Hawaii homeowners facing foreclosure would get a little more time, and perhaps more assistance, to help them avoid losing their property, under a bill introduced at the state Legislature.

The bill aims to help reduce Hawai'i foreclosure cases which soared last year and are expected to keep rising amid the economic downturn and softening real estate market, though the bill's result may only be a delay of foreclosures by a month or two.

Senate Majority Leader Gary Hooser, who introduced Senate Bill 1623 with support from eight other legislators, said it's a modest but meaningful effort to stem the rising foreclosure tide.

"I'm hopeful it will provide some meaningful help for people in tough times," said Hooser, D-7th (Kaua'i, Ni'ihau).

Other bills introduced this year at the Legislature also are attempting to address the foreclosure issue along similar lines, a clear sign that lawmakers believe people in danger of losing their homes could use additional consumer protections.

SB 1623 would prohibit a lender from starting the foreclosure process until they contact a homeowner either by phone or in person with an offer to discuss their financial difficulties as well as options available to avert foreclosure.

Lenders also would be required to provide homeowners with a toll-free hot line to reach a counseling agency certified by the U.S. Department of Housing and Urban Development.

Thirty days after providing such notice, which could be extended if a homeowner seeks a follow-up discussion with their lender, a lender can begin the foreclosure process that typically begins with a mailed notice of foreclosure.

"This is not a moratorium on all foreclosures," said local foreclosure attorney Marvin Dang, who reviewed the bill. "It slows down the process."

The bill seeks to exclude investor-owned units and focus on owner-occupied homes. But a provision also requires lenders to mail notices to properties targeted for foreclosure advising tenants that if they are renters then they must be given a minimum 60-day eviction notice.

The bill would apply only to loans made from Jan. 1, 2003, to Dec. 31, 2008, and if it becomes law would expire Dec. 31, 2012.

RAPID INCREASE

Foreclosures have been rapidly rising in Hawai'i for two years, and appear near levels reached during the state's last real estate market contraction in the mid-1990s.

Nearly 3,200 Hawai'i homeowners faced foreclosure last year, a 230 percent increase from the year before and a nearly 500 percent rise from 2006, according to real estate research firm RealtyTrac as cited in the bill.

The Pew Charitable Trust expects that one in 29 Hawai'i homeowners, nearly 4 percent, will experience foreclosure by the end of 2010, the bill said.

"It is essential to the economic health of Hawai'i for the state to ameliorate the deleterious effects of continued foreclosures of residential properties by temporarily modifying the foreclosure process," the bill states.

Foreclosure filings in Hawai'i have grown to an alarming level, but remain among the lowest in the 50 states.

According to the Mortgage Bankers Association, Hawai'i's mortgage delinquency rate was eighth-lowest in the U.S. at 4.04 percent in the third quarter. The percentage of Hawai'i mortgages considered "seriously delinquent" — either in foreclosure or 90 days behind in payments — was 2.87 percent, or 12th lowest.

The Mortgage Bankers Association said significant time is already built into the foreclosure process, as lenders generally don't refer loans to foreclosure until payments are 90 to 120 days past due.

Dang said it typically takes another three to four months for a nonjudicial foreclosure case to be completed, which provides a good deal of time for homeowners to try to work out a solution.

However, Dang also said loan officials can sometimes be difficult to reach, especially Mainland lenders, which can make averting foreclosure a daunting task for consumers. So requiring contact between lenders and borrows could help.