Residents seek more help with mortgages after Lahaina fire

Leah Nakamura Frank is stuck with two mortgages, including one for a condominium that no longer exists.

Frank's current home in Napili was out of the fire zone, but her former residence at Opukea at Lahaina condominiums that she rented to other local families at under market rate burned down in the Aug. 8 fire.

A fourth-generation Lahaina resident, Frank is still paying the mortgage on the condo, which she hoped to one day pass down to her child. She's now busy calling her lenders for any type of assistance she can get. While she's thankful for the help she's received, she says she'll need a lot more.

"I will not face foreclosure, I will get a 2nd job before that happens," she said via email Wednesday. "But it is not ideal as I have a young child, too. I have many friends who do face foreclosure though and if the banks would just step up and take care of our community, their homes/land would be saved."

She also called on government-sponsored enterprises such as Fannie Mae for more help.

"We are not asking to not pay, just to pay later after the dust settles," she said. "Our whole lives have been uprooted and we are just asking for a little compassion and time."

Frank, who immediately refunded her tenants their full August rent and deposit after the fires, said many families are at risk of losing their land because they cannot pay for both their mortgages and rent until they are able to rebuild, which, at least for her condo, is estimated at five to 10 years.

Maui attorney Lance Collins is trying to help folks like Frank and is calling for a three-year mortgage deferral and foreclosure moratorium for Lahaina homeowners.

He says those in similar situations who cannot pay their mortgages are reluctant to speak out, fearing it could make matters worse.

Collins said that without immediate intervention, Lahaina will be faced "with a tsunami of foreclosures" and "predatory land grabbing will reign under the cloak of the legal process."

Federal regulations permit most homeowners a 90-day forbearance on the payment of their mortgages due to a natural disaster, Collins explained. But after that, they must begin making payments again and also pay the three months of missed payments.

Most of these homeowners no longer have homes, and many remain displaced in temporary housing and are without work, Collins said in a news release Monday. He added that it is estimated that rebuilding will take at least three years.

The attorney has reached out to Gov. Josh Green, asking him to use his emergency powers to suspend the foreclosure law for residential properties in the burned zone "to strongly encourage lenders to work with property owners on deferments and loan modifications."

He is also requesting that federal agencies require mortgage lenders to declare a "general deferment of both mortgage payments and accrual of interest for three years" as well as extend the maturation date of any loan by three years, or allow the reamortization of the three years over the life of the loan.

The Office of the Governor said in an email Wednesday that Collins' letter has been received and is under review.

The Governor's Office also pointed to recent announcements by the state telling homeowners to call their mortgage loan servicer to request a 90-day forbearance. The Federal Deposit Insurance Corporation, or the FDIC, "encourages depository institutions in the affected areas to meet the financial services needs of their communities," such as extending repayment terms or restructuring existing loans, the governor's news release said.

Hawaii and federal financial regulators have established a framework to encourage lending institutions to meet the financial needs of the affected communities, the Governor's Office has also said.

Nonprofit community development financial institution Hawai'i Community Lending has said that four statewide banks have pledged to provide mortgage forbearances to Maui families impacted by the wildfires. They are: American Savings Bank, Bank of Hawai'i, First Hawaiian Bank and Central Pacific Bank.

Tim Sakahara, corporate communications manager for CPB, said Wednesday that the bank has loan payment deferral programs and that CPB customers are encouraged to reach out to their loan officer to discuss options for their specific circumstances.

Sakahara said CPB "is committed to working with the Maui community," and has made substantial donations to relief effort and implemented initiatives to help its customers, including the loan payment deferral program. This includes its residential mortgage loan payment deferral programs, which offer three months of principal and interest payment deferral.

CPB's consumer, auto, home equity line and small business loan payment deferral programs also have three months of principal and interest payment deferral available. They also have a commercial loan and commercial real estate loan payment deferral program.

As part of its Maui Response and Recovery Strategy, Hawai'i Community Lending said it contacted 51 mortgage services locally and nationally for assistance.

By taking a pledge to help, HCL said servicers agree to provide Maui homeowners with mortgage forbearance for 90 days and up to 12 months depending on individual homeowner needs, according to its website.

After local banks took the pledge, it prompted national servicers Servbank and Homestreet Bank to follow, HCL said.

But Collins said that the relief is not enough. Even if banks offer forbearance, interest continues to accrue and the missed payments with additional interest are tacked on at the end of the loan's term, he said. The three-year deferment he is calling for means interest stops and that payments just resume at the end of the deferment.

The loan term would also be extended by the length of deferment or the deferred payments are reamortized over the term of the loan.

Collins has made his request to the Federal Housing Administration, the Federal Housing and Financing Authority, Government National Mortgage Association and the Veterans Affairs Benefits Administration.

* Staff Writer Melissa Tanji can be reached at mtanji@mauinews.com.