New foreclosure law likely aided drop in sales of troubled homes

A year of slowed foreclosures under changes to Hawaii law may have begun to stem the tide of sales of homes lost by delinquent borrowers.

Real estate research firm RealtyTrac released a report Wednesday saying 364 homes caught up in foreclosure statewide were sold in the second quarter, down 44 percent from 647 sales in the same quarter last year.

Sales in the second quarter represented 9.1 percent of all Hawaii home sales, RealtyTrac said.

Nationally, sales of homes in foreclosure declined 22 percent in the second quarter, and represented 23 percent of all home sales.

An overhaul of Hawaii foreclosure law in May 2011 slowed the number of new foreclosure cases and prevented many homes in the midst of foreclosure from proceeding to auction. But last year lenders still sold more homes in foreclosure than they did the year before, in part because of accumulated inventory of repossessed homes.

Lenders had been gradually increasing new foreclosure cases over the past year, but volume was cut back again by another revision to state law enacted in June, which likely will affect the volume of homes exiting foreclosure through sales.

Other efforts to help homeowners avoid foreclosure and keep their homes, as well as the improving economy, also are influencing the foreclosure sale volume decline, according to analysts.

RealtyTrac counts sales by lenders after repossession through foreclosure as well as "short sales" by troubled borrowers where lenders consent and foreclosure is averted.

Of the 364 sales, 213 were lender sales and 151 were short sales.

The average price for all the sales was $358,133, or 29 percent less than the average for nonforeclosure home sales in the second quarter.

RealtyTrac calls the difference a discount, though the difference is influenced by a variety of factors including the condition, size and location of homes.