Mortgage foreclosure mediation now law

Governor Abercrombie signs Senate Bill 651

By Ben Gutierrez - bio | email

HONOLULU (HawaiinewsNow) - A landmark bill aimed at reducing mortgage foreclosures is now perhaps the strongest law of its kind in the country.

Dozens of lawmakers and supporters were present at Gov. Neil Abercrombie signed Senate Bill 651.

"It's a 'time out' opportunity for people to speak face to face, and more importantly, to allow the homeowner to stay in their home, and in fact get a loan modification from the lender," said Keali'i Lopez, director of the state Department of Commerce and Consumer Affairs.

According to Lopez, there were some 6,000 foreclosures in Hawaii last year. She expected another 2,000 homeowners would be eligible to participate in the mediation process.

Under the law, owner-occupants of residential property that is in foreclosure have the opportunity to meet face-to-face with lenders to modify their loans or work out a payment plan within three months. Lenders and owner-occupants must take part in the program if the lender wants to pursue a non-judicial foreclosure. And the foreclosure process would be suspended until the dispute resolution is complete.

"The legislators, in particular, were getting calls constantly from constituents who were losing their homes as part of the mortgage foreclosure crisis," Lopez said. "I think that's the best way to put it. It was a crisis, and still is."

One of those constituents was Melba Amaral. She and her husband, Eddie Amaral, Jr., had defaulted on their mortgage and were in danger of losing the Kalihi Valley home they had lived in for 15 years.

"You imagine burning your house. Thinking, 'okay, you want my house? Then I'll burn it down,'" Melba Amaral said. "But the only problem here was that you never knew when you were going to get that eviction notice."

The Amarals were part of a February 14 protest against Bank of America, which wanted to foreclose on their home. They supported the mortgage dispute resolution bill, and said they didn't regret going public with their foreclosure process to see it become law.

"To win you house back, it was really worth it because we've been here 15 years now," Eddie Amaral said.

"This is home. This is where we live."