A century-old Hawaii law that allowed an out-of-court home mortgage foreclosure frenzy was supposed to have been repaired by the Legislature last year by requiring mediation. When that didn’t work, lawmakers added tweaks that took effect last month — but instead of improving the system, made it worse.

The process has also revealed a confounding legislative system filled with dubious decision-making. As acknowledged by a key lawmaker, legislators will need to rework the flawed foreclosure system next year, to untangle the mess of red tape that’s snarled hapless homeowners within reach of predatory lenders.

Last year’s law, Act 48, was intended to curtail major lender abuses, such as selling a home at auction in as little as four weeks, with no third-party oversight and sometimes without a homeowner’s knowledge.

But instead of starting fairer nonjudicial processes, including possible mediation in the midst of a lingering recession, lenders have been filing foreclosures in court, choosing this route over perceived unfair penalties for violations. These cases have tripled to nearly 4,000 in the 12 months through this May, clogging the courts and workloads. Such a foreclosure can take more than two years, causing banks and lenders to complain about the slowdown of bad-debt recovery and about borrowers abusing the system by skating on mortgage payments while living in the home.

A new law enacted last month, Act 182, was intended to fix those problems, but skeptics warned that it would only make matters worse, restricting foreclosures even further. An expectation that lenders might stop filing new court foreclosures because of the change has not happened in that short time.

Among other things, the month-old law allows foreclosure ads to run in weekly newspapers no more than a year in publication with a circulation of only 3 percent of a county’s population — rather than the largest daily of general circulation, as previously required — limiting the broad public reach that boosts transparency and notification. The new parameters seem tailor-made for law firm RCO Hawaii, which has ties to one of the largest foreclosure mills in the Northwest and an Oahu startup publication called The Island Sun Weekly, which in turn shares ownership and an office with FEI, a foreclosure services vendor. The set-up allows the publication’s owners to create a one-stop foreclosure shop model — one loaded with conflict-of-interest potential to inflate the cost of public notices by piling on fees for financially-struggling homeowners.

Confronted with such a model, for instance, Idaho’s Legislature quickly passed a law prohibiting foreclosure trustees from having an ownership stake in the newspapers in which foreclosure notices are published.

"It’s terrible public policy to allow (a foreclosure company) to get in on both ends of the transaction," said Roger Plothow, publisher of the Post Register in Idaho Falls. "It lacks checks and balances."

Such concern, though, was absent in this year’s Hawaii Legislature:

» State Rep. Bob Herkes, who helped craft the new law, said he was unaware of the depth of RCO’s foreclosure ties, but now says conflict-of-interest language should be added when the foreclosure law is re-examined next year.

» Sen. Rosalyn Baker, who helped drive the changes, repeatedly refused to answer questions for last week’s "Foreclosure Fallout" series in the Star-Advertiser, a galling nonresponse from an elected official, given the financial, and emotional, devastation that foreclosures can wreak on families’ lives.

And there can be little doubt about the dire stakes. Hawaii had about 12,000 delinquent home mortgages in the first quarter of 2012, estimated at $3.7 billion in delinquent home loans.

Indeed, fallout from Hawaii’s nonjudicial foreclosure system, which prompted reforms in the first place, is landing in another court — with lawsuits alleging a deceptive, widespread practice using quitclaim deeds in foreclosure sales that profited lenders at the expense of homeowners. A handful of lawsuits are now seeking class-action status on behalf of thousands of foreclosed-upon residents, claiming homeowners were deceived by predatory lenders.

Last year’s law and the alterations that took effect last month obviously have failed to work as desired. Having more information into the situation, the players and motivations must spur next year’s lawmakers to review all aspects of recent changes, then craft legislation to prevent abuses in the foreclosure process, not invite more of them.