Homeowners facing non-judicial mortgage foreclosures now have a new tool to keep their homes: an online dispute resolution program designed to help them work things out directly with lenders.

On Monday the Hawaii Department of Commerce and Consumer Affairs unveiled the program’s website at a press conference at DCCA’s downtown Honolulu office.

It comes just five months after the enactment of Act 48, the state’s effort to reform Hawaii’s foreclosure process. As on the mainland, mortgage foreclosures have skyrocketed in recent years, causing many homeowners to lose their property.

The Mortgage Foreclosure Dispute Resolution program, the centerpiece of Act 48, sunsets in September 2014, though legislators can choose to amend the law.

“We took care of the little guy in this bill,” said state Rep. Bob Herkes, a Big Island Democrat who was one of the architects of the legislation. “Every so once in a while we do something here that makes you feel good.”

Bypass Aggressive Servers

The portal, officials say, allows homeowners who live on their property the opportunity to meet directly with their lenders to modify loans or work out an alternative to the foreclosure process.

Many homeowners have complained about the aggressive practices of companies who serve foreclosure notices.

The state’s dispute resolution program will be funded through fees paid by participating lenders and owner-occupants. It applies to mortgage foreclosures served after May 5, the day Act 48 became law.

Everett Kaneshige, the DDCA’s deputy director, said two nonprofits with mediation experience — one on Oahu, the other on the Big Island — have been identified as program mediators, though contracts have not been secured.

While some of the features of the online system are still being worked out, starting Monday lenders can submit non-judicial foreclosure notice filings through the new website. A required subscriber account may be obtained by registering here.

DCCA Director Kealii Lopez said she was unsure how many people the program would help. But she said local banks had helped test the program to make sure it worked.

Judicial Foreclosures Next?

Maui Sen. Rosalyn Baker, a Democrat who also worked on crafting Act 48, applauded the DCCA for meeting the Oct. 1 deadline imposed by the law.

In spite of greater attention to the mortgage foreclosure dispute crisis — Lopez said a multi-state settlement is in the works in a number of states, including Hawaii — Baker said some offshore banks and lending institutions were still harassing property owner-occupants.

“They don’t care about Hawaii homeowners,” she said.

Herkes said he was hopeful that the dispute process created by Act 48 for non-judicial disclosures might be adopted for judicial disclosures as well.

When the law was passed, the government-controlled mortgage finance company Fannie Mae began converting all of its new and pending non-judicial foreclosures in Hawaii to judicial foreclosures — allowing them to bypass the new law.

As Civil Beat has reported, the state judiciary has been overwhelmed by an increase in judicial foreclosures and fears that more lenders will follow Fannie Mae’s lead.

For more information about the mortgage foreclosure dispute program, click here.

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