Hawaii recently enacted foreclosure mediation into law, joining a host of other states bent on curbing mass foreclosures. The enduring recession has led to countless foreclosures across the country, and states have been scrambling to enact legislation to halt or slow the unfortunate trend. The Aloha state has a higher foreclosure rate than all but 10 states, and it is estimated that approximately one in 201 homes received a foreclosure filing in the first four months of 2011.

The new state law, which is set to begin no later than October 1, 2011, and span through September 30, 2014, means that lenders and homeowners must now work together to negotiate alternate resolutions. The law includes a provision called the Mortgage Foreclosure Dispute Resolution Program, established to provide face-to-face meetings between lenders and borrowers when requested by distressed homeowners. A third-party facilitator would mediate these negotiations, and foreclosure proceedings would be suspended until some sort of resolution is reached.

Significantly affected by budget concerns, Hawaii faces a $771.9 million shortfall over the next two-year budget cycle and a $71.6 million budget deficit for 2011. Though it may seem like a poor time to enact new, expensive legislation, the state has taken measures to make the Mortgage Foreclosure Dispute Resolution Program self-sufficient. To help pay for program expenses, Hawaii established a $250 lender foreclosure fee. In addition, homeowners and lenders interested in dispute resolution will each have to put up $300 in program fees.

The resolution program requires that all negotiations be in good faith, and lenders and homeowners can each be fined a maximum $1,500 for “unjustified noncompliance” if they fail to fulfill specific program requirements. Collected fines will be used to help finance the foreclosure mediation program, and lenders who fail to comply with the set regulations will be prevented from proceeding with non-judicial foreclosure.

To find a foreclosure mediation attorney in Hawaii, browse our National Mediation Directory listings.