The number of foreclosures in Hawaii skyrocketed 340 percent in September, pushing the state to the No. 20 spot — its worst level ever — in a nationwide ranking of foreclosure rates among states.

“;That's a huge jump for a state that has always been in the bottom third,”; said Daren Blomquist, marketing and communications director for research firm RealtyTrac, which released its monthly foreclosure report today.

Hawaii had a record 594 foreclosure filings in September, which means that one in every 842 households in the state experienced a foreclosure last month, according to RealtyTrac. The September foreclosure rate in Hawaii was up 76.8 percent from the previous monthly record of 336 recorded in August when the state ranked 34th nationally.

“;The foreclosure activity is continuing to grow in Hawaii,”; Blomquist said. “;It's hard to predict what will happen with foreclosures going forward, but typically it takes several months to a year for the trends to play out.”;

To put it into perspective, the foreclosure tally for Hawaii in September alone makes up nearly half of all the foreclosure activity experienced by the state in 2007. Last year 1,270 foreclosures were filed in Hawaii, and the state's foreclosure rate was ranked at No. 43.

Nationally, some markets appear to be turning — although Hawaii clearly is not one of them, Blomquist said.

“;Some states have passed consumer-friendly laws that have stemmed their foreclosure rates,”; he said.

Nationwide, September foreclosures decreased 12.5 percent from the previous month and increased 21 percent year over year, according to RealtyTrac. A total of 265,968 foreclosures, or one for every 475 households, was filed in the U.S. in September, the survey said.

Up until the last few months, Hawaii's real estate market appeared to be largely isolated from the turbulence that had plagued many mainland markets. Even at the height of the real estate boom, Hawaii lenders tended to be more conservative about risk, and fewer borrowers tended to gravitate toward hybrid or subprime loan products that required no money down and little income verification.

Still, there were more than 16,000 of these loans out there, and the bulk of them began recasting in 2007, according to data prepared for the Honolulu Star-Bulletin by First American Loan Performance, a California-based research firm.

Since there is normally at least a 90-day lag between late payments and the start of the foreclosure process, Hawaii could just now be seeing the folly of the decisions that were made during the unprecedented real estate appreciation of Hawaii's last up real estate cycle, said Stephen Higa, a mortgage broker for Honolulu-based Point Financial. While lenders are now reluctant to underwrite higher-risk loans, Hawaii's booming real estate market of the past several years created an environment where the money was easy and the decisions were quick, Higa said.

Then again, Hawaii's mounting foreclosure rate also could be the result of the overall downturn in the state's tourism-based economy, said John Riggins, owner of John Riggins Real Estate.

“;In previous down cycles, whenever we have had a problem with tourism, we have had a problem with housing,”; Riggins said, adding that housing values in some of Hawaii's resort markets like Ko Olina and Princeville have plummeted.

The fact that the state's seasonally adjusted unemployment rate hit 4.5 percent in September, its highest level in more than 6 1/2 years, also has exacerbated the housing problems for many, said Wendy Burkholder, executive director of Consumer Credit Counseling Service of Hawaii.

Since January, Hawaii has experienced the closures of Aloha and ATA airlines, the loss of two NCL America cruise ships, the closure of Molokai Ranch and widespread layoffs at visitor industry businesses and others, Burkholder said.

“;Right now we are all so focused on home prices and the types of loans, but traditionally the bigger driver of foreclosure activity is the loss of jobs,”; Blomquist said. “;If Hawaii is seeing an eroding of its employment base, that's going to have an impact.”;

Generally, about 15 percent to 20 percent of Burkholder's client load comes as a result of joblessness or underemployment, she said. However, in September, Burkholder said, 40 percent of her clients were grappling with mounting debt from job loss, cutbacks in hours or the inability to find a second or third job.

“;The closure of Aloha and ATA kicked the problems into high gear, but I don't think that we have truly bottomed out,”; she said.

But while the burgeoning foreclosure rate in Hawaii is troublesome, the numbers are still short of the trauma experienced by some mainland markets. Nevada continued to top the nation's foreclosure rate in September. Foreclosure filings were reported on 13,022 Nevada properties during the month, an increase of 136.6 percent from September 2007 and one in every 82 housing units — more than five times the national average.