Foreclosure filings down, but it’s likely the calm before the storm

November foreclosure filings have declined this month by 27.4% since last year, but that is only a small part of the story.  A new law past last Summer changed the game on lenders trying to foreclose.  In an attempt to stem the growing tide of foreclosure actions in the State of Hawaii, a new law attempts to bring more resolution to issues rather than foreclosures.

Hawaii has allowed non-judicial foreclosures for some time. They are less expensive and are faster, but a concern over homeowners in the state allows a way to hold off on these foreclosure.  The law pout into place a foreclosure moratorium and then puts in place a mandatory mediation and attempt to modified the loan before continuing on with the foreclosure.  The law’s unintended consequences are that there are now many legal issues for lenders with pursuing non-judicial foreclosures.  The technical issues with the law are so thorny that Fannie and Freddie have said that they will only just the judicial foreclosure avenue.

Currently it will take approximately 8 months for a judicial foreclosure without any objections to be completed.  Lenders typically start filling new foreclosures in the first quarter of the year here in Hawaii and so come January look for a flood of new foreclosures.

Looking at the foreclosure filings more closely the number of non-judicial foreclosures is falling off of a cliff, but Non-judicial foreclosures which 2 years ago was a small percentage now are about half of the 637 filings for November.  So, watch out.  The length of a judicial foreclosure will likely get very long as the courts are clogged with all of these cases.