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Monday, July 28, 2014         

SPECIAL REPORT: FORECLOSURE FALLOUT | First of 3 parts


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Law comes with deluge of problems

Critics say an effort to facilitate the process has stymied homeowners, lenders and the housing market's recovery

By Andrew Gomes

POSTED:


In June, Bank of America filed a lawsuit against Raymond J. Ruddy III, seeking to foreclose on a home he owns on Oahu's North Shore.

The lawsuit is part of a diverted flow of Hawaii foreclosures resulting from controversial changes the Legislature made to state foreclosure law in May 2011.

Ruddy hasn't made a mortgage payment on the Laie house, which he rents to students, in about 21/2 years.

Another North Shore property, a condominium at Turtle Bay Resort that Ruddy also owns and rents to a friend, is the subject of a foreclosure lawsuit that BofA filed in April.

Ruddy, a California mortgage broker, is perplexed by Hawaii's foreclosure system despite knowing a lot about home loan financing.

"I'm still trying to figure it out," Ruddy said of the distorted path he encountered after defaulting on both mortgages toward the end of 2009.

Ruddy isn't alone.

COMING UP

MONDAY
Part 2: Legislature may take another look at foreclosure issues.

TUESDAY
Part 3: Hawaii borrowers file suits after nonjudicial foreclosure auctions.

DID YOU KNOW?

12,000
Number of delinquent Hawaii home mortgages in the first quarter of this year

$312,000
Average Hawaii home loan balance

$3.7B
Estimated value of delinquent home loans

Sources: Mortgage Bankers Association and Transunion

HAWAII'S FORECLOSURE LAWS:
CRITICAL CHANGES

OLD LAW

Since Late 1990s

» Popularized nonjudicial (out-of-court) foreclosure as cheaper and quicker procedure for lenders to repossess homes from delinquent mortgage borrowers.

» Provided little protection for homeowners, including poor notification requirements.

ACT 48

Enacted May 2011

» Allowed borrowers to force lenders into mediation on nonjudicial foreclosures.

» Provided stiff penalties for lender violations.

» Prompted lenders to abandon nonjudicial foreclosures in favor of court foreclosures, resulting in no mediations.

ACT 182

Enacted June 2012

» Attempted to redefine penalties to be more acceptable to lenders for nonjudicial foreclosures.

» Requires attorneys representing lenders in nonjudicial or judicial foreclosures to attest to the accuracy of documents.

 

GLOSSARY:

FORECLOSURE TERMS

» Deed-in-lieu: Transferring ownership of a home to a lender outside of foreclosure

» Judicial: Foreclosure in court overseen by a state judge

» Nonjudicial: Foreclosure out of court with little to no third-party oversight

» Short sale: Sale of a home for less than what a borrower owes on a mortgage

 

A little more than a year after Hawaii lawmakers overhauled state foreclosure law via Act 48, the foreclosure process in Hawaii is in turmoil. Hundreds of pending foreclosure cases were halted, and lenders have restarted relatively few even as additional homeowners default on their loans. At the same time, a mediation program created by Act 48 that was supposed to help homeowners has never been used.

Additional tweaks to the law were implemented last month when Gov. Neil Abercrombie signed Act 182.

Proponents of the latest changes say they fix problems with Act 48, but critics say it makes the law worse to the point where foreclosures will be further restricted. That picture should become clearer in the months ahead.

Advocates of Act 48, mainly its chief architects -- Rep. Bob Herkes (D, Puna-Kau-South Kona-North Kona), chairman of the House Consumer Protection Committee, and Sen. Rosalyn Baker (D, Makena-Wailea-Kihei-Maalaea-Lahaina-Kaanapali-Napili-Kapalua), chairwoman of the Senate Commerce and Consumer Protection Committee -- say it has helped many homeowners even though a major function of the law, mediation, has never been used.

Critics of Act 48, including local economist Paul Brewbaker and lending industry representatives, say the law hasn't made it easier for lenders to resolve problem loans, and many delinquent borrowers are taking advantage of foreclosure delays by keeping their homes while making no mortgage payments.

Those critics also say the improving economy is helping homeowners and that Act 48 has inhibited a faster recovery in the housing market because foreclosures have been delayed and homeowner credit hasn't been restored.

"My impression of the main consequences of Act 48 is that the foreclosure inventory has persisted at high levels in Hawaii," Brewbaker said. "I think Act 48 was misguided."

One nonprofit that campaigned for Act 48, Faith Action for Community Equity, said the foreclosure delays triggered by the law provided opportunities for homeowners to avoid foreclosure through loan modifications, selling their homes for less than they owe and granting lenders property deeds in lieu of foreclosure.

FACE organizer Jun Yang said the public movement that helped produce Act 48 pressured lending giant BofA to establish face-to-face meetings with Hawaii borrowers. In addition, the drop in foreclosures brought on by Act 48 has resulted in fewer personal bankruptcies, Yang said. "We feel that the law has benefited the community," Yang said.

Data from the national Mortgage Bankers Association suggest that since Act 48, fewer Hawaii loans are entering default, but foreclosure inventory hasn't fallen. Act 48 critics say this indicates the law is interfering with an organic recovery.

Even though Hawaii's economy has improved in the past several years, foreclosure inventory has stayed between 4.5 percent and 5 percent of the housing market since the fourth quarter of 2009, peaking at 5 percent in the fourth quarter of 2011, after Act 48.

At the same time, completed loan modifications and new repayment plans have declined over the past two years.

Hope Now, a national alliance of debt counselors and mortgage companies helping consumers keep their homes, said there were 1,577 loan modifications done in Hawaii and 1,596 repayment plans started last year, down from 2,758 and 2,596, respectively, the year before.

There were about 12,000 seriously delinquent Hawaii loans in the first quarter of this year, of which about 8,700 were in foreclosure and another 3,500 were more than 90 days delinquent but not in foreclosure, the Mortgage Bankers Association reported.

Based on an average Hawaii home loan balance of about $312,000 calculated by credit reporting agency Transunion, the total value of seriously delinquent mortgages could be about $3.7 billion.

Brewbaker said letting so much bad debt fester weighs down economic recovery. In neighborhoods with lots of foreclosure homes on the market, home values can suffer.

Act 48 was a response to a more than 100-year-old statute that established a nonjudicial, or out-of-court, foreclosure process that a 2009 report by the National Consumer Law Center called one of the weakest in the country for consumer protections.

Hawaii's old law gained widespread use in the late 1990s, and until May 2011 was how the vast majority of foreclosures were done because it was quicker and cheaper than going through court.

Act 48 aimed to curb what consumer advocates said were lender abuses, while allowing foreclosures to proceed in cases where homeowners had no realistic prospect of maintaining their mortgage.

Herkes said the old law, dating back to 1874, enabled lenders to sell a home at foreclosure auction in as little as four weeks, with no third-party oversight and sometimes even without a homeowner's knowledge.

A key provision in Act 48 encourages mediation to work out problem loans. The law allows qualified homeowners to bring nonjudicial cases into a dispute resolution program overseen by a mediator. The program was set up by the state Department of Commerce and Consumer Affairs with $400,000 in state funds.

Act 48 halted all pending nonjudicial foreclosures and required that they be restarted, using the new process which included the possibility of mediation. But lenders balked at the revamped procedure because of what they perceived as unfair potential penalties, and for the past 14 months there have been no nonjudicial foreclosure cases restarted by lenders.

Instead the lenders have been filing judicial foreclosures. New judicial foreclosure cases tripled to 3,936 in the 12 months through May, compared with 1,304 in the 12 months before Act 48 was enacted, according to state Judiciary figures.

While huge, the increase doesn't reflect the number of foreclosures that lenders have amassed but can't get into court because of workload limitations, according to local foreclosure attorneys.

In short, they say, the volume has been constrained because court foreclosures take more effort, money and time. Each case can take up to two years to complete, compared with several months for nonjudicial foreclosures.

For instance, Bank of New York Mellon intended to sell a Makaha Valley Towers condo in July 2010, according to a nonjudicial auction notice. But the sale never happened. In November the bank restarted the case in court.

According to court documents and property records, local real estate agent Amalia Johles bought the condo in 2005 for $165,000 with a $132,000 loan from Countrywide Home Loans Inc. Six units similar in size to Johles' were sold earlier this year for between $70,000 and $115,000.

In May an attorney for Bank of New York, which represents investors that acquired the loan from Countrywide, told the court that numerous attempts to serve Johles with a copy of the lawsuit were unsuccessful. The court gave the bank six more months to serve Johles.

Johles did not respond to a request for comment.

Local foreclosure attorney David Rosen, who isn't involved in the Johles or Ruddy cases, said lenders are being stymied from recovering bad debt through foreclosure, while many homeowners are able to stay in their homes without making mortgage payments or rent.

"The entire process is being abused," he said.

Rosen said one lender he represents had 1,000 nonjudicial foreclosures pending in Hawaii when Act 48 took effect.

Brewbaker contends that a relatively small number of Hawaii families beset by circumstances such as job loss or divorce were caught up in foreclosure after making un-risky home purchases. He contends that far more people made risky purchases and are now coasting on benefits from Act 48.

"There are way more deadbeats and failed real estate speculators working the system, living in their houses for years without making a mortgage payment, I mean proportionately, more than genuine economic distress would suggest should be likely," he said.

Ruddy, the North Shore rental property owner, said he would have preferred a quick foreclosure under Hawaii's old foreclosure law. But with the way things went, he's not conscience-stricken about collecting rent while the bank plods through court foreclosure.

"My losses far outweigh the benefit," he said.

Ruddy bought his Turtle Bay condo in 2004 for $370,000, followed by the Laie house in 2005 for $550,000 as Hawaii's real estate market was surging. He said he made down payments in cash totaling $50,000 to $80,000 and spent $80,000 to $100,000 on renovations. But a slump in the rental market combined with rising expenses turned his rental investments sour in 2008 as the economic downturn was unfolding.

Soon the properties were losing what Ruddy said was $2,000 to $4,000 a month. "I went through my savings, I went through my retirement," he said. "I got wiped out."

Ruddy defaulted toward the end of 2009. BofA tried to modify his loans three or four times in what Ruddy said was a maddening experience that involved the bank losing his paperwork and shifting his case to numerous ill-informed staff. He attempted a short sale -- selling the property for less than the loan amount -- on the Laie home in late 2009, but a deal in escrow fell apart. After that, Ruddy prepared for foreclosure by moving tenants out and filing for bankruptcy. That was two years ago. Instead, auction dates got postponed and then Act 48 was enacted.

After Ruddy learned it could be 12 to 18 months before foreclosure concluded, he decided to rent out the properties again, in part to offset some losses and to keep paying maintenance fees and property taxes.

"I was thinking it was going to be done, but then Act 48 passed," he said. "In a way it prolonged the agony. If the bank would have come and taken the property right away, that would have been preferable."

Ruddy has benefited from what he said has been $35,000 to $40,000 in additional rental income absent of mortgage payments, though it will take him longer to repair his credit after foreclosure is completed.

In the past six to nine months, Ruddy said, BofA has been encouraging him to deed over the property in lieu of foreclosure, but he said he is wary given his previous ordeals trying to work with the bank. "Why should I go through another process jumping through hoops?" he said.






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Bdpapa wrote:
Ruddy is the type of person who helped create this problem. He wonʻt pay the bank but still collects rent. What a wonderful person!
on August 5,2012 | 04:44AM
palani wrote:
Exactly. It's bad enough when speculators initially drive up prices for everyone else, now this California real estate "investor" is gaming the foreclosure system, at our expense. But let's not forget that the root of the problem began with big government jokers such as Barney Frank cajoling the banks and Fannie Mae to provide mortgages to people who knew they they could not afford the payments. It does not matter if a house is "underwater" (loan balance exceeds resale value). Almost every new car purchased is worth less than the loan balance as soon as the vehicle is driven off the dealer's lot. The buyer commits to make the payments, not because he thinks the car will appreciate in value, but because he can afford it.
on August 5,2012 | 05:43AM
username_required wrote:
Ive always wondered abt the "new car losing value as it leaves the dealer's lot." Is there really a market for these seconds- owned vehicles? Where can I buy one?
on August 5,2012 | 08:53AM
2_centz wrote:
This comment has been deleted.
on August 5,2012 | 10:57AM
wondermn1 wrote:
2_cents, The people who took out these loans understood and agreed to make paymenbts as scheduled. if they defaulted on the payments they should loose the home in a timely manner so the banks can recoup their investment like andy other contract. Preditory lending is a lot BS, the baks were heloing people to get home who may not otherwise have been able to afford one. it is not the banks fault the people did not pay. For the state to jump in and change the rules and make it a major obstichle to forclose is an injustice to the banks. If you loaned someone 400,000.00 and they did not pay would you want your money back, of course you would. P.S. Once you put money in a savings account it is the banks money until you withdraw it.
on August 5,2012 | 01:50PM
aomohoa wrote:
This makes me so angry! I personally know someone like him.
on August 5,2012 | 09:19AM
Bdpapa wrote:
And to top it off, he is/was a mortgage broker! He knew the game. Sounds like premeditated fraud.
on August 5,2012 | 09:38AM
igrinds wrote:
totally agree. Real estate speculators not only here but across the country expect to be rescued by the state/federal government. It should be like the stock market. You speculate on company ABC and borrow on margin to buy stock and stock sinks, you pay. It really is that simple.
on August 5,2012 | 02:26PM
Wazdat wrote:
I have NO SYMPATHY for these types of investors. They are part of the problem, we let non-residents just come in a BUY up all the islands then turn around and rent it to the locals. We need to TAX all froeign, non-resident residentail investments and stop letting people come in and buy up the island.
on August 5,2012 | 06:14AM
onevoice82 wrote:
The state "does" tax non-hawaii resident and not-usa resident investors of property here in Hawaii. As for the ban on all outside sales, that would cause a huge drop in prices and 1000's of our local residents would be devestated by the drop in value. I do agree with your first sentence, investors like Ruddy are freeloaders!
on August 5,2012 | 07:20AM
Wazdat wrote:
What is that tax rate ??? it should be at least 15-20%. We have something everybody wants
on August 5,2012 | 07:56AM
tiki886 wrote:
If you increase the tax rate on investors, you increase the rent of the renter! Duh!?
on August 5,2012 | 08:27AM
soundofreason wrote:
There you go again. Always thinking ahead :/
on August 5,2012 | 08:33AM
tiki886 wrote:
I guess some people have not made the connection that an "investor" is the same thing as your landlord if you are renting.
on August 5,2012 | 09:15AM
soundofreason wrote:
Those are the SAME people who want to raise taxes on corporations NOT realizing that those higher taxes will just be passed on as higher prices on products "people" purchase - with the income from JOBS provided BY those same corporations.
on August 5,2012 | 10:13AM
wondermn1 wrote:
tiki, abosolutly
on August 5,2012 | 01:50PM
igrinds wrote:
Rents are still controlled by outside market forces. In other words, just because a landlords expenses go up does not automatically trigger a rise in rents. You do have people that rent property out there that owe nothing on house A while another owner still pays a mortgage on house B on the same street. Needless to say, owner of house A has way more flexibility to compete. And as we've found out by Mr. Ruddy's example, owners of house B can find themselves in trouble when market forces press down upon them.
on August 5,2012 | 02:36PM
onevoice82 wrote:
Harpta tax is 5% for non Hawaii residents and Firpta tax is 10% for non usa residents. (total of 15% for foreign investors) Investors also pay GET tax on the rental income.
on August 5,2012 | 10:59AM
igrinds wrote:
Why is it that when real estate goes down people think it's a bad thing? When prices for jeans, milk, eggs and other consumer good go down it's good in my book. Real estate prices in Hawaii are still way above what a middle class worker here can afford. The rule of thumb is the purchase price of real estate should not be more than 3 times a families yearly gross income. Today it's still over 5 times! I know, I know everyone that is currently vested will feel poorer if prices drop. But you know what, homes first and foremost are supposed to be just that, homes. They should not appreciate more than inflation over the long term which is what really takes place when looking at a long time sample.
on August 5,2012 | 02:31PM
tiki886 wrote:
Normally, if you intended on renting the property, the lender would make you sign a 'rental income addendum' to the mortgage. Meaning in the event of default, (none payment of your mortgage) the bank can step in and collect the rent to minimize its losses from non payment of the mortgage. The fact that Ruddy is in possession of the rents and not the lender means he purchased the properties as '2nd homes' which is treated as if it were an 'owner occupant' purchase. The only catch was he had to qualify for the loans without the benefit of the rental income to qualify. That being said, the most common and widespread fraud committed in the whole mortgage meltdown subprime fiasco was NOT the no income, no credit, no job, no asset qualifying, it was the status of how you purchased the home: owner occupant (primary residence), 2nd home or investor that was the most common fraud such as Ruddy committed.

Prosecution for this kind of fraud is difficult because it is almost impossible to document the "intention" to defraud the lender.


on August 5,2012 | 06:48AM
tiki886 wrote:
Fannie Mae and Freddie Mac in their efforts to buy more mortgages from banks and lenders, turned a blind eye as to how easy the occupancy status could be fraudulently satisfied simply by over stating one's income (under the no income verification process) to compensate for a lack of rental income when buying a property at lower and better terms as a "2nd home" buyer.

Once again, there was a catch to it. The borrower had to have excellent credit and a larger down payment to avoid actual proof on income, employment or assets. However, at the end of this subprime mortgage meltdown, we find that even these requirements were non existent. Eliminated by Fannie Mae and Freddie Mac and the Democrats like Maxine Waters, Gregory Meeks, Chris Dodd and Bwarney Fwank who supported FNMA and FHLMC which were populated Democrat cronies such as Franklin Raines, James Johnson, Jamie Gorelick, etc.

Watch on CSPAN the Dems say there is nothing wrong with how Fannie Mae and Freddie Mac has operated: http://www.youtube.com/watch?v=NQXbT5ZMYaY


on August 5,2012 | 07:23AM
Grimbold wrote:
You lend money to Joe to buy a house. He signed a repayment contract and breaks it, does not make payments for years and can not be thrown out of the house. You loose a large amount of money because we have socialist fools for lawmakers who allow deadbeats to steal your money.
on August 5,2012 | 07:03AM
soundofreason wrote:
These people that got behind were never really going to "come up" with the money they owed and the non-judicial process got them out quickly. Now, with this new Act - they sit in the houses for a longer period of time - STILL not making those payments - and what they owe, goes up and up. Under the previous non-judicial foreclosure process, they could have been moved out quickly and NOT been tagged for the amount they were behind - kind of like a "get out quckly and we'll forget about it" deal. Our "wise" legislators have NOW made it to where the people ARE responsible for their deficit balances by requiring the lenders to utilize the formal judicial process. Tens of thousands of dollars worth. Thank a legislator.
on August 5,2012 | 07:40AM
tiki886 wrote:
Correct. Under the non-judicial foreclosure if there was a deficiency that the borrower owed from the process, meaning the borrower owed more than the property was worth, the borrower could possibly walk away owing little or nothing to the bank. Under judicial foreclosure the costs of to the lender of receiving no mortgage payments are piling up. The unpaid interest on the loan is piling up. Attorney's fees are piling up.

As the costs pile up the bank is keeping a record of these expenses so that when the foreclosure is complete, the lender is going to go after the borrower for the total amount of the deficiencies and the result is that the lender will chase you into bankruptcy!

Good job there Bob Herkes and Rosalyn Baker. They continue to prove that government is always the cause of problems and never, never the solution. From beginning to end.


on August 5,2012 | 07:55AM
kais1269 wrote:
So what do you know, a heavy-establishment press outlet writes an editorial, masquerading as a news story, decrying the dispossessed. And, gosh, it really is a shame that Hawaii housing prices are arguably slowed right now in their ascent . Real tragedy.
on August 5,2012 | 07:45AM
onevoice82 wrote:
I am intriqued by your post and left wanting more explanation. Please elaborate......
on August 5,2012 | 08:00AM
tiki886 wrote:
It's simple. He's taking the side of the deadbeats. Unsympathetic to the SA and the article and certainly unsympathetic to the lenders. Fianally, you can see his envy, jealousy and resentment at his inability to afford a home of his own.
on August 5,2012 | 08:10AM
onevoice82 wrote:
Got it!
on August 5,2012 | 11:00AM
Changalang wrote:
The law saved Hawaii's housing market. Thanks Bob ! Look at our housing price projections. Those who can pay their mortgages in Hawaii will now have equity vs. be under water, like in Vegas. Why? Because this Law makes the banks and the banker apologist who wrote this article have to go through de facto judicial foreclosure The mortgage payors do not suffer. We have locked terms on our mortgages. However, there is no supply gut for Hawaii housing vs. the Vegas market. Prices are stable, values are going up to a nation leading median price via Brewer, owners are not underwater but can get HELOCs at 1 percent interest for credit flow, and foreclosed upon homeowners get judicial due process. What is not to love? Unless you are a bankster or real estate sales parasite.
on August 5,2012 | 08:05AM
Changalang wrote:
Typo: There is no supply glut in Hawaii over-supplying and depressing the Hawaii housing market like in Vegas. Our median home values are going strong because of gifted and wise legislators.
on August 5,2012 | 08:07AM
onevoice82 wrote:
We do not have enough forclosures and preforclosures to ever glut the market, even if they all came up next month. Dont compare vegas to hawaii.
on August 5,2012 | 11:02AM
from_da_cheapseats wrote:
Interfering in the market is gifted, wise. Sounds like pandering for votes. That's where the legislators are truely gifted. But not wise. They are so very happy to concoct and impliment reguations, so they can get their fundraising to undo them. If that's wise, they are indeed brilliant. Meanwhile the john q public, who pays their bills suffers
on August 5,2012 | 12:38PM
igrinds wrote:
Gifted and wise legislators? Who? Where? I need to find these rarities!
on August 5,2012 | 02:57PM
tiki886 wrote:
Bob and Rosalyn merely delayed the inevitable and in the process made the borrower vulnerable to being chased into bankruptcy.

As far as equity is concerned, it is just like equity in stock or ownership of stock. The value goes up and down. And as long as you don't need to sell when the value is down you won't incur a loss. So I don't get your point as to why it is so important that you now have equity and not "underwater". It didn't affect your ability to make the monthly payment. Your spending and earning capability does.


on August 5,2012 | 08:25AM
inverse wrote:
Changalang is just trying to protect thr status quo Hawaii elected officials who constantly meddle in Hawaii private business, trying to prove their relevance/importance, that in the long run does way more harm than good for the HONEST taxpayers in Hawaii.
on August 5,2012 | 11:05AM
sparkyzane wrote:
That's the point lost in these discussions. The LTV is not a measure of affordability, never was. Because one's home value is below the market valuation has nothing to do with a homeowner's payment of the months bill. It's investor's like our Cali firend who see the vlaue and refuse to make the payment although they are still collecting rent. So who did these billl favor?
on August 6,2012 | 10:38AM
soundofreason wrote:
Again......These people that got behind were never really going to "come up" with the money they owed and the non-judicial process got them out quickly. Now, with this new Act - they sit in the houses for a longer period of time - STILL not making those payments - and what they owe, goes up and up. Under the previous non-judicial foreclosure process, they could have been moved out quickly and NOT been tagged for the amount they were behind - kind of like a "get out quckly and we'll forget about it" deal. Our "wise" legislators have NOW made it to where the people ARE responsible for their deficit balances by requiring the lenders to utilize the formal judicial process. Tens of thousands of dollars worth. Thank a legislator.
on August 5,2012 | 10:24AM
igrinds wrote:
This constant expectation of equity growth in housing is continued folly in our thinking. We need to go back 30-40 years to understand it's effects. In the 1970's a regular Joe making a middle income wage could buy a 3 bedroom home in Mililani. Notice I used the singular in describing the buyer. ONE INCOME COULD QUALIFY TO BUY A HOME ON OAHU 30 YEARS AGO! Yes, mom (or dad) could stay home. Let's not forget that interest rates peaked at something like 18% and the single middle class person still qualified for a 30 year mortgage. Today it takes 2 incomes to afford a 3 bedroom Mililani home. What's happened? One generation benefited from escalating home prices at the expense of the next. Those of us in our 40's will never see home prices escalate like our parents experienced. The economic stress that this has created for the young detrimental. When equity is created the assumption of the future is that a buyer will come and pay you what you think your commodity is worth. What happens when the affordability is no longer there? What happens when the future average Joe doesn't make enough money to fulfill you assumption of value? Prices come down.
on August 5,2012 | 02:54PM
Changalang wrote:
Judicial foreclosure slows everything down via jurisprudence; just like the Feds control on the markets. If the banks suffer too much, then they can go to the Fed discount window, get 25 basis point loans and invest their way to success. Sound familiar? All entities are getting an almost free ride. All the Fed needs is more time. All the banks needed were more time. All the defaulters needed was more time. Get credit while you can. The clock is ticking. LOL.
on August 5,2012 | 09:02PM
tiki886 wrote:
If you increase the tax rate on investors, you increase the rent of the renter! Duh!?
on August 5,2012 | 08:16AM
Bdpapa wrote:
Good point. But the monies for City Services come from property taxes. Renters donʻt pay property taxes directly. So, if an investor is making money renting a property , they should pay higher taxes . Itʻs the cost of business. If it goes back to the renter, the renter has a choice to stay or move on.
on August 5,2012 | 11:49AM
kolekole wrote:
Ruddy's gotten far more than 30K. It's probably closer to 80K. This type of parasitic Hyena is of the worst kind! Hawaii should be rid of this kind of people! Aloha is not in their vocabulary. PUNISH HIM!
on August 5,2012 | 08:17AM
tiki886 wrote:
He's not breaking any laws so there is no judicial punishment awaiting him. What is awaiting him are the expenses that are piling up. He's actually in a "pay me now or pay me later" situation if he doesn't know it already.

Ruddy said, BofA has been encouraging him to deed over the property in lieu of foreclosure, but he said he is wary given his previous ordeals trying to work with the bank. "Why should I go through another process jumping through hoops?" he said.

His comment is merely an excuse. The bank is asking him to give up the property so they can sell it and stop the 'bleeding' for both he and the bank. It's also called a 'voluntary foreclosure'. The rent that he has been pocketing should have been going toward minimizing the expense of the foreclosure in terms of the unpaid interest, unpaid principle and mounting attorney fees for both sides. He will end up losing everything for sure when the bank chases him into bankruptcy for all of these unpaid expenses.


on August 5,2012 | 08:41AM
aomohoa wrote:
These people are all over not just Hawaii.
on August 5,2012 | 09:27AM
aomohoa wrote:
The only ones that we should feel sorry for are the people that have lost there jobs and trying to hang on to their home they love. Even then the problem is that people live way beyond their means. Investors are the ones that always are smart enough to get away with this s**t. The rich get richer! They created the bubble that caused the collapse of the real estate market. I believe that if you are rich because you worked hard and earned it good for you. If you are rich because you are scum you should be brought down! This type should not be able to get away with this.
on August 5,2012 | 09:25AM
Bdpapa wrote:
Yes, owner occupants have much more at stake. If anything, owner occupants should pay a lower tax rate by the amount of time they owned their home. The difference could be made up by investers and absentee property owners. Also, foreign investers should pay a higher rate.
on August 5,2012 | 11:51AM
ready2go wrote:
These Hawaii legislators should be held accountable for weak legislation. This process is a waste of time and money!
on August 5,2012 | 10:55AM
Kawipoo wrote:
This is what happens when you have government interfering with home foreclosures. Just stay out and let them be foreclosed. upon. It is like trying to bail out Greece.
on August 5,2012 | 11:44AM
Grimbold wrote:
Those that are foreclosed are those that wanted to make a profit and bit of a piece too big for them out of greed. Now they fault the banks.
on August 5,2012 | 03:02PM
kailua000 wrote:
I hope BoA takes Ruddy's house. Why the heck should I pay my mortgage every month, and not get any special consideration when I want to re-fi, yet ye wants special consideration. Amaing.
on August 5,2012 | 12:49PM
paradisetax wrote:
BTW, to help pay for the Obama health care fiasco a soon to be implemented "tax" of 3% will be added to the cost of selling your home. Ah, so let me see now, that's 6% to the realtor and 3% additional for the feds. Huh? So states with high foreclosure rates will have an even more difficult time unloading their properties. Most sellers aren't even aware this tax is coming down the road
on August 5,2012 | 12:51PM
Grimbold wrote:
The 6% to the realtor is the most outrageous steal. They manipulated the laws in a way that you have to complete idiotic paper mountains of useless stuff , with the outcome that you can not sell your house yourself. On one single sale of $800,000 they rob the involved seller and buyer by $48000. So those parasites make one sale a year and they can live of our money for one year.. I have owned several houses and always sold them myself in the past, giving the savings to the buyers instead paying the useless parasite realtors !!
on August 5,2012 | 02:57PM
igrinds wrote:
Why did the StarAdvertiser choose to feature two real estate speculators in this article? Mr Gomes couldn't find a family that was actually living in a distressed home. Brewbaker is correct in stating that to many speculators are gaming the system. This guy Ruddy lives in California but purchased 2 properties to rent out. He blames the economy of 2008 for his troubles, you have to be kidding me. He also states that he probably collected 35-40K since he stopped paying the mortgages on these speculations. We'll he should be sending it in to the banks. He borrowed the money to make a buck, it didn't work out and now he thinks he's the victim of cosmic consequence. There are way more Ruddy's on the island and in the state that have tried to game the system from out of state. North shore, Kailua and Hawaii Kai are just a few neighborhoods where these "Ruddy's" speculated. Interesting that he's a mortgage broker in California, enough said.
on August 5,2012 | 02:22PM
Grimbold wrote:
Realtors drive up the price of houses , everytime it is sold the price has to go up 6% just to be even.
on August 5,2012 | 03:00PM
roadsterred wrote:
A big mahalo to our illustrious State Legislature for making a bad situation worse. Earth to legislators, did you "feel good" when you passed Act 48? I'll bet you did. Our State Legislature is notorious for passing "feel good" laws. A recent example is the move over law. Are the paramedics going to through spitballs at the passing motorist if he/she does not move over? Now that you have learned that you are helping real estate speculators scam the system, what are you going to do about it?
on August 5,2012 | 07:01PM
SVTPLT wrote:
Instead of getting mad at people that game the system, you should be getting mad at the stupid politicians that put laws like these in place. Vote out the bums!
on August 5,2012 | 08:45PM
Kapakahi wrote:
The analysis in this article has gaping holes in it. One gets the clear sense that the banks united to oppose the legislation and then, once it passed, collectively decided to not cooperate with the new process, figuring they could wait it out through their intransigence. This is likely a major factor in the persisting high percentage of homes remaining in foreclosure. The banks do not want to resolve the problem under the current system. They prefer to drag their feet in order to create pressure on the legislature to revert to the earlier system. You know, the one recognized as "one of the weakest in the country for consumer protections."

The writer fails to develop this argument, preferring Paul Brewbaker's framework that the government, while well-intended, are interfering with the "natural working" of the marketplace, which should be trusted to handle this without interference. I have found Paul to be very intelligent and thoughtful man, so I assume a broader examination of his views on the foreclosure problem would present a more nuanced view than the facile laisSez-faire, neo-liberalism suggested by the brief quotes allowed him in this article.

2centz introduces the notion the lenders may have acted in bad faith and two of the lenders mentioned, Bank of America and Countrywide, have been exposed as having engaged in widespread bad faith, even illegal practices of the kind this legislation was supposed to protect consumers from. But, as I said, this angle was not investigated by the reporter, leaving Mr. Ruddy available to us as the only actor on which we can "blame" the situation. Well, Ruddy and those well-intended, but "misguided" legislators who foolishly tried to restrain the Invisible Hand and protect consumers.


on August 7,2012 | 09:03AM
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