October foreclosure rate rises


POSTED: Thursday, November 12, 2009

Hawaii foreclosures rose in October to their third highest total of the year, more than doubling from the prior year, according to data released today by the online foreclosure marketplace RealtyTrac.

The story was ugliest on the neighbor islands, where the rate of foreclosures on Maui, Kauai and the Big Island surpassed the national average, said Daren Blomquist, RealtyTrac's marketing manager.

“;I haven't seen that before,”; said Blomquist, who has been tracking annual foreclosure data since 2006.

Last month, RealtyTrac ranked Hawaii 17th among states for foreclosures. Although foreclosures in Hawaii fell nearly 5 percent from the previous month, they grew more than 134 percent from the year prior. Hawaii's October foreclosure rate, one in 548 households, was better than the nation's rate of one per 385 households. However, foreclosures on the neighbor islands, which have been hit by rising unemployment and the tourism downturn, was larger than the nation's average.





        Hawaii's monthly foreclosures over the past year, including the year-over-year percentage gain:




MonthTotal% Change
MonthTotal% Change


Source: RealtyTrac





“;If you look back over time, Hawaii has been steadily narrowing the gap between it and the rest of the nation,”; Blomquist said.

Last month, 218 properties went into foreclosure on Maui, pushing its rate to one in 298 households. In Kauai, there were 89 October foreclosures, equating to one in 328 households. And 230 properties, or one per 338 households, were in foreclosure on the Big Island.

According to RealtyTrac, the Big Island's Kailua-Kona posted the most foreclosure activity of any neighborhood in the state. In descending order, other hot spots included Kihei, Maui; Ewa Beach, Oahu; Wailuku, Maui; Lahaina, Maui; Waianae, Oahu; Waipahu, Oahu; Wahiawa, Oahu; Princeville, Kauai; and Kahului, Maui.

“;We saw a lot of foreclosures in the second-home markets and some related to people losing their jobs,”; said Howard Dinits, a Realtor with RE/MAX Resort Realty in Wailea.

Although many distressed owners have tried to get approval to short-sale their properties, or sell them for less than what is owed, the process is often lengthy and complicated, he said.

“;If there is insurance on the property, many banks would rather foreclose and file a claim,”; Dinits said.

Georgia Roberson, REO (real-estate owned) director for Coldwell Banker Pacific Properties LLC, said foreclosures are preferred even though they cost lenders more money.

“;A lot of short sales are not going through,”; Roberson said. “;Some banks appear reluctant to take the write-off at this time.”;

However, foreclosures are moving, she said.

Oahu's foreclosures are related to fallout from loans that had upwardly adjusting mortgage rates and balloon payments, Roberson said.

“;It's the typical Hawaii story: People bought properties that they weren't able to afford once the creative financing ran out,”; she said. “;The Furlough Fridays didn't help either.”;

A recent decision from the USDA not to purchase or securitize mortgages in lava zone 1 on top of an earlier ruling from Fannie Mae to stop lending in lava zones 1 and 2 exacerbated Big Island market declines, said John Dirgo, broker/owner of Hilo-headquartered Aloha Coast Realty.

“;People are having trouble modifying or refinancing their loans,”; Dirgo said.

Given the current conditions, Hawaii foreclosures will continue rising through 2010, Roberson predicted. However, she does not expect them to quadruple to the level seen after the Japanese bubble burst in the late 1990s.

“;We don't have the same artificial conditions now, so I think the increases will be more mild,”; she said.