The number of foreclosure cases initiated against Hawaii property owners fell last year for the first time in four years, which was another positive reflection on Hawaii’s economy and real estate market.

However, there are some asterisks that need to be affixed to the annual statistics reported by the state Judiciary due to jarring changes made to Hawaii foreclosure law in three of the past four years. These changes cloud what otherwise might be a more clear trend.

There were 2,084 lawsuits filed against property owners statewide last year, down from 3,430 the year before, according to the Judiciary figures. Last year’s tally was the lowest since 1,331 new cases in 2010.

"The numbers have declined," said Marvin Dang, a local foreclosure attorney representing lenders.

Generally, it would be natural for foreclosures to decline amid an economy where unemployment and bankruptcies have been falling while real estate values are rising as the state’s biggest industry attracts record numbers of tourists.

These other economic indicators have been favorable for the past few years or so. But foreclosures looked to be a stubborn holdout — until last year.

Some observers in the housing industry have said it’s possible that foreclosures in Hawaii have been improving for longer and that a backlog of unresolved bad loans formed due to changes in the law as well as missteps by lenders that previously rushed foreclosures with improper mortgage documentation.

Hawaii foreclosure data became distorted in 2011 when a new law led to all cases against homeowners to be initiated in state court instead of what had been a cheaper and quicker nonjudicial process that homeowner advocates said lenders were taking advantage of by improperly repossessing homes.

The data show a spike in new case volume in 2011 and that new cases continued rising in 2012 and 2013. However, those annual counts were influenced by several changes in state law.

For instance, many foreclosures in 2010 were conducted out of court and were excluded from the Judiciary’s count. In mid-2011 all cases initiated by lenders shifted to court due to an overhaul of the foreclosure law. In 2012 lawmakers passed a law to correct deficiencies in the 2011 law, which again affected the filing of foreclosure cases and produced a sharp midyear drop followed by ballooning volume that ran into 2013.

Another tweak was made to Hawaii foreclosure law last year and led to the number of cases plunging to 80 in May after running between 211 and 270 during the first four months of the year. Since July the number of new cases per month has averaged 160. In December there were 158 new cases, down from 179 in the same month the year before.

Dang said it appeared that foreclosure volume was running lower in the early part of last year compared with the year before, and the trend held up through the end of the year.

However, Dang also noted that foreclosure cases filed in court are not only cases where mortgage lenders are taking action against homeowners. The cases counted by the Judiciary also include commercial property and in some cases foreclosures initiated by community associations or condominium associations.

FORECLOSED

New Hawaii foreclosure cases filed in state court, including the year-over-year percentage change:

* Many foreclosures by mortgage lenders were conducted out of court in 2010. That stopped in mid-2011.