Foreclosure Mediation Helps 172 Homeowners

A partnership between Ku’ikahi Mediation Center and West Hawai’i Mediation Center with support from the Third Circuit Court, has helped 172 homeowners avoid foreclosure through the Hawai’i Island Foreclosure Mediation Program.

The program allows lenders and borrowers to use mediation services while in judicial foreclosure. In addition, homeowners who are in pre-foreclosures can opt for mediation as an alternative to court.

“Foreclosure Mediation is a process in which a neutral third party assists the lending institution and the homeowner to reach a mutually satisfactory agreement to prevent foreclosure,” said Ku‘ikahi Executive Director Julie Mitchell. “As non-profit community mediation centers, we provide case management and mediators to facilitate dialogue and document exchange. Our Foreclosure Dispute Resolution Specialists have extensive experience working with borrowers, lenders, attorneys, and housing counselors.”

Meaningful discussions are held during the mediation process between lenders and borrowers, which are able to lead to real resolutions. Homeowners who ideally want to keep their houses can emerge with a positive outcome, which also benefits the lender by keeping the mortgage solvent. The entire process can reduce the negative effects of foreclosure on neighborhoods.  

“Together, our mediation centers have helped save 172 homes to date through loan modification or reinstatement,” noted WHMC Executive Director Katie Woods.  “If retention is not possible, other options such as a short sale, deed in lieu, or cash for keys can be discussed.  These loss mitigation options help avoid the negative results of foreclosure judgements.”

Hawai’i County had the highest foreclosure rate in 2010. The Foreclosure Mediation Pilot Project was a result of a crisis response by the Hawai’i State Supreme Court.

The Third Circuit Court reported in 2010 that homeowners had expressed feeling “intimidated and overwhelmed by the foreclosure process. Homeowners who have fallen behind on their bills are often in a state of stress, with worries of foreclosure, bankruptcy, and repossession, creating a sense of high anxiety. Homeowners may not know where to turn or what options they may have available.”

Funding for the Hawai’i Island Foreclosure Mediation Program has come through the Department of the Attorney General for the past three years. The Attorney General, on behalf of the State of Hawai’i, obtained a consent judgement against the five largest mortgage loan servicers in the United States. The judgement led to a $7.9 million payout to the Attorney General, which has been held in trust for the benefit of homeowners and others who may be affected by mortgage loan proceedings.

In an effort to immediately assist distressed homeowners through housing and financial counseling, public education, mediation, and dispute resolution efforts, and enforcement of laws and agreements protecting the rights of homeowners and lessees, the Attorney General developed the Foreclosure Assistance Program.

“The mediation process provides relief to homeowners within a process they can access and understand,” Third Circuit Judge Greg Nakamura explained. “When compared to the court process, mediation is more informal and parties have more time to negotiate and, hopefully, reach a joint agreement on the terms.”

Woods added, “For those homeowners who are pre-foreclosure, meaning you have missed or are about to miss a mortgage payment, we encourage you to contact us to see if mediation is right for you. For those who have received notice of judicial foreclosure, we encourage you to fill out the ‘Foreclosure Mediation Request’ form attached as the last page of the mailed court complaint.”

For more information about the Foreclosure Mediation Program in East Hawai’i call the Ku’ikahi Mediation Center at 935-7844 or visit the Hawai’i Mediation website. Those in West Hawai’i should contact the West Hawai’i Mediation Center by calling 326-2666 or visit the West Hawai’i Mediation Center website.