When Lahaina resident Mikey Burke stopped by a recent mortgage assistance fair to speak with a representative from her mortgage company, she got the nightmare news.
“She says, ‘Oh, wait a minute, you are delinquent on your loan.’ I say, ‘Well, that can't happen because I'm on a disaster forbearance plan.’ And she goes, ‘Yeah, correct. That's got to be a mistake.’ And so she looks into it further, and just very nonchalantly, she says, ‘Oh, we actually started foreclosure proceedings on you.’”
Like most Lahaina homeowners, Burke is responsible for paying a mortgage on a home that no longer exists after the August fire.
She’s been calling her mortgage lender every 90 days over the past 11 months to communicate about her disaster forbearance, which allows homeowners to temporarily pause loan payments.
“Thank God I knew my rights, and I knew what was correct and incorrect," she said, "because had I not, I would have fallen apart right there.”
She’s not the only Lahaina resident to have received recent foreclosure notices.
“These foreclosure actions are illegal at this time due to the forbearance plan and the moratorium in place,” said Jeff Gilbreath, executive director of Hawaiʻi Community Lending.
Foreclosure status for nonpayment is illegal for owner-occupant borrowers who have been granted forbearance. The U.S. Department of Housing and Urban Development has also extended its foreclosure moratorium through Aug. 4 for Maui borrowers with mortgages insured by the Federal Housing Administration.
Burke said her lender has promised to correct the foreclosure error.
She has also filed a report with the state Department of Commerce and Consumer Affairs Division of Financial Institutions, which is investigating unlawful foreclosures of Lahaina homes.
A public-private partnership has launched the Lahaina Homeowner Recovery Program to help. Gilbreath said the program is between the Hawaiʻi Community Lending, the Lahaina Community Land Trust and the Division of Financial Institutions.
“If folks need help, or if it's just too overwhelming, we're happy to step in and help talk with the servicer on their behalf and start a process so that we're making sure we're putting a pause on the foreclosure, we're stopping it, and we can figure out a way to rework the existing mortgage so the family can afford it,” Gilbreath said.
Autumn Ness is interim director of the Lahaina Community Land Trust. She said after the fire, everyone thought mortgage protections must be automatic with such disasters.
“Then we slowly, over a few months, realized not only was that not the case, but that individual mortgage owners were completely on their own to contact their mortgage servicer and negotiate deals,” she said.
The nonprofit has been working on solutions to help Lahaina homeowners having to make tough financial decisions about their land.
“We thought we had some time to figure out how to communicate to people what their options are, and get them all in line so they don't lose their what's left of their home," Ness explained. "And we realize that people have just been put in foreclosure, and they don't even know it.”
The urgency of the situation is a reminder for her of why Lahaina residents saw a need.
“The reason that Lahaina Community Land Trust was formed at all is exactly this,” Ness said. “We were so afraid that people would end up being backed into these corners without the support and resources they need. And then what happens?”
Ness said the land trust’s goal is to keep Lahaina residents on their land. But if foreclosures cause bank sales or if investors are knocking, the organization can give families options to keep their land in local hands through purchase and community ownership models.
Meanwhile, Gilbreath urges action.
“I would just tell Lahaina homeowners if you're receiving a foreclosure notice, just call us right away,” he said. “There's no need to suffer in silence. There's nothing worse than doing nothing.”
Burke, who is also board president of Lahaina Community Land Trust, said that with some mortgage lenders giving homeowners misinformation or poor advice, education is key.
“We’re just trying really hard to get people to understand that if you're still holding on to a mortgage, just reach out and let's see,” Burke said. “Because I thought I was fine. I was on my forbearance plan, I did everything correct, and I'm still hit with this issue.”
