On behalf of Lahaina homeowners who have been affected by the devastating Aug. 8 fire, Maui attorney Lance Collins is formally asking several federal agencies and Hawaii’s governor to take measures to ease the burden of paying their mortgage, according to a news release.
Lahaina homeowners are facing the threat of foreclosure. Typically, federal regulations allow homeowners a 90-day forbearance on mortgage payments in the aftermath of a natural disaster. However, after this period, they are required to resume payments and cover the three months of missed payments.
Many Lahaina homeowners have lost their homes and find themselves displaced in temporary housing with no stable source of income. Some estimate rebuilding will take at least three years.
In response to this situation, Collins has petitioned the Federal Housing Administration, the Federal Housing and Financing Authority, the Government National Mortgage Association, and the Veterans Affairs Benefits Administration to mandate mortgage lenders grant a general deferment of mortgage payments and the accrual of interest for three years. Additionally, he is advocating for the extension of the maturation date of loans by three years or the option to re-amortize the deferred payments over the loan’s lifespan.
Collins also wrote a letter urging Hawaii Governor Josh Green to use his emergency powers to suspend the Foreclosure Law for residential properties within the burn zone in Lahaina. This suspension would encourage lenders to collaborate with property owners on deferments and loan modifications, providing relief to those at risk of foreclosure, according to Collins.
“Without immediate intervention, the Lahaina community will next be faced with a tsunami of foreclosures, and predatory land grabbing will reign under the cloak of legal process,” said Collins.
Spectrum News Hawaii reached out to Green’s office, who said, "The letter has been received and it is under review."
While some local banks have offered forbearance options, where interest continues to accrue and missed payments are added to the end of the loan’s term, Collins’ request goes further. He seeks a general deferral that does not accrue interest during the deferment period and extends the loan’s maturity date accordingly.
Editor's Note: This story has been updated with comment from the governor's office. (Sept. 20, 2023)