Foreclosure Meditation

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Wednesday, 23 Apr 2014


Hawaii enacted the nation's strongest foreclosure law in May 2011, that requires lenders to meet face to face with homeowners before they can foreclose. Hawaii enjoyed one of the lowest foreclosure rates historically, but now The goal of the bill, which is based on a similar 2009 Nevada law, is to have lenders and homeowners come up with a compromise for a modified mortgage. Its strength lies in the details. In addition to mediation, the bill places a moratorium on all "new non-judicial foreclosure actions," until July 1, 2012, for foreclosures covered under Part 1 of the state statute governing foreclosures. The law requires lender's to show evidence (Chain of title) that is has the legal right to foreclose. Homeowners dealing with foreclosure on a second home, however, will not be able to take advantage of the moratorium. Hawaii offers both Judicial and non-judicial foreclosure processes.

Hawaii's foreclosure mediation process requires face to face meetings with whatever lender is involved. The homeowner will be required to provide documentation, such as pay stubs and proof that the payment can be made, should the loan be modified. Both the lender and the homeowner are required

What is foreclosure mediation?

Mediation is a process where the mediator helps the homeowner and the lender reach a fair, voluntary, and negotiated agreement. Foreclosure mediation programs have proven effective in reducing foreclosures in other states, but only if the borrower can provide documentation proving to the mediatr that they have a financial capacity to make a modified payment, and that the new payment is Net Present Value (NPV) positive, in that the investor makes more money modifying than foreclosing. This can often be proven with a REST Report (, as it utilizes the Treasury algorithm for determining HAMP eligibility. The REST Report can be found here.

What do I need to bring to the mediation session?

  • Proof of income, if employed; for example, a current pay stub, Profit & Loss statement if self employed or 1099, Bank Statements showing your income being deposited;
  • List of expenses;
  • Copies of any completed application(s) for mortgage modification or financial assistance; and
  • Any other information that may be helpful.
  • A REST Report ( will allow you to show that your loan is NPV positive or modifiable. The REST Report utilizes the U.S. Treasury algorithm to determine HAMP eligibility as well as the Net Present Value (NPV) of your loan in a modified state. In other words, does your lender make more money modifying your loan, or foreclosing. If you can prove to the mediator it is in the investor's financial interest to modify as opposed to foreclose, your will likely prevail in mediation. Without this Report, it is difficult for the Mediator to know whether it is in the lender's best interest to modify.