Foreclosures Soar in Hawaii

Home foreclosures are up nationwide, and Hawaii is no exception. More than twice the number of homes went into foreclosure last month compared to the same period a year ago. Many factors are in play.

The number of filings in Hawaii is up 114% last month compared to September 2006. That’s outpacing the national average increase of just over 99% in the same period, according to data from RealtyTrac.”People were buying houses that they really couldn’t afford. Prices on houses were hitting the ceiling,” said Daren Blomquist of RealtyTrac. “There were loans out there that allowed them to do that.”

Some of those loans were in the form of adjustable rate mortgages, with rates resetting to higher amounts just two or three years into the deal. That’s hitting right about now. “Once reality kind of hit, people discovered that those prices were really out of their range,” Blomquist said.

Homeowners in most other states actually have it worse. Hawaii is seeing 1 foreclosure out of every 3,600 households, and that puts us in the bottom 10 in terms of our foreclosure rate.”I think fundamentally it’s kind of different here because the different ethnic groups have more of an obligation here to make the payments people here are not willing to just walk away,” said Donald Lau, president of the Hawaii Mortgage Brokers Association.

While on the mainland home values are starting to slump, prices are holding in Hawaii for now. “People still see a lot of equity in their property, and they’re going to hold onto it,” Lau said. “They try to make the best they can making their payments if they’re having trouble.”

Homeowners should act now to protect their investment. “What they should do to avoid the worst case is if they are in an ARM-type program where it would be adjusting, they should really look around to get a fixed rate mortgage now,” Lau said.

And if you’re just entering the home or condo buying market… “make sure you qualify for what you can pay for, and don’t overextend yourself,” Lau said.

That can be hard to avoid with median prices above $300,000 for a condo and double that for a home. Analysts expect the foreclosure growth trend to continue for a year or two.

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