HONOLULU—A bill that places an immediate five-month moratorium on both pending and new non-judicial foreclosures, while a national investigation on securitization plays out, took a big step forward in Hawaii’s State House of Representatives.
On Wednesday, February 2, members of the Joint House Committees on Consumer Protection and Commerce and the Judiciary unanimously voted to advance House Bill 894.
The bill states: “No mortgagee shall initiate or continue with a foreclosure proceeding under parts I or II of Chapter 667, Hawaii Revised Statutes, beginning on the effective date of this Act and ending on the date that the federal government releases a final public report on any federal investigation into the securitization of mortgages.”
Introduced by Rep. Mele Carroll (D), HB894 passed the House Committees unanimously with a proposed amendment. The will now go directly to the House Floor for a vote.
“There have been too many questionable foreclosures undertaken by the mortgage lending industry and until the legalities of these actions on their behalf can be qualified, the hardworking people of Hawaii need protection from these predatory actions,” Carroll said.
Since January 2005, mortgage lenders saw more than 11,000 cases of suspected mortgage fraud in San Francisco’s federal court district, causing a total loss of more than $345 million, The Wall Street Journal reported. A decision by the FBI to shift more agents toward mortgage fraud lead to a total of 970 federal convictions in the year that ended last September 30, up from 494 a year earlier.
In Hawaii, foreclosures are also on the rise. Real estate research firm RealtyTrac Inc. reported that there were 12,425 properties throughout Hawaii affected by foreclosure last year, a 38 percent increase from 9,002 properties in 2009.
Despite the numbers and the arguments on Capitol Hill, Hawaii Department of Commerce and Consumer Affairs (DCCA) director Stephen Levins doesn’t think the situation warrants a moratorium.
“While [DCCA] is aware of law enforcement actions around the country directed at particular lenders who allegedly have violated consumer protection statutes and foreclosure laws, it is unaware of any which has resulted in a mandated foreclosure moratorium,” Levins said in testimony. “Neither is it aware of any federal or State sponsored legislation in this regard. In fact, the Obama Administration has repeatedly rejected calls for a nationwide moratorium on housing foreclosures amid fears that such a move could cripple an already slow recovery of the U.S. housing market.”
Hawaii lawmakers, however, appear to support giving residents more time to work things out with their lenders.
“[If HB894 is passed], homeowners facing foreclosure in Hawaii will have some breathing room to stay in their homes and work out a viable solution with their mortgage company via mediation, loan modifications, negotiations, a forgiveness process or other efforts of keeping our families in their homes,” Carroll said.