.
· A phase-in period until August 15, 2011, will allow owner-occupants currently undergoing a nonjudicial foreclosure to convert to a judicial foreclosure provided that the nonjudicial foreclosure has not been completed.
Temporary Moratorium on Certain Nonjudicial Foreclosures
A moratorium on new nonjudicial foreclosures under the old nonjudicial process (Chapter 667 Part I) will be in effect until July 1, 2012.
Permanent Amendments to the Nonjudical Foreclosure Process
· Personal service of a nonjudicial mortgage foreclosure notice is required.
· The public sale of foreclosed properties may only take place at certain state facilities that are not under the administration of the Judiciary.
· Deficiency judgments are prohibited for most nonjudicial foreclosures.
· Egregious conduct by a foreclosing mortgagee is prohibited. Such conduct includes:
o Completing a nonjudicial foreclosure during the pendency of a bona fide short sale where the offer meets minimum price criteria and escrow is opened and closed during a specified time frame surrounding the noticed public sale;
o Holding a public sale on a date or time or in a place not properly noticed;
o Specifying a fictitious place for the public sale; and
o Completing nonjudicial foreclosure proceedings during loan modification negotiations with the mortgagor or while the mortgagor is being evaluated for entry into a federal loan modification program.
· Nonjudicial foreclosures by junior lienholders will be barred or suspended during the pendency of a nonjudicial foreclosure by a mortgagee in certain circumstances.
Tighter Regulation of Mortgage Servicers
· Mortgage foreclosure actions taken by an unlicensed nonexempt mortgage servicer will be void.
· Starting July 1, 2012, certain large mortgage servicers must maintain an office in Hawaii staffed by at least one agent to address consumer inquiries or complaints and to accept service of process. Mortgage servicers may comply with this requirement by contracting with local entities.
3 comments:
Although I sympathize with homeowners, I can't say that I'm happy with the new foreclosure law as it will impede lenders from quickly/efficiently foreclosing on properties. It will add a layer of government intervention and will delay long-term market stability.
The law was enacted to help home owners undergoing foreclosure a "fair" assessment of their situation. Because many home owners lost their homes to unfair and unethical practices where even owners who actually "did not" have a mortgage to begin with, had their home foreclosed. Which meant that the entire foreclosure process needed to be investigated far deeper than initially thought. Consider that lenders who sold these packaged loans to investors knew full well that the owners would eventually default on their loans. Remember those ARM loans? They were being sold as the best alternative to getting a mortgage because for the first 3,5,7 or 10 years your interest rate would remain low but after that it would go up but the lender told you not to worry because you can easily refinance your loan before it matures. But that wasn't the truth because when the housing market crashed and home values dropped everyone was immediately upside-down on thier mortgages and were no longer able to refinance their loans. So, the interest rates resetted upwards and the owners were left unable to pay their mortgage. So, if Act 48 helps homeowners to fight back on bad loans, poor servicing on loan modifications and not being able to refinance their home, then more power to the homeowner's and I hope the lenders find themselves in bankruptcy. In my opinion, the US Gov't shouldn't have bailed them out in the first place. Billions of dollars in bailout cash but these same lenders are failing the American people by not providing the help they truly need.
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Maui Foreclosures
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