The mortgage crisis has arrived in Kaaawa in a very visible way.

A cluster of three brand new, never-occupied homes built by developer W. Michael Sessions have been empty since they were built two years ago and now appear abandoned.

Although real estate records continue to list the owners as Michael Sessions and Daniel Sessions, the homes are currently being marketed for sale as “REO”, a real estate term for homes that are held by banks as “real estate owned”.

Notices posted on two of the homes, located on Kekio Road behind the Kaaawa Post Office, says the homes were found “unsecure/or vacant” and were secured by Field Asset Services, a Texas company specializing in maintenance of bank-owned properties.

The properties were purchased in 2007, real estate records show. W. Michael Sessions held a 2/3 majority interest, with the remainder owned by Daniel Sessions. City building permits were issued for construction of the three new homes in late 2007.

Construction financing was provided by IndyMac Bank, which was reopened as OneWest Bank after being shut down by federal regulators. IndyMac/OneWest have been criticized for aggressive and, according to some, illegal foreclosures on IndyMac mortgages.

The houses are on portions of two larger lots that were registered as condominiums in order to build multiple houses on what is zoned for single family homes.

Sessions’ Kina’ole Development earlier built two homes next to the post office in 2005-2006. Although these were slow to sell, they eventually did sell. He then quickly proceeded to build on a lot on the other side of Kekio Road, but was unable to sell the homes before the market dried up.

Sessions’ problems are unlikely to get much sympathy from longtime Kaaawa residents, who regret the move by real estate speculators into the area with projects that increase the density and cut up large residential lots in the area once owned by Kualoa Ranch.

Sessions’ first two houses caused considerable local controversy because a concrete driveway was built through an existing drainage swale, and the new drainage provided was not adequate for the heavy rains that occasionally fall in the area. During discussions of local flooding, the Kaaawa Community Association has pointed to the inadequate drainage as a contributing factor.

Although never occupied, all three homes are now described as needing repairs, according to the current real estate listings.