*Note: The following opinion piece was submitted to the Honolulu Star-Advertiser, which declined to publish it. We've decided to post it here.
Last
Thursday[1], this paper reprinted old
news about Act 48. We already knew the foreclosure rate dropped 50-60%.
We already knew the banks are foreclosing through the courts to avoid
penalties for fouling up the new non-judicial process.
We
can only speculate why the repeat messaging; and why this paper is so intent on
spinning Act 48 as a failure. Their editorial last Monday[2] provides some clues.
Its title, “Reform law to let lenders, borrowers settle homes fairly” presumes
Act 48 isn't "fair" to lenders. What they're really talking
about is a loss of privilege. In light of all the illegality, we were
obligated to limit their license to self-police.
Remember
- almost half the other states disallow non-judicial foreclosures. Banks
only started foreclosing non-judicially in Hawaii after a law was passed in
1998. But there's a twist to the legislative history - which this paper
aptly explained[3]
in 2010: the 1998 law was so defective, it went unused - only to revive
an arcane law from 1874. The Star Bulletin reported[4] the 1874 law was created
to drive Native Hawaiians off their land. Title insurers resigned to work
with that law and helped lenders develop a non-judicial "practice"
that was palatable to them.
After
the economy tanked, the mainland banks became desperate for capital and our
so-called "law" made Hawaii a perfect target. Act 48 stopped
the hemorrhaging under the 1874 law and fixed the 1998 law the banks pushed so
hard for just fourteen years ago. That's all the time it took for lenders
to consider the 1874 fast-track their right. How rude of us.
Here's
another strange statement from the editorial: "While delinquent
homeowners might have been helped by the resulting sharp decline in
foreclosures, the change in recent months could prolong the negative effects on
the housing market." Huh?
Let
me break down the cause and effect. Act 48 guarantees third-party
oversight in owner-occupant foreclosures - in court or dispute
resolution. No more free rides on the 1874 express. The new express train requires banks to show
their legal standing to foreclose - or they're thrown off. That frightening
prospect resulted in the sharp decline of foreclosure activity. By
slowing down the rate of wrongful, fraudulent, and avoidable foreclosures, we've
stopped a flood of inventory from dragging down home prices and keeping folks
from going further underwater. I doubt Hawaii's homeowners view this as a
"negative." In fact, that is a "negative" our Federal
Reserve[5] is trying to
achieve. The prestigious Council of State Governments also recommended
that states enact their own Act 48[6].
Simply asserting there are "negative effects on the housing market" without explaining what they are is an insult to readers. Ironically, the editorial was printed the same day Paul Brewbaker lectured the legislature on Hawaii’s economy. He spoke at length about Hawaii's housing market, emphasizing that Oahu's prices are slowly stabilizing and that neighbor island prices are tracking the market on the mainland. He didn't mention any "negative effects" specifically created by Hawaii's Act 48. There are more colossal market forces at play.
I have grown tired of arguments that rely on fabrications and baseless doomsday scenarios. We cannot ignore the rule of law because someone affected (a realtor, banker, mortgage broker?) claims it's bad for business.
Resolution to this crisis cannot rest solely on the simpleton's question to troubled homeowners: "did you pay your mortgage?" We also need to be asking the banks: "did you cheat?"
Pay attention this legislative session. We're going to apply what we've learned from Act 48's shake-out - and do what is best for Hawaii's people.
1 comment:
The publication requirements for auction notices will also be revised to encourage competitive pricing while balancing the need for broad dissemination of auction information.
Post a Comment