Isle foreclosures continue to climb

A rise in new foreclosure lawsuits filed against Hawaii property owners continued in January, extending a trend that emerged shortly after changes to state law took effect in mid-2012.

There were 364 new foreclosure cases initiated in court statewide last month, according to the state Judiciary.

The figure is up from 341 in December, 327 in November, 196 in October and close to 60 or 70 each in September, August and July.

January was the first month in which the number of cases was higher than the year-earlier month since the amended law imposed new conditions on lenders seeking to foreclose on homeowners with mortgage troubles.

In January 2012 there were 285 cases filed.

Because of the change to the law, which was the second overhaul in two years, it’s difficult to infer whether Hawaii’s foreclosure mess is clearing up.

The local economy is improving with record tourism last year, job growth and a rebounding real estate market. The number of bankruptcy cases has fallen for 23 consecutive months. But the picture of foreclosures is muddled.

The Legislature made an initial round of changes to state foreclosure law in mid-2011 aimed at reforming a relatively quick and unregulated nonjudicial, or out-of-court, foreclosure process that lenders were using for the vast majority of cases. As a result, all pending foreclosures were canceled, and lenders temporarily stopped filing new cases. Lenders then began filing all new cases in court in a more time-consuming process.

Then last year the Legislature added new provisions to the law, including one that makes attorneys responsible for affirming the accuracy of all case documents submitted by lenders.

The affirmation process took a while for some lenders and attorneys to establish, but in recent months the number of new foreclosure cases has been growing.

Local foreclosure attorneys have said that lenders had amassed a backlog of delinquent mortgage accounts over the last two years and that it will take longer to get through the backlog in the judicial foreclosure system, where a case can spend one or two years or longer.

Critics of the overhauls say the changes have prolonged resolution of troubled mortgages and added to the inventory of homes caught in foreclosure.

But advocates of the changes argue that many homeowners have been spared from unfair lender practices and benefited from assistance or incentives to avoid foreclosure through loan modifications, short sales or giving up deeds in lieu of foreclosure.