Governor Neil Abercrombie recently signed a foreclosure reform into law that will allow the owners of distressed properties to enter into loan-modification discussions with a neutral trained third party.
With all the foreclosures we’ve seen throughout the nation, a reform like this is certainly overdue. Many homeowners who have had a hard time making their mortgage payments wind up in confusing situations with large, mainland lenders who enter into a false negotiation process that doesn’t result in loan-modification whatsoever. There have even been many situations where banks claim they are considering the modification of a customers’ loans when they have no intention of doing so. They will often encourage the person to just keep at it. Some have resubmitted as many as twenty loan applications at the request of their banks, to no avail.
This new law will stop most nonjudicial foreclosures, temporarily. According to our Maui Senator Roz Baker who is largely responsible for making the foreclosure reform bill a reality, “It’s an attempt to bring some order to a very chaotic process.” The senator is the chairwoman of the Senate Commerce and Consumer Protection Committee.
Based on the way we’ve seen some lenders handling the foreclosure and loan-modification processes, it is great news that we will be seeing some oversight to keep them in line. An amusing statement by West Maui state Representative Angus McKelvey indicated that the problem was, “Mainland lenders running amok.”
Hawaii Credit Union League President Dennis Tanimoto opposed the new law, at least as far as it affects Hawaii based lenders. He asserted that the change will slow the foreclosure process. He also felt that this would delay the recovery of Hawaii’s real estate market and cause further decline in property values. However, it seems that with fewer distressed properties on the market to keep home prices down, prices are more likely to rise as a result of this change. Instead of a continuing flood of foreclosed homes on the market, it seems we might have a protracted trickle, and that is assuming the process doesn’t help homeowners ultimately save their properties.
The future can be full of surprises, so we will just have to see how this legislation plays out, and if it is successful, hopefully other US states will implement similar versions of it.
As for those of you who are considering buying a Maui home, browse our website for South Maui real estate listings or try our Maui real estate search tool. If you need any assistance, you’ll find our contact information at the bottom of tha page. Mahalo!