The number of properties in Hawaii attached to foreclosure filings fell dramatically in August, dropping a staggering 75 percent when compared to the same month a year ago. While this number may seem like a good thing, the reality is this number represents a lag in the system as it switches from non-judicial to judicial proceedings. Based upon implications of Act 48, which was put into law May 6th 2011, bank’s lawyers most likely suggested cancelling any non-judicial proceedings. Once these non-judicial proceedings are re-filed in the court and judicial system, the number of foreclosures will once again rise.
For the time being, however, Hawaii has moved down to the 32nd spot for total foreclosures in the nation, based upon information supplied by Irvine California’s RealtyTrac. For every 431 housing units in Hawaii, there was one foreclosure filing for August, for a total of 1,197 foreclosure filings. That number breaks down to 725 notices of default, 74 public auction notices and 398 bank repossessions.
The intent of Act 48, while noble, has so far failed in its execution. Instead of opening up dialogs between lenders and property owner occupants who are unable to meet payments, Act 48 has created a backlog in an already over-taxed and under-staffed court system. As a real world example, immediately upon Act 48 becoming law, Fannie Mae decided all its foreclosures must be commenced as judicial foreclosures, and any non-judicial foreclosures not yet in process are to be dismissed and converted to judicial foreclosures. Obviously, this immediately caused the court backlog to grow, and it only became worse as time moved ahead.
While the state of Hawaii did launch its Mortgage Foreclosure Dispute Resolution Program this month, giving the opportunity for lenders to meet with owner-occupants of homes in non-judicial foreclosure for purposes of trying to negotiate loan modifications, time will tell if this is an effective way to handle disputes of foreclosure and repossession.
As it is, Act 48 has done little to stem the flow of foreclosures. Rather, it has simply redirected the steady stream to a court system barely able to handle what it already had to deal with before Act 48 dumped a lot more work on them.
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