A new law in Hawaii has the Federal National Mortgage Association abandoning non-judicial foreclosures in the state. In addition, the secondary lender might reverse some recent real-estate-owned filings.
Hawaii Gov. Neil Abercrombie signed SB 651 into law on May 5.
“The primary component established under this measure, the Mortgage Foreclosure Dispute Resolution Program, seeks to provide the owner-occupants of residential property in Hawaii who are facing foreclosure the opportunity to meet face-to-face with the mortgagees to possibly resolve their differences,” Abercrombie’s office said in a statement at the time.
But the program is only required on non-judicial foreclosures.
So Fannie Mae Friday told its approved servicers that all foreclosures in Hawaii which have not proceeded to sale and are not handled through a court of law should be dismissed. The cases should then be re-filed as judicial foreclosures.
Any new foreclosure filings must be handled as judicial foreclosures.
The policy is immediately effective.
The Washington, D.C.-based lender said that the maximum allowable foreclosure fee in Hawaii has been established at $2,200 for judicial foreclosures. The fee is in effect for all new filings in the state and pending foreclosures that are converted to judicial actions.
“Due to potential title insurance issues, Fannie Mae may be required to eliminate certain recent REO acquisitions that resulted from non-judicial foreclosures,” the servicing notice stated. “Upon being notified of any eliminations, servicers must immediately restart the matters as judicial foreclosures.”
The only two law firms that can be used by mortgage servicers in Hawaii are Crabtree & Olsen, PS; and Clay, Chapman, Iwamura, Pulice & Nervell, AP/ALC.