The Advertiser (prior to the advent of the Star-Advertiser) recently reported that Hawaii foreclosures have increased dramatically. According to Realty Trac, a research firm that tracks foreclosures nationwide, 1,474 properties in Hawaii were in foreclosure in April, 2010. That number is double the number for the previous year. Hawaii ranks 11th in total number with one foreclosure per 348 households statewide. That number is significantly better than the worst state, Nevada, with one foreclosure per 69 households or Utah at one per 221, but far worse than West Virgina at one per 8,442 (second best) or N. Dakota at third best with one per 5,912.
While record numbers are in many ways attributable to high unemployment and losses of income for persons whose incomes depend upon commissions or tips, the number of foreclosures also reflects the inability of a number of borrowers to make payments on loans that were easy to obtain, but for which the borrowers were ill-equipped to pay.
A classic example is a case soon to be before the Courts where a local loan company made a $130,000.00 loan to a woman who had not been working for years. The borrower had been able to pay her original mortgage off several years before, but an injury rendered her unable to work. The borrower had been convinced to take the loan out to pay attorneys’ fees and costs in a case that she cold have avoided. Over $100,000.00 went out to pay attorneys’ fees and costs necessary to obtain the loan, leaving a total of less than $30,000.00 to carry the mortgage and pay for continuing expenses on the second property that she had been talked into trying to obtain title to.
The borrower’s problem was that the loan required repayment in two years. The borrower did not have the money to carry the monthly payments for longer than a few months. She had been using loan proceeds to make the monthly payments and was without funds within six months.
Fortunately, Hawaii law may provide relief for people like her and a remedy for this woman’s particular legal problems. Chapter 480 of the Hawaii Revised Statutes prohibits persons and businesses from committing “unfair and deceptive acts or practices.” Although what specific acts or omissions constitute “unfair and deceptive acts or practices” are not set forth with particularity in the statute, Hawaii case law, or published decisions of Hawaii’s appellate courts have suggested that the types of acts that may be “unfair and/or deceptive” are quite broad.
Federal Truth-in-Lending law (specifically what has come to be known as “Regulation Z”) also prohibits practices related to the making of certain mortgage loans to persons who do not have the means of repayment. The Hawaii law and Federal law are designed to protect consumers.
The statutory protections, however, were not meant to give borrowers excuses for not making agreed-on monthly mortgage payments, but rather to assist borrowers who have genuinely been mislead or victimized by a mortgage lender that has violated the law.
If you feel that you have been victimized by lender impropriety, you should consult with someone who is familiar with the law. If you are unable to afford a consultation, the internet offers a wealth of information on the subject.
