The Mortgage Foreclosure Dispute Resolution – Foreclosure Mediation in Hawaii

Let the Foreclosure Mediation begin…or will it?

The Mortgage Foreclosure Dispute Resolution (MFDR) procedure, as defined in Hawaii’s Act 48, went into effect on October 1st. I monitor the conversation about Act 48 because it is so important to Hawaiian homeowners and to the many sellers and borrowers that I represent.

All through the local news I read press releases about the beginning of this “MFDR” process that will be implemented by the DCCA. Hawaii News Now reported on it, Honolulu Magazine reported on it, and Pacific Business News reported on it, but who is telling the real story, I wonder?

Since May 5th, when Act 48 went into effect, there have been ZERO non-judicial foreclosures on our island. Many mainland lenders have started refiling their foreclosure proceedings in the courts as judicial foreclosures. Just as I am unsure how many homeowners understand their options in non-judicial, I am unsure how many homeowners understand the repercussions of a judicial foreclosure, where the foreclosing lender is entitled to a deficiency judgment by Hawaii State Law.

So, in a state where the local lenders like Bank of Hawaii, First Hawaiian Bank, Finance Factors, Central Pacific Bank, American Savings Bank, and others have always pursued foreclosure through our court system, the mainland lenders are now following suit. And this begs the question that I presented to our legislators back in June at the Act 48 informational briefing, “Just who is going to be using the MFDR?”

In concept, it is an idea well conceived. Create a mediation process where the borrower and lender sit down with a neutral third party and see if there is a workout option that can help the homeowner to remain in their home.

It makes sense that a face-to-face mediation has better potential than the years most people spend sending their loan modification documents to the lender, only to have the lender continuously lose the borrower’s paperwork. It makes sense to bring some logic and accountability to the system, but the problem is, there is no MFDR setup in the judicial foreclosure process, and as far as I can tell, non-judicial foreclosure in Hawaii is a thing of the past.

So, will the Foreclosure Mediation begin as announced on October 1st, or will the DCCA staff who has spent the the last few months setting up the systems and understanding the mechanics of foreclosure and the challenges both parties have, be sitting idly waiting for something that won’t be happening? What do you think?

View all Kauai Foreclosure deals in my Kauai Foreclosure Gallery. I track the entire marketplace of short sales and foreclosures on Kauai and around the state.