‘Flaws’ in Act 48 are actually teeth to protect homeowners

By Robert N. Herkes
POSTED: 01:30 a.m. HST, Jul 17, 2011

On Wednesday, this paper reported on a meeting sponsored by collection lawyers to discuss Act 48 — Hawaii’s mortgage foreclosure reform (“Attorneys say flaws mar new isle foreclosure law,” Star-Advertiser).

It appears this meeting was a gripe session for those who previously enjoyed a free ride on a fast track through a giant loophole in Hawaii’s foreclosure law.

Act 48 has taken the wind out of their sails because of its explicit moratorium on a law from the 1800s. That law allowed a bank to sell a home at a foreclosure auction in just four weeks — without requiring the homeowner’s knowledge.

Until Act 48, these lawyers used that law to steamroll through the vast majority of Hawaii’s foreclosures. That process had virtually no consumer protections, nor any third-party oversight.

With the fraud, deception, mismanagement and mistakes that have come to light during this national foreclosure fiasco, I feel no sympathy.

It’s clear these lawyers are going judicial because they have little faith in their ability to follow the new non-judicial law and the integrity it requires.

One lawyer said he receives up to 100 referrals a month. If compensated at Fannie Mae’s bargain rate of $1,100 per non-judicial foreclosure, that lawyer could still bring in $110,000 per month. However, Fannie Mae only pays $2,200 per judicial foreclosure — money they might not see for a couple years. Plus, these lawyers actually have to show up and plead their case to a judge. What a hassle! No wonder they’re so upset.

They should look at the bright side. The Legislature could have taken the approach the New York courts have — require lawyers to affirm they actually verified the accuracy of the foreclosure papers submitted to the court. [MORE on the HONOLULU STAR ADVERTISER]

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DEADLY CLEAR:  Post your thoughts here and on the HONOLULU STAR ADVERTISER.  The Legislators need to hear you.  Legislators were trying to to the right thing – they just didn’t realize they were dealing with banksters.  Apparently, they do now!  That a boy, Rep. Herkes!