Hawaii’s Legislature Poised to Pass Nation’s Strongest Foreclosure Protection Bill

American homeowners in all 50 states should take note that it was only last November when a group of homeowners in Hawaii, with the support of Faith Action for Community Assets (“FACE”), whose members are predominately churches of various denomination and non-profit community groups, embarked on a grass roots effort to bring meaningful change to the process homeowners were being forced to endure when faced with the prospect of losing their homes to foreclosure.

The group also partnered with Hawaiian Community Assets, a non-profit group that provides housing counselors and whose wonderful relationships with families made a huge difference throughout the campaign, according to those involved.

The dialog about the foreclosure crisis began when FACE member ministers began talking openly about there being no dignity for the families trying to save their homes from foreclosure by the mainland banks.  That’s what motivated FACE to get involved in the first place.

The idea that some uncaring and enigmatic banking institution on the mainland would treat a homeowner at risk of foreclosure as the ministers were describing in their reports was intolerable to those involved in the group.

With the next legislative session scheduled to begin in January of 2011, FACE Policy Director, Kim Harman and other key members of the team, wasted no time finding out as much as possible about the foreclosure process, in order to begin drafting a proposed bill that would be strong enough to be effective.

The end result of their grass roots initiative is found in: Senate Bill 651

Harman explains:

“For example, our people went to the library each day in order to read all of the non-judicial foreclosure notices, and they compiled data on which banks were foreclosing on the most homes, among other things.”

Armed with the increasing breadth and depth of knowledge they were gaining through their research efforts, it quickly became clear that a cornerstone of the legislation the group would propose would be a mandatory mediation program.

Nevada State Senator-Ret. Barbara Buckley, who had been the driving force behind the creation and implementation of that state’s foreclosure mediation program, also became a supporter the group’s efforts.   Harman says:

“She (Buckley) even took the time to get on the phone with legislators in Hawaii, which helped give the concept legitimacy.

Rev. Robert Nakata, a retired state senator from Hawaii, and an individual said to have more energy than most twenty year-olds, signed on to help with the group’s lobbying efforts.  (The only way I can think to describe Bob Nakata, is to say that I spoke with him a couple of times over this past weekend and I hope to know him for the rest of my life.)

Rep. Bob Herkes sponsored the House version of the bill, and Sen. Roz Baker championed the bill in the state senate.  Sen. Baker was responsible for the section of the bill that requires the servicer, at least 14 days prior to foreclosure, to present among other things, “a copy of the promissory note… including any endorsements, allonges, amendments, or riders to the note evidencing the mortgage debt.”

Policy Director Kim Harman had glowing things to say about everyone involved in the grass roots initiative, but she said the homeowners that came out and supported the initiative really made the difference.

“We have well over a hundred families that very actively support the bill.   I mean people that came out for the hearings and press conferences, and carried signs during demonstrations,” Harman said.

Ding dong… Hawaii Calling

As part of the grass roots effort, the group specifically confronted Bank of America on two occasions… once bringing groups of homeowners to the bank’s offices in Honolulu and once on Maui.  In addition, they confronted Wells Fargo in Honolulu on two occasions, and once they paid a visit to Chase.  “At several of our demonstrations, we even had people playing the ukulele,” Harman says.

Harman believes that Hawaii’s legislators wanted to do the right thing, but in many cases were so busy with other priorities that it was difficult to develop a widespread understanding of what would constitute a really strong bill, and why such strength in a foreclosure prevention bill was unquestionably what was needed.

“We studied what wasn’t working in other states… we didn’t see any point to passing a bill that wouldn’t actually change anything for Hawaii’s homeowners,” Harman explains.

The state of the economy also made the establishment of a new program a harder sell, but Harman’s group is certain that a strong and effective foreclosure prevention bill will lead to cost savings for the state of Hawaii in the future.

She also pointed out that the legislative process itself was hard to deal with for many homeowners that wanted to support the bill, saying:

“Notices of hearings often don’t allow much time to notify members of the group, and of course not everybody can just stop working or drop whatever they’re doing to come support the bill with short notice.  But, we were really blessed to have well over 100 families truly committed to this bill… and they continue to go above and beyond to support this effort.”

The Bill’s Current Status…

Hawaii’s Legislature Poised to Passes Nation’s Strongest Foreclosure Protection Bill

On April 29th, 2011… at 5:18 PM… what appears to be the strongest foreclosure prevention bill in the nation bill was passed by a vote of the Hawaiian legislature’s Conference Committee.

The floor vote of the House and Senate is scheduled for this coming Tuesday morning, May 3rd, but could potentially be postponed for as late as next Thursday, which is the end of the legislative session.

Harman says she has been assured by all of the legislators with whom she has spoken that it will pass the floor vote, and from there it’s straight to the governor’s desk where it will either be signed or, perish the thought, vetoed.  The governor is expected to sign the bill between mid-June and early July.

“Both the governor and members of his staff have been great supporters of the mediation process contained in the bill,” explains Harman.

Ever-Present Risk, Brought to You by the Banking Lobby…

The banking industry doesn’t like this bill… no, wait… that’s not the right way to put that.  The banking industry hates this bill with the white-hot intensity of a thousand suns… there, that’s a little better.

Why?  Well, ask your friendly neighborhood banker and he or she will likely start talking about how the bill’s passage will lead to the people of Hawaii paying higher interest rates in the future.  Such a claim, however, is pure horse pucky.

First of all, bankers LOVE reasons to charge higher interest rates, it might even be considered their single favorite sport, so if this bill were going to cause higher rates in the future, one would have to think that the bankers would be for it, not against it.

Secondly, interest rates are not picked out of thin air by bankers and then offered to the rest of us.  That’s not how rates are set, banker-people, and you know that.  What if Chase decided to increase interest rates because they wanted to punish Hawaii for passing this bill?  What do you suppose the banks that compete with Chase would do with their own rates?

Not that our bankers are doing a whole lot of lending right now anyway… and they won’t be doing much for quite some time… but let’s say it’s 10 years from now and Chase wants to raise rates.  What will Chase’s competitors do when Chase’s loans become more expensive?  They’ll kick Chase’s butt, that’s what they’ll do.  And Chase will bring rates directly back to where the market had set them … because that’s a large part of how rates are determined.

And third, the bankers make it sound as if this bill creates some new laws… but it really doesn’t.  Banks are already supposed to have the promissory note, assignment, allonge, and whatever else is required by state law, before they foreclose… they’re supposed to make sure they own the loan and that the Chain of Title is intact… that is also already the law.  The new bill just says you just have to show these items to someone before you foreclose.

The cornerstone of the bill is the creation of the state’s mandatory mediation program, and bankers should remember that other states have mandatory mediation too, but I don’t see those states swamped by higher borrowing costs.  So, maybe you meant something else… like, you had a different lie in mind.

The real reason the bankers don’t like this bill is because it represents change, quality control… fairness, and accountability… and the bankers position is basically that they want to be able to do whatever they want, whenever they want as related to a homeowner behind on payments.  Period.  The banker’s position seems to be that nothing should interfere with foreclosing on someone’s home and that’s that.

Regardless any of these common sense points… none of that has stopped the banking lobby from giving it that old banker try to kill SB 651.  Lobbyists have been swarming all over Hawaii chatting up anyone who’ll listen as to all the reasons why this bill is a bad idea.

Memo to those working on the passage of SB 651…

It’s not over until the ink used by the governor for signature is dry… and in fact the next few days are critical… remember what happened to the Arizona bill on the way to the Arizona House of Representatives just a couple of weeks ago?

So, for my two cents… I’d be getting on those phones, asking others to call their representatives to express their support for the bill… and keeping an eye on the banking industry lobbyists… because as we all saw in Arizona recently, they are capable of making a bill that’s already passed the state senate 28-2… completely disappear over a weekend.

FACE’s Efforts to Prevent Corruption…

While I was speaking with Kim Harman yesterday, she started explaining one of the key tactics her group used in an effort to stop members of Hawaii’s legislature from turning a blind eye to corruption by banking industry lobbyists…

She told me that they had used Mandelman Matters articles.

Harman told me that she would read articles I had written and posted on Mandelman Matters that documented what had recently transpired in Arizona with the disappearing S.B. 1259, to Rev. Bob Nakata, and as a retired state senator, he then went to both the House and the Senate to make sure that the leadership saw and was current on what was happening in Arizona as it unfolded… asking for vigilance in making sure that such corruption did not visit Hawaii.

I have to tell you that as I spoke with FACE’s Policy Director, Kim Harman, and she told me how the group had distributed and used my articles in conjunction with their lobbying effort and grass roots movement, I had tears in my eyes as she spoke and I am honored to have been able to help.

Maui homeowner, Marcy Koltun-Crilley, another key member of the group…

Marcy is a reader of mine, who is originally a New Yorker who came to live on Maui just shy of 20 years ago… and after experiencing the lies being told to homeowners by Bank of America first hand, she became resolute in her desire to help fix what was obviously broken.

Marcy wrote to me about what was going on in Hawaii, and because I love Hawaii… I jumped at the chance  help.  I wrote an article about how a group of homeowners, accompanied by FACE leadership, had visited Bank of America without an appointment.  Homeowners Pay Unexpected Visit to Bank of America in Honolulu

I wrote it to say something very seriously and very clearly… although I will admit… it has the very definite potential to make you laugh if you know anything about the people of Hawaii.  According to Kim, the article had a very positive impact on many in the group working towards the passing of the bill, and I could not have been happier to know that.

We who live in the contiguous 49 states of the United States of America have a lot to learn from the people of the Great State of Hawaii.

My prayers are with them during these next few days… I hope yours are as well.  If this bill passes as expected, we have reached the turning point in the foreclosure crisis, and I’ll be writing about we need to do next.

Mandelman out.

P.S.  Coincidentally , the State of Arkansas has just passed a foreclosure prevention bill that, although it does not go quite as far as Hawaii proposal, is still a bill that will prove effective to some significant degree.   Here’s a link to the

Arkansas Foreclosure Bill


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