Major Relief for Hawaii’s “Distressed” Property Owners
Yesterday, Hawaii’s Governor Linda Lingle signed Senate Bill 34 into law.Â This long awaited amendment to Hawaii’s Mortgage Rescue Fraud Prevention Act (Act 137), provides an exemption for licensed real estate brokers and salespersons from being defined as “distressed property consultants” under Act 137. Most buyers and sellers were (and are) completely unaware of the havoc that Act 137 caused in the market… until they attempted to buy or sell a property that was defined as a “Distressed Property”.Â In short, a “Distressed Property” is defined as any property where the owner/borrower was 2 months or more behind in payments to ANY lien holder.Â Originally, Act 137 prohibited Realtors from communicating directly with lien holders on behalf of their clients OR from coaching their clients on how to communicate and deliver information to their lien holders about the sale of their property!
People who had legitimate hardships, who could no longer pay their mortgages, were left completely ‘unrepresentable’ by Realtors under Act 137.Â For example (just one of MANY), we’ve represented clients who suffered debilitating illnesses which cost them their jobs and their ability to pay their mortgages… but once they were 2 months behind on their payments, we, their licensed agents and fiduciaries, were no longer allowed to speak with their creditors or even coach our clients on how to proceed with the sale of the property that they hired us to sell!
So, the end result was that people in Hawaii who needed the assistance of a Realtor the most were prevented from getting it… and this has undoubtedly contributed to the State’s growing number of foreclosures.
This new law will be Act 66 of the 2009 Legislative Session, and is effective immediately.Â Finally, Hawaii’s property owners who are faced with financial hardship, and perhaps foreclosure, will be able to have the guidance and expertise of Realtors who are trained in Short Sales and foreclosures.