Foreclosures in Hawaii had been a major problem for some time. And while they still are, a new state law has caused a major drop in foreclosures in the state. Hawaii home foreclosures dropped for a fourth consecutive month in September under a state law that created a freeze on many new out-of-court cases.
A report released Wednesday by real estate research firm RealtyTrac said there were 414 foreclosure filings statewide last month in Hawaii. That was about one-quarter the year-ago volume of 1,617 filings. Last month’s tally was up by one from 413 in August.
So is this good or bad? Well, it depends on how you look at it. Foreclosures in Hawaii are dropping, and continue to drop, however, many consider this an artificial lull in foreclosures, as the state is only masking what foreclosure attorneys say is a ballooning backlog of delinquent mortgages that will need to be resolved.
This new law has put Hawaii in a good light on the national foreclosure stage, however, what is going to happen with all of these backlogged foreclosures that are being masked by the new law?
A de facto moratorium on initiating many nonjudicial foreclosure cases — out-of-court foreclosures that historically accounted for an estimated 90 percent of foreclosures in Hawaii — began May 5 with the enactment of the new law.
The moratorium ended Sept. 27 when the state allowed lenders to resume nonjudicial cases under a program that forces lenders to participate in a mediation program with qualified borrowers if borrowers so choose.
But as of Wednesday, no lender had filed a nonjudicial foreclosure case with the agency handling the program, the Department of Commerce and Consumer Affairs.
Based on RealtyTrac’s count, Hawaii had the 32nd best rate of foreclosure filings last month based on one filing for every 1,245 homes. Total filings were down 74 percent from a year ago. Nevada had the worst rate at one foreclosure filing per 118 homes. Vermont had the best rate based on one filing per 18,485 homes. The national rate was one filing per 605 homes.
“U.S. foreclosure activity has been mired down since October of last year, when the robo-signing controversy sparked a flurry of investigations into lender foreclosure procedures and paperwork,” James Saccacio, chief executive officer of RealtyTrac, said in a statement. Saccacio said it appears the downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up.
Don’t get me wrong, I am all for laws that help people keep their homes. It just seems that in this case, the law is only delaying the inevitable, while making Hawaii look much better on the national foreclosure scene than it really is.