As a Native Hawaiian whose granduncle Prince Jonah Kuhio Kalanianaole in 1920 wrote the Hawaiian Homes Act as a delegate to Congress, I have always had a deep interest in the welfare of Native Hawaiians. Except for the Department of Hawaiian Homelands, many would be homeless today.
Consequently, I was very disappointed at the state auditor’s report to the Legislature regarding the DHHL.
The auditor’s implication that lessees unable to pay their mortgages should be removed from the land is most disturbing and demonstrates a fundamental misunderstanding by the auditor of the national mortgage foreclosure epidemic.
The audit concludes that leaving defaulting borrowers in their homes is somehow perceived as giving special treatment to this group and favoring them over others on the wait list. Such a view is mean-spirited, shortsighted and divisive.
It is evident there is a very small number of extreme cases for which eviction is the only option; however, there are viable alternatives for the overwhelming majority of lessees in default that the audit does not address.
What the auditor should have recommended is that DHHL engage in a process of loss mitigation, practiced by every lender locally and nationally with the help of the state and federal governments. DHHL should be required to follow the Mort- gage Foreclosure Dispute Resolution Act law of 2011, which forces a mediation process between lenders and borrowers. This oversight exposes the auditor’s ignorance of the mortgage foreclosure epidemic that has gripped this nation for the past five years.
Melinda Fulmer of Microsoft Network Real Estate writes that mortgage foreclosures nationwide increased 47 percent in March 2013 from March 2012, and nationally, 149,150 homes were in the foreclosure process. California led the nation with 31,434 filings, or 1 for every 385 homes; Illinois, 14,303 filings, or 1 per 511 homes; and Texas, 12,755 filings, or 1 for every 631 homes.
In contrast, Hawaii had 65 filings or 1 for every 7,085 homes. These numbers graphically demonstrate that local lenders are constantly servicing and monitoring their mortgagees. DHHL should learn from them.
The lawsuit brought by 49 state attorneys general nationwide against certain lenders has resulted in approximately $25 billion for borrowers. It requires these lenders to change their broken system of servicing loans into one that is functional. Banks are forced to reduce their principal on many of their loans to allow homeowners to keep their homes. These lenders must refinance borrowers who have been unable to refinance due to negative equity.
DHHL should consider this settlement as a template to remedy its own mortgage crises.
As a "lender of last resort," DHHL has enjoyed an annual settlement payment of $30 million for 20 years since 1995, in addition to between $10 million and $13 million annually from the Native American Housing Assistance and Self-Determination Act of 1996.
DHHL should be required to behave like a lender or, in the alternative, hire one to do the job.
It is incumbent that DHHL learn from this experience and commit itself to resolving financial obligation issues in a straightforward process instead of making excuses or subjecting lessees to a convoluted "workout" process that is dysfunctional.
DHHL should consider emulating these recent solutions mandated by the federal government settlement as well as the local banks, whose overall FHA delinquency rate is less than 2 percent.
"Stick together and try to agree to the best of your ability to meet the most important problem: the rehabilitation of our race," Prince Kuhio said on his deathbed.
DHHL would go a long way toward accomplishing this were it to take its founder’s advice.
