National Mortgage Settlement to impact Hawaii homeowners - Hawaii News Now - KGMB and KHNL

National Mortgage Settlement to impact Hawaii homeowners

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David Louie David Louie
Melba Amaral Melba Amaral

HONOLULU (HawaiiNewsNow) - The Hawaii Attorney General calls it a good deal for Hawaii homeowners.  A $25 billion settlement has been announced with the country's five largest banks.  It's all designed to help struggling homeowners and reform the housing industry.  But is it enough?

Hawaii's share of the settlement will be $71 million.  This only affects customers with Bank of America, Citi, JP Morgan Chase, Wells Fargo and Ally/GMAC.  Loans owned by Fannie Mae or Freddie Mac will not qualify.

"Everybody knows what kind of a mess the banks created with their bad servicing, their fraud, their runaround and all of the 'gee I'm sorry we can't help you' kind of attitude and we're going to change that," said David Louie, Hawaii Attorney General.

Change that by getting banks to cooperate and pay homeowners who were foreclosed on from January 1, 2008 through December 31, 2011.  However the amount is only up to $2,000.

"The question is, 'well gee I lost my house, how is $2,000 or $1,500 helpful?'  It's a small drop in the bucket. Those people that did lose their house improperly can still sue. They can still bring claims, they can seek out attorneys and they can file claims against these banks and other people for their wrongful foreclosures. I do not mean to suggest in any way that $2,000 would be adequate compensation for losing your house," said Louie.

People who are still in their house should be able to modify their loans at lower interest rates.  If they are completely underwater, meaning they owe much more than their house is worth, they can reduce their principle.

"You have a situation where homeowners have no hope of ever paying off that large mortgage. That creates despair and depression and that's not a good place for us to be so if we can bring down the value of the loan so people don't feel so underwater so people can see the light at the end of the tunnel, they're still in the tunnel, but they can see a light at the end of the tunnel, we believe that will help the overall national foreclosure problem and the national housing crisis," said Louie.

Homeowners that fought with the bank for years say the settlement is a start but it's not going to fix everything.

"It's not enough. It will never correct the wrongs that the banks did to these families. Homes were taken away unnecessarily. It was just fraud closure," said Melba Amaral, a Kalihi homeowner who fought with Bank of America for two years trying to get a loan modification.

One detail homeowners are optimistic about is the fact banks must give families one single point of contact and shuffle you around from person to person.  They must also set up a portal to scan documents online so the bank can't say they lost documents.

"It has been a very long frustrating process so I think it's definitely a victory for Hawaii in that it will help families stay in their homes," said Mitzi Toro, a Maui homeowner who has tried to get help from Bank of America for 18 months.

The federal government is supposed to monitor the banks and fine them for breaking the rules.

So do you qualify? The government admits borrowers won't know immediately.  The state plans to set up a hotline.  In the meantime you can research the mortgage settlement and call you lender. 

For more information about the National Mortgage Settlement click here.

For information from the Hawaii Attorney General's office click here.

For the Hawaii news release and frequently asked questions click here.

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