Hawaii foreclosure cases in steady downswing

The number of new foreclosure lawsuits filed in Hawaii declined in 2019 to mark a sixth consecutive year of fewer cases mostly against homeowners struggling with mortgage debt.

A recently completed annual tally by the state Judiciary shows that 1,159 foreclosure cases were filed in state court last year, down 8% from 1,261 cases a year earlier.

The reduction continued a trend that began in 2014, and the count last year was about a third of what it was in 2013 when there were 3,430 cases filed mainly by mortgage lenders against homeowners.

Stable or modestly rising home prices combined with very low unemployment, gains in personal income and low interest rates have been among factors that have helped property owners avoid trouble with foreclosure in recent years.

Yet homeowners still can face financial difficulties due to circumstances that include medical issues, divorce and other events.

For the past two years, the number of bankruptcy cases in Hawaii have been higher, with last year’s count rising 12% to 1,666 cases.

Sometimes people file bankruptcy to delay foreclosure and buy time to work out their financial problems.

Most bankruptcies were filed by consumers, and most foreclosures were filed by mortgage lenders against homeowners.

Foreclosure cases also can include actions initiated by condominium associations against homeowners who fail to pay maintenance fees or other assessments. Some foreclosures by condo associations also are often handled out of court through a nonjudicial process, and these actions are not counted in the Judiciary data.

Foreclosure cases involving timeshare properties also are typically done through the nonjudicial process.

Under Hawaii law, all foreclosures initiated by lenders against homeowners since mid-2011 must be filed in state court. Prior to that, most Hawaii foreclosure cases were conducted out of court in a nonjudicial process that homeowner advocates contended was unfair to borrowers and led to abuses by lenders.

The change in the law makes it problematic to compare foreclosure case volumes in recent years with more historical figures. There were also a few additional tweaks made to Hawaii foreclosure law after 2011 that sometimes required lenders to refile cases.