Representative Bob Herkes, chair of the House Committee on Consumer Protection and Commerce, submitted a sharp reply to the Star-Advertiser’s recent coverage of Hawaii’s foreclosure crisis and Act 48, which now regulates nonjudicial foreclosures.
The Star-Advertiser declined to print the op-ed as submitted, and an editor explained the newspaper’s decision:
As a general rule, we prefer commentary-length pieces not be direct rebuttals to previously-published items (whether to stories, editorials or other commentaries), but that they make fresh, concise points of their own. If you’d like to directly react to the story and/or editorial, a 150-word letter would be the format.
Alternatively: I do think there are enough interesting points/relevant history here that could get revised into a fresh commentary piece, so I invite you to go that route, if you prefer. You can certainly reference the story and/or editorial in your piece — but taking exception to them can’t be the focal point of a full-length commentary.
And just to clarify on the editorial headline: Despite your office’s perception, the title was NOT a nefarious attempt to imply or “presume that Act 48 isn’t ‘fair’ to lenders”; rather, it was to advocate for a law or system that is fair to BOTH lenders and borrowers.
Herkes’ staff later shared the column with me, and it appears below. I’ve omitted several footnotes, but only because they were difficult to format and some linked to “premium” stories available only to subscribers of the S-A. I’ll try to add them later today.
Last Thursday, this paper reprinted old news about Act 48. We already knew the foreclosure rate dropped 50-60%. We already knew the banks are foreclosing through the courts to avoid penalties for fouling up the new non-judicial process.
We can only speculate why the repeat messaging; and why this paper is so intent on spinning Act 48 as a failure. Their editorial last Monday provides some clues. Its title, “Reform law to let lenders, borrowers settle homes fairly” presumes Act 48 isn’t “fair” to lenders. What they’re really talking about is a loss of privilege. In light of all the illegality, we were obligated to limit their license to self-police.
Remember – almost half the other states disallow non-judicial foreclosures. Banks only started foreclosing non-judicially in Hawaii after a law was passed in 1998. But there’s a twist to the legislative history – which this paper aptly explained in 2010: the 1998 law was so defective, it went unused – only to revive an arcane law from 1874. The Star Bulletin reported the 1874 law was created to drive Native Hawaiians off their land. Title insurers resigned to work with that law and helped lenders develop a non-judicial “practice” that was palatable to them.
After the economy tanked, the mainland banks became desperate for capital and our so-called “law” made Hawaii a perfect target. Act 48 stopped the hemorrhaging under the 1874 law and fixed the 1998 law the banks pushed so hard for just fourteen years ago. That’s all the time it took for lenders to consider the 1874 fast-track their right. How rude of us.
Here’s another strange statement from the editorial: “While delinquent homeowners might have been helped by the resulting sharp decline in foreclosures, the change in recent months could prolong the negative effects on the housing market.” Huh?
Let me break down the cause and effect. Act 48 guarantees third-party oversight in owner-occupant foreclosures – in court or dispute resolution. No more free rides on the 1874 express. The new express train requires banks to show their legal standing to foreclose – or they’re thrown off. That frightening prospect resulted in the sharp decline of foreclosure activity. By slowing down the rate of wrongful, fraudulent, and avoidable foreclosures, we’ve stopped a flood of inventory from dragging down home prices and keeping folks from going further underwater. I doubt Hawaii’s homeowners view this as a “negative.” In fact, that is a “negative” our Federal Reserve is trying to achieve. The prestigious Council of State Governments also recommended that states enact their own Act 48 .
Simply asserting there are “negative effects on the housing market” without explaining what they are is an insult to readers. Ironically, the editorial was printed the same day Paul Brewbaker lectured the legislature on Hawaii’s economy. He spoke at length about Hawaii’s housing market, emphasizing that Oahu’s prices are slowly stabilizing and that neighbor island prices are tracking the market on the mainland. He didn’t mention any “negative effects” specifically created by Hawaii’s Act 48. There are more colossal market forces at play.
I have grown tired of arguments that rely on fabrications and baseless doomsday scenarios. We cannot ignore the rule of law because someone affected (a realtor, banker, mortgage broker?) claims it’s bad for business.
Resolution to this crisis cannot rest solely on the simpleton’s question to troubled homeowners: “did you pay your mortgage?” We also need to be asking the banks: “did you cheat?”
Pay attention this legislative session. We’re going to apply what we’ve learned from Act 48’s shake-out – and do what is best for Hawaii’s people.
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My nomination for best quote in 2012,
“Resolution to this crisis cannot rest solely on the simpleton’s question to troubled homeowners: “did you pay your mortgage?” We also need to be asking the banks: “did you cheat?”
Ref: ThePaper’s “policy” – them that buys the ink get to decide how it’s used (so to speak). Fortunately there are other media through which information and ideas can find an audience.
I have known Bob Herkes for more than four decades as a newsmaker, an able opponent, a friend and a good interpreter of the past and future.
Trust him to back up and start over when things go wrong. He is not afraid to tackle the big and small. We are not buddies. To the contrary we have beefed on business, political and policy matters. He does listen, he is bright and he has a real sense of history, statewide and locally .
I personally believe he took the best action in the sleazy mortgage mess with banks mass signing phony foreclosures and all the related crooked stuff going on in Hawaii and across the country.
It was a lengthy editorial – and involved subject – to adequately puncture in 150 words. Then, again, there’s a retired banker listed on the opinion page as a member of the publishing company’s board. Just saying…
Sounds like Herkes just found out there are policies and rules to things and he can’t just blast away as he is known to do. His heart bleeds for those living rent free.
“As a general rule, we prefer commentary-length pieces not be direct rebuttals to previously-published items (whether to stories, editorials or other commentaries), but that they make fresh, concise points of their own.”
yet another example of an utter inability to handle criticism. a ridiculous position in the world of journalism. but not unexpected.
I can see why the S-A would not publish this, viewing it as a tit-for-tat. At least I think I can follow their reasoning and it is THEIR paper. However, I will look to see that this “policy,” of which I was previously unaware (if it existed at all), is applied evenhandedly. If it is, then I’ll write off their refusal as one with which I might not agree but as one which is theirs to make. If not, if will just confirm what I generally believe about corporate media.
Why should the paper grant column space to every tom dick and harry that wants to comment on an editorial? What’s wrong with a paper having at least some minimum standards/guidelines. They took the time to clearly define and explain why they didn’t think it was appropriate and still everyone wants to take shots. I don’t know why they bother. Isn’t this what letters to the editor are for? Love all the dark conspiracy theories on this site.
They editorialized against a major bill written by Rep. Herkes. How does giving the bill’s author space to reply to their criticisms the same thing as saying “every tom dick and harry” will now have a claim for free column space?
It’s called, “point, counter-point,” and is the basis of a free and even-handed debate.
excellent point, Bart Dame.
I’m glad to read Rep Herkes comment. He understands well the banks have been negligent, abusive and disrespectful to American homeowners and he’d like them to be held accountable. One thing i do not understand in his column though. Rep. Herkes implies 3rd party oversight in Judicial Foreclosures. Has MFDR process defined in Act 48 been applied to the judicial proceedings? Have the judges in all our counties attended any seminars or workshops from the nations foreclosure defense and fraud experts to learn what exactly to look for when the proceedings come their way. The judicial system appears ( i cannot be sure) to be moving slower than ever with an ever growing load of judicial proceedings. On my little island of Kauai, all 300 plus non-judicial proceedings were cancelled and all are slowly beginning again in the courts. Yes, we’ve slowed down the banks a lot. But I thought the law’s intention was to help Hawaiian homeowners stay in their homes for good. This law is just buying a lot of time for homeowners and sometimes free time. Modifications have NOT gotten any better. In fact, its well known that if the owner of the note has heavy insurance on the secured trust where the loan is setting, the loan will NOT be modified. It’s not in the financial interest of the noteholder to do so. Kudos to Rep Herkes and his peers for their efforts, but its going to take more than Act 48 to keep Hawaiian homeowners in their homes that have lost 30-50 per cent of their value since 2008.
Ian,
It’s really “easy pickin’s” to find fault, even “fatal flaws” in this so-called newspaper. When we accept the fact that it’s been reduced effectively to a trashy item with perhaps the sole productive use a fish-wrapper, we know what we’re dealing with here…
Ditto goes for the U S Legislature too….it will need watching too since republicans probably will challenge the appointment by President Obama of Richard Corday ( one of the good guys), as the new Consumer Financial Protection Bureau Chief. CFPB will begin regulating part of the shadow banking industry…read…Mortgage Service industry, Pay Day Loans, credit card issuers, and many of the high flying financial instruments that got our markets into such deep kimchi.
Wouldn’t it be great to have one simple universal mortgage application form, clearly written, for use across the country? It’s coming.
There is plenty of opposition to Dodd-Frank but I am not buying any of it when I read that the mortgage debacle cost our nation over 12TRILLION in lost home value in 2008. Add to that the trillions lost in IRAs and 401ks and lost opportunity cost for the last four years…the lost jobs, our nation’s good credit standing…and on and on. It is time for some sensible regulation and all the whining by the banks is falling on deaf ears out here in the homeland.
You are now the local newspaper of record, Ian. How does it feel?