In Hawaii, the Mortgage Foreclosure Dispute Resolution Program provides homeowners in foreclosure with the opportunity to participate in mediation with their lender to discuss alternatives to foreclosure. It is only available if you are in nonjudicial (vs. judicial) foreclosure. Unfortunately, many lenders now file judicial foreclsures in Hawaii so they don't have to participate in foreclosure mediation.
Eligibility for the Hawaii MFDR Program
Hawaii’s Mortgage Foreclosure Dispute Resolution (MFDR) program is offered to any borrower whose lender files anonjudicial foreclosure as long as the property is:
- residential, and
The MFDR program is not available in judicial foreclosures. (To learn more about the difference between judicial and nonjudicial foreclosure, and the procedures for each, see Will Your Foreclosure Take Place In or Out of Court?)
What Does the MFDR Program Do?
The MFDR program (Haw. Rev. Stat. § 667-71 et seq.) gives borrowers in nonjudicial foreclosures the opportunity to participate in a face-to-face meeting with their lenders to modify their loans or to work out an alternate plan to avoid foreclosure. The Department of Commerce and Consumer Affairs – Office of Administrative Hearings (DCCA-OAH) administers the program.
How Can I Participate in the MFDR Program?
If your lender starts a nonjudicial foreclosure process, it must file a notice of nonjudicial foreclosure with the DCCA. The DCCA-OAH will then send you:
- a notice regarding the opportunity to participate in dispute resolution
- information about the program
- a MFDR participation form, and
- instructions and contact information for the program.
You then have 30 days after the mailing of notice to submit the MFDR participation form and pay a $300 nonrefundable program fee. If you do not submit the form, then the nonjudicial foreclosure process will proceed.
Nonjudicial Foreclosure Suspended During Mediation
The nonjudicial foreclosure process is suspended until the mediation is completed. If you and your lender are able to reach an agreement on an alternative to foreclosure, the foreclosure is canceled. However, if you and your lender cannot reach an agreement, the nonjudicial foreclosure will proceed.
Can I Choose to Go Through a Judicial Foreclosure Instead?
If you haven't yet participated in the mediation program, you can switch from a nonjudicial to a judicial foreclosure. However, if you choose the judicial route, you will lose the right to the MFDR program.
For more information about conversion to judicial foreclosure, visit the Hawaii State Judiciary’s website at www.courts.state.hi.us/self-help/foreclosure/foreclosure_conversion_faqs.html.
Lenders Bypassing the MFDR Program
According to a December 2012 report by the DCCA-OAH, at the present time, lenders are extremely reluctant to participate in the MFDR program. Consequently, virtually all lenders have started filing their foreclosure proceedings in the courts as judicial foreclosures so they can bypass the MFDR program altogether -- depriving borrowers of the opportunity to participate in the program.
The Hawaiian legislature has advanced several bills to amend the mediation law so that it applies to judicial foreclosures as well. However, none of the bills have been successful.
For more information on the MFDR program, go to www.hawaii.gov and search for “Mortgage Foreclosure Dispute Resolution Program.”