Foreclosures rise in October with new law

It took four months, but a predicted surge in new Hawaii foreclosure cases emerged in October as more law firms and mortgage lenders adjusted to the latest overhaul of a state foreclosure law enacted in June.

The number of foreclosure lawsuits filed statewide roughly tripled to 195 last month from about 60 to 70 in each of the three previous months, according to figures made public this week by the state Judiciary.

Even with the spike, the number of new cases remains significantly below the October 2011 level of 363 foreclosure cases filed in state court.

Some local foreclosure attorneys had predicted that the case volume would pick up once lenders adopted new procedures to comply with the law’s overhaul, which became effective June 29 as Act 182.

The new law’s provisions include a requirement that attorneys affirm the accuracy of all documents submitted by lenders in foreclosure cases.

Act 182 was the second time in two years that Hawaii lawmakers dramatically revised the law to give homeowners better protection against foreclosure.

It remains to be seen whether new case volume rises further or settles.

This year through June, case volume had been building. But some observers expect fewer foreclosures due to the recovering economy and housing market as well as lender efforts to resolve delinquent mortgages through other means such as loan modifications, short sales and accepting deeds in lieu of foreclosure.

Marvin Dang, a local foreclosure attorney and representative of the Hawaii Financial Services Association, which represents several large national lenders, said the October surge appears to be the result of more lenders and local attorneys adopting procedures for complying with the attorney affirmation provision in Act 182.

"It was just a matter of attorneys working with their clients so clients would provide appropriate information and documentation to them," he said.

It appears a variety of lenders are filing cases. Ten cases filed on Monday and Tuesday in First Circuit Court in Honolulu involved seven lenders, including local banks, a credit union and large mainland financial institutions.

In one foreclosure case filed this week by Bank of America, local attorney Robert Ehrhorn Jr. attested that he corresponded in writing with a bank vice president who personally reviewed the facts of the case and that based on that correspondence and his own inspection, the documents in the case contain no false statements.

Dang said it’s not just new cases that are on the rise as affirmation procedures are put in place. He said foreclosures that were pending before Act 182 were held up by the affirmation requirement. With affirmations, foreclosure sales in those cases are proceeding, he said.