It’s no surprise that with the recent economic downturn and weakening real estate market that foreclosure rates throughout Hawaii are rapidly increasing. In fact, over the past two years foreclosure rates have quickly been approaching the levels of the last real estate market contraction in the mid 90s. Last year alone saw a 230% jump from 2007 with nearly 3,200 homeowners in Hawaii facing foreclosure. Experts predict that somewhere around one in 30 Hawaii homeowners, or approximately 4 per cent, will suffer from foreclosure before the end of 2010.
These shocking statistics make it necessary for lawmakers to intervene with legislation to slow the growing rate of foreclosures. The economic health of Hawaii will be greatly served by a proposed bill to give homeowners experiencing foreclosure more time and assistance to prevent losing their property. This bill, which is about to be introduced to the state Legislature, focuses on delaying the foreclosure process by a month or two. Senate Bill 1623 was introduced by Senate Majority Leader Gary Hooser in an earnest effort to halt the prevailing trend of foreclosures.
Recently, lawmakers have introduced a number of bills in order to address the problem of foreclosures. SB 1623, along with similar legislation, offers a clear sign that the Senate is committed to protecting homeowners in danger of losing their homes. Essentially, this bill requires lenders to contact a homeowner, either by phone or in person, to discuss the financial difficulties and alternative options available before starting the foreclosure process. Furthermore, lenders would need to establish a toll-free hotline for homeowners to reach a federally certified counseling agency. As it stands now, lenders can start the foreclosure process by simply mailing a letter of notice of foreclosure. Under this proposed bill, lenders would have to wait thirty days to begin foreclosing, and this period can be extended if homeowners engage in follow-up discussions with their lender.
SB 1623 is clearly focused on owner-occupied homes and will likely exclude investor-owed units and would apply to loans made between January 1st, 2003 and December 31st, 2008.