Hawaii Attorney: Failure of Foreclosure Law Inevitable
06/17/2011
Flickr; Jeff Turner
UPDATED 6/20/11 10:30 a.m.
I told you so.
That's what Hawaii foreclosure attorneys were probably thinking after the news broke that mortgage giant Fannie Mae said it was converting all of its non-judicial foreclosures into judicial foreclosures, essentially skirting Hawaii's new foreclosure law.
Was SB 651 — what some called the nation's strongest foreclosure law — overhyped?
At least one foreclosure attorney thinks so. Gary Dubin says that while lawmakers were well intentioned, he warned them the bill wouldn't solve Hawaii's foreclosure mess. Two days after Gov. Neil Abercrombie signed SB 651 into law, Dubin predicted Fannie's move.
On May 8, Dubin emailed Civil Beat: "It is actually a cruel joke and virtually will not be used, as lenders will now merely unanimously elect judicial foreclosures and bypass the new DCCA moratorium/mediation procedures if and when they ever get going."
Lawmakers touted SB 651 as a major accomplishment of the 2011 legislative session. The bill was hailed by supporters because it stipulated mandatory mediation between lenders and homeowners, as well as requiring lenders to prove the legal authority to foreclose on a home. The law had the potential to impact thousands of Hawaii residents.
Lawmakers anticipated some conversions, but not the volume that Fannie has promised.
"We contemplated that there would be some conversions," Sen. Rosalyn Baker, who co-introduced the bill, wrote Civil Beat in an email. "But when you consider the amount of time that a judicial foreclose takes and the expense, it didn't seem logical that there would be large (numbers) of conversions."
According to Dubin, other lenders will soon follow suit.
"The minute this bill was signed by the governor, it was like a hurricane in the Pacific with a forecast that it was going to hit us in five or six days," Dubin told Civil Beat. "It was as inevitable as a hurricane pointing right at us. There was no way the lenders would not get out of the system."
