Homeownership is the cornerstone of middle-class life both in Hawaii and our nation. That’s why it is so important to address the epic foreclosure crises that grip us, perhaps the worst since the Great Depression.

This whole downward cycle created a foreclosure meltdown on a national level, particularly with our trillion-dollar national banks. We live with the consequences here in Hawaii. In just a few years, we skyrocketed from being one of the states with the lowest foreclosure levels to one of the highest, hovering now around 16th in the nation. Nothing to be proud of.

What makes matters worse is that some of the national banks are making a mess out of servicing mortgage loans both here and on the mainland. Because of the global securitization of mortgage loans, they have lost control of the mortgage paperwork and the payments that are due under them.

The sheer number of defaults makes it difficult to work with borrowers on bringing their loan current and avoiding foreclosure, or making the foreclosure as painless as possible in cases where the borrowers have lost their complete ability to repay the loan (for example, because they are unemployed.)

There really is no excuse for not servicing a loan properly. Mortgage loans are legal contracts and the biggest investment most Americans will ever make is the purchase of a home. Lenders must take the legal obligations to their borrowers seriously, and they must treat their borrowers with respect. This is not happening with the large national banks and their borrowers in Hawaii or around our country. Where there are deceptive practices with loan originations and modifications, our attorney general needs to step in with a strong hand.

Hawaii’s Legislature, working with Faith Action for Community Equity (FACE), recognizes this servicing problem and has been moving legislation to improve the communication between lenders and borrowers when negotia- ting the rocky road of mortgage foreclosure.

The problem is that "one-size legislation" does not fit all. There is a world of difference between local community lenders like First Hawaiian Bank, Bank of Hawaii and credit unions and trillion-dollar national banks tied to Wall Street. Lenders headquartered in Hawaii have very few foreclosures in comparison to large national lenders.

For example, Bank of America, one of our nation’s largest national banks, currently has approximately 27 times more active foreclosures than the combined foreclosures of First Hawaiian Bank, Bank of Hawaii — Hawaii’s two largest banks — and approximately 65 credit unions scattered on every island that make mortgage loans. Statistics such as these prove that lenders headquartered in Hawaii are servicing their loans properly. This makes sense because they are in our communities on each island and every town, and they reach out to their borrowers because they are their neighbors and long-term customers. This is the nature and business model of a successful community lender.

The legislators leading the charge to solve the problem, along with FACE, recognize this significant difference. They are crafting legislation that is written to address the "bad actor" lenders while not punishing those local lenders who are already doing an admirable job working with their borrowers.

All the stakeholders must step back unemotionally and let sound reason prevail. There is a major problem and it must be fixed. It just doesn’t need to be over-fixed. Until it is fixed, we will not see a full recovery of our housing market and, in turn, of our economy.

The foreclosure process must be allowed to work itself out in a fair and equitable way, and those who can no longer afford to own a home must be helped to resolve their situation. Only then will our economy return to full health.