Hawaii foreclosure cases plummeted last year

Real estate foreclosure cases filed in Hawaii fell sharply last year amid moratoriums by the nation’s two biggest mortgage holding firms.

Data from the state Judiciary shows that the number of new foreclosure lawsuits filed statewide plummeted 46% to 647 cases last year from 1,198 the year before.

The 2020 total represented a decade low and was consistent with a downward trend that started in 2014.

However, last year’s decline was a forced one driven by two mortgage investment firms backed by the federal government alongside many private lenders offering a range of foreclosure mitigation programs to help homeowners who have been struggling financially due to the coronavirus pandemic.

Some housing advocates fear an explosion of foreclosures at some point in the future, but the relief for struggling homeowners so far this year has been extended.

Marvin Dang, a local foreclosure attorney, said his monitoring of cases filed last year shows that a considerable number were filed by condominium and community associations that collect maintenance fees from homeowners.

Some mortgage lenders also have continued to file foreclosure cases, though many have held off given hardships experienced by customers who have lost work hours or jobs because of government-ordered restrictions to combat COVID-19.

“The main aspect of all this is to try to enable the borrower to have some time to resolve their delinquency,” Dang said.

The biggest relief push has been from Fannie Mae and Freddie Mac, two government-backed mortgage investment firms that established moratoriums last year on new foreclosures as well as evictions in pending foreclosure cases.

Other federal agencies — the Department of Housing and Urban Development, Department of Veterans Affairs and Department of Agriculture — also have implemented mortgage loan forbearance and foreclosure relief programs most recently extended to June 30.

Fannie Mae and Freddie Mac hold an estimated 60% of all mortgages in Hawaii. The companies announced last month that their moratoriums would be extended through the end of this month and that borrowers can defer payments for up to 15 months.

This deferral allows borrowers to repay missed payments when the term of their mortgage ends, or when they refinance their mortgage or sell their home, according to the Federal Housing Finance Agency, which regulates the two government-backed companies.

“To keep families in their home during the pandemic, FHFA is allowing borrowers to be in COVID-19 forbearance for up to 15 months and extending the (Fannie Mae and Freddie Mac) foreclosure and eviction extension,” agency Director Mark Calabria said in a statement last month.

The administration of President Joe Biden said last month that just over 10 million homeowners nationwide are behind on mortgage payments.

Mortgage industry relief is helping many, but not all, homeowners, as different lenders have adopted different policies with regard to assistance.

In some cases, foreclosure is proceeding against homeowners who have vacated homes, and other cases involve delinquencies that predate economic impacts from the pandemic.

For example, New York-based HSBC Bank USA National Association filed a foreclosure case in August against the owners of an Ewa Beach home after HSBC acquired the mortgage debt on the property in June. A mortgage servicing company for the prior mortgage holder notified the homeowners March 20, 2020, that it intended to foreclose on the home because two payments since Feb. 1, 2020, had not been made, according to the complaint.

The state Department of Commerce and Consumer Affairs has an online Hawaii Foreclosure Information Center at cca.hawaii.gov/hfic with information to help Hawaii homeowners facing foreclosure, including references for certified housing counselors and guidance from the federal Consumer Protection Financial Bureau.