On May 5, 2011, Hawaii Governor Neil Abercrombie enacted into law SB 651, effectively stopping all new non-judicial foreclosures throughout the state of Hawaii. Hailed by some as the strongest foreclosure law in America, this new legislation now gives Hawaii homeowners in preforeclosure the option of a face-to-face meeting with their foreclosing lender (want to sit across a desk from the Bank of America rep and tell him/her what’s on your mind?). The goal is that such a meeting, mediated by a neutral third party, will lead to more disputes ending in a loan modification instead of a foreclosure, auction and/or bank repossession. However, it’s important to note some key parts of SB 651:
- The law only applies to non-judicial foreclosures. Hawaii has both non-judicial as well as judicial (court) foreclosures, and while the latter is the least common, SB 651 does not offer protection for any mortgagee in default against a judicial foreclosure.
- Both the borrower and lender must prepare sufficient documentation for a satisfactory dispute resolution. The Hawaii mortgagee must provide an array of financial documents to prove an ability to pay a modified loan amount. The lender, on the other hand, must show proof of chain of title – that it has the authorization to actually foreclose.
- This law is only for owner-occupied residences. It does not offer protection for second homes.
If you are in preforeclosure, you have some protection here but please do not make the mistake of thinking you now have a free ride and that all your problems are solved. Remember – this bill is still intended to ultimately move your mortgage into the next step (loan modification, if possible) and not spin it in wind forever. You and your mortgage are not given a free pass to remain in limbo indefinitely – this is not the last stop!
If your mortgage is upside down on your Hawaii property and you want to stay in your house, then SB 651 might be the bill that allows you to do just that. BUT – if you are better off with a short sale or just wish to move on from the problem property and forget a loan mod altogether, then you should still CONTACT ME here at Big Rock Investments. Drop me a line or CALL ME at (808) 377-4379 and we can discuss all of your options so that you can make the best decision for you and your family.