Fannie Mae Skirts Landmark Hawaii Foreclosure Law

RJ Brown

Mortgage giant Fannie Mae has found a way around what some consider the nation's strongest foreclosure law.

Fannie, a government controlled mortgage finance company, which operates in the secondary mortgage market, announced this week the company will convert all of its new and pending non-judicial foreclosures in Hawaii to judicial foreclosures effective immediately — essentially allowing them to skirt Hawaii's new law.

"Our announcement is consistent with Hawaii law and was made in response to recent Hawaii legislation," Andrew Wilson, a Fannie spokesman told Civil Beat in an email. "The judicial foreclosure process allows homeowners to raise any challenges to the foreclosure in court. Fannie continues to encourage homeowners to reach out as early as possible to their servicers to pursue modifications and other foreclosure prevention solutions."

In May, Gov. Neil Abercrombie signed Act 48, a measure requiring lenders to meet face-to-face with homeowners for mediation before foreclosing on a property. Additionally, the bill places a moratorium on all new non-judicial foreclosure actions until July 1, 2012, for foreclosures covered under Part 1 of the state statute governing foreclosures, and requires lenders to prove they actually have the authority to foreclose on a property.

"It doesn't seem like (Fannie) really cares much about our homeowners or assisting homeowners stay in their homes," Sen. Rosalyn Baker, who co-introduced the mortgage bill, said in an email.

Intended to reform Hawaii's foreclosure process, Act 48 has the potential to impact thousands. But the law only applies to non-judicial foreclosures.

Loading