Foreclosure, utility moratoriums ending soon

Time is running out for those who need to pay their rent, utilities or mortgage, and the time to take action is now, according to a nonprofit advisory group.

While many Hawaii residents have been offered a reprieve from making these payments during the COVID-19 pandemic, an end to those grace periods is coming soon. Disconnection moratoriums for regulated utilities in Hawaii end May 31, while federal foreclosure moratoriums end June 30.

Now is the time to take proactive steps, according to the Hawaii Homeownership Center, which assembled a Foreclosure Prevention Advisory Council a few months ago to address these issues.

The center provides foreclosure counseling services as well as resources for both renters and homeowners.

“There’s a potential in terms of there being a bigger problem than what we’re experiencing right now,” said Hawaii Homeownership Center Executive Director Reina Miyamoto. “We’ve been bracing ourselves since last year. The shoe hasn’t dropped yet, but we got our staff ready as much as you can be.”

The impact could potentially be severe, resulting in more homelessness, according to the center, but what residents should do is talk to their bank, credit union or lending institution now rather than later, to see what their options are.

“Do not wait until you are in a deeper hole,” said the center in a news release. “Reach out to them now. They are saying that it is their preference to work with their customers to keep them in their home and avoid foreclosure proceedings. They believe that they can help you restructure your loan or offer the best options as long as they have advance notice, and you connect with them sooner rather than later.”

During the pandemic, Miyamoto said there were scenarios where residents who were already challenged found themselves in an even worse situation. There are others who were furloughed for months on end and, thus, unable to make payments.

There were also many who used limited funds for food, medicine and other necessities instead of rent or mortgages, thanks to the moratoriums.

While she does not have an exact figure on how many face eviction or foreclosure in Hawaii, a crisis appears to loom on the horizon.

The National Equity Atlas reported that 14,000 Hawaii households are behind on their rent, primarily due to job or income loss.

When Honolulu started accepting applications for its Rental and Utility Relief Program in April, for instance, offering federal relief, the limit of 8,000 was reached within four hours, and quickly maxed out again during the second round in May.

The first step for a homeowner is to contact a lender, she said, rather than doing nothing until the last minute.

“I don’t think I’ve ever spoken to any lender that said we would rather foreclose on a borrower,” she said. “It’s expensive. If they can actually resolve it without that, it’s better all around for the homeowner and the bank, everybody all around.”

The Hawaii Public Utilities Commission, meanwhile, has extended a suspension on disconnections due to nonpayment numerous times over the past year, but has set that deadline for May 31.

The deadline covers all regulated utilities, including Hawaiian Electric and the Kauai Island Utility Cooperative.

Hawaiian Electric has encouraged its customers with a past-due balance to set up a payment plan that can be stretched into installments over many months, including an 18- month plan.

Customers who have set up a payment arrangement are not subject to the disconnection process, the utility said, and late fees are waived.

What’s important to understand, according to Mi­ya­moto, is that mora­- tor­iums are a postponement of bills past due, but those amounts are still owed at the end of the day.

The Hawaii Homeownership Center “is focused on being a resource to Hawaii families to sustain their housing to the extent possible,” she said. “Our role to support the community includes collaborating and facilitating conversations with our peers and stakeholders like our ‘council.’ The situation is very fluid, and we will continue to work with others to be a light in the storm for those that need it.”

For more information, visit hihomeownership.org.