ÌìÃÀÊÓƵ

Hawaii’s temporary ban on non-judicial foreclosures — imposed by a new that went into effect May 5 — was expected to overwhelm Hawaii’s courts by forcing foreclosures through the judicial system.

But only seven petitions have been filed since May 5 to convert a non-judicial foreclosure to a judicial one, according to the Hawaii Judiciary.

Still, the total number of judicial foreclosures filed statewide is expected to outpace last year’s numbers. The total number of judicial filings between May and August of this year is up by almost 82 percent, compared with last year’s May-August filings.

The numbers seem to indicate that the law is having its intended effect. Lenders are banned from starting new non-judicial foreclosures and are opting to handle foreclosures through the courts. Non-judicial foreclosures had previously been viewed as an easier — and quicker — option for lenders. A requirement in the new law that will force lenders to have face-to-face mediation with homeowners only applies to non-judicial foreclosures.

Concerns about an anticipated spike in judicial foreclosures were raised when mortgage giant Fannie Mae announced in June that it would convert all of its new and pending non-judicial foreclosures in Hawaii to judicial foreclosures effective immediately — essentially allowing it to skirt the new law. Freddie Mac followed suit.

It’s not clear exactly how many homes Fannie and Freddie have foreclosed on in Hawaii. But a Freddie Mac spokesman said the company on average has financed between 9,000 and 10,000 single-family mortgages annually in the state over the last decade. Some in the local industry have estimated that Fannie may have a 20 percent to 40 percent share of the Hawaii foreclosure market.

“The numbers filed this year are beginning to approach the total number of filings last year,” Rod Maile, Hawaii’s administrative director of the courts, told Civil Beat. “We’ve got October, November and December, and half of September left. We’re definitely anticipating more filings this year.”

In calendar year 2010, the Judiciary handled a total of 1,330 judicial foreclosure filings statewide. This year, the count is at 1,266 judicial filings, up to and including August.

The courts handled 474 judicial foreclosures statewide between May and August of last year; it logged 861 judicial filings in the same time period this year — an 81.6 percent increase.

Here’s a month by month comparison of judicial foreclosures filed last year and this year:

First Circuit Court (Oahu):

• May 2010: 57; May 2011: 55 — down by 2
• June 2010: 51; June 2011: 91 — up by 40
• July 2010: 57; July 2011: 80 — up by 23
• August 2010: 56; August 2011: 140 — up by 84

Second Circuit (Maui)

• May 2010: 24; May 2011: 26 — up by 2
• June 2010: 22; June 2011: 53 — up by 31
• July 2010: 28; July 2011: 48 — up by 20
• August 2010: 26; August 2011: 66 — up by 40

Third Circuit (Big Island)

• May 2010: 32; May 2011: 52 — up by 20
• June 2010: 25; June 2011: 49 — up by 24
• July 2010: 36; July 2011: 60 — up by 24
• August 2010: 28; August 2011: 82 — up by 54

Fifth Circuit (Kauai)

• May 2010: 6; May 2011: 8 — up by 2
• June 2010: 11; June 2011: 16 — up by 5
• July 2010: 11; July 2011: 17 — up by 6
• August 2010: 4; August 2011: 18 — up by 14

Maile had warned lawmakers at a legislative briefing in late June that a substantial increase in judicial foreclosures would overwhelm the courts. The courts handled about 10 percent of state’s foreclosures last year. Maile said at the briefing that the judiciary would need to ask the Legislature for more money to handle a heavier volume.

“Up to now, the filings have not been at the level that would overwhelm our resources, but they are showing a significant increase,” Maile said. “We have looked at strategies for dealing with cases as expeditiously as we can, but we’re also mindful that mortgage foreclosure cases are one of many types of cases that the Judiciary is responsible to process.”

He said the Judiciary is closely monitoring the filing numbers by month.

“We continue to monitor for trends that could indicate that maybe we’ve reached the point where we’re seeing a lot more (foreclosure) cases filed,” Maile said. “There may be a lot of potential cases out there. When those are filed is really up to the lenders and attorneys involved.”

When passed, supporters hailed the legislation as the nation’s strongest foreclosure law. It will require lenders to have face-to-face mediation with a neutral party to try and develop a compromise that will keep a family in their home. But that only applies to non-judicial foreclosures. The moratorium on non-judicial foreclosures was meant to help prevent families from being evicted.