WAILUKU - On the outside, the paint is worn, and the yard is a brown patch of dirt and parched grass.
Inside, cabinets have been pulled from the kitchen walls, fans and light fixtures stripped from the ceiling. Someone has used a bedroom wall to play a few dozen games of tic-tac-toe with permanent marker. "Nick's house" is printed in block letters in an upstairs hallway.
The home, a four-bedroom house once valued in the $600,000 range and built just five years ago in The Legends neighborhood of Maui Lani, is in foreclosure, and has been vacant for months. There are three other homes in foreclosure on the same street. Countywide, it is one of more than 600 properties now in foreclosure - double the number just six months ago.
The Maui News / MATTHEW THAYER photo
While giving a tour of a foreclosed home in The Legends neighborhood of Maui Lani, John Andersen points out where kitchen cabinets and appliances have been stripped from the walls.
As the number of homes in foreclosure grows larger and larger, so do the problems caused by an increasing number of homes sitting vacant, ownerless and uncared for in neighborhoods around Maui.
"We have one house that has a broken window that needs to be repaired," said Barbara Kojima, general manager for Maui Lani, who oversees community association matters for The Legends and five other Maui Lani neighborhoods. "The bottom line for our homeowners is that while these properties are vacant and not in great shape, it affects their property and resale values as well."
John Andersen, executive director of Na Hale O Maui, a nonprofit that buys homes out of foreclosure to resell as affordable housing, said even nice houses deteriorate when they sit uncared for for months on end.
In addition to unkept yards becoming an eyesore in the neighborhood, foreclosed properties can attract vandalism, crime and even squatters.
"The banks are back on the Mainland, so there's no supervision," Andersen said. "There have literally been people who've moved in and taken over some of these houses."
Many owners facing foreclosure contribute to the problem by stripping their homes of everything from refrigerators and wall-mounted microwaves to ceiling fans, light fixtures and window coverings as they move out, he added. What had been a nice family home in a good neighborhood one day becomes an unlivable shell requiring thousands of dollars of restoration the next.
Walking through a foreclosed home in The Legends neighborhood, Andersen keeps his shoes on as he crosses a dirty and badly stained carpet, and points out how the former owners stripped the home. He estimates it would cost $20,000 to restore the 1,800-square-foot house.
"This is not a condition that a young family could move into," he said.
While Kojima declined to say how many foreclosed homes her association had counted in The Legends, Andersen said he estimated there were 16 in the neighborhood so far.
The Legends appears to be the victim of bad timing, with homes coming on the market at the same time that both the lending boom and home prices were at their peak.
"That's why the foreclosure rate is so high," Andersen said.
Kojima said she could understand why homeowners might try to take what they could from a home as they move out in the face of foreclosure.
"They've put their life into this house," she said. "They have a refrigerator and a stove, and they have to move somewhere."
Andersen said he is concerned that the number of homes now in foreclosure could have a harmful effect on Maui's real estate market.
While the number of new foreclosure filings appears to be slowing down, homes are staying in foreclosure for longer than ever before, without the bank selling the property at auction or working out a way for the original owners to keep the house. That means the total number of foreclosures just keeps piling up week after week.
To make matters worse, many banks seem to have postponed sending properties to auction until the new year, perhaps to keep them off the books for 2009. That will lead to a glut of foreclosed properties hitting the market in the first quarter of 2010, something Andersen fears could drop the bottom out of the real estate market.
There are 350 foreclosure sales scheduled for January alone, he noted, with as many as 80 properties scheduled to go to sale on a single day.
"The market will have a hard time absorbing that number of distressed properties," he said.
The vast majority of foreclosures are bought at auction by the banks that hold the mortgages on the properties, Andersen said. The banks then sell the properties through a local real estate agent.
Very few private individuals buy properties at a foreclosure auction, because so little information about the property is available, including title and condition of the home. Na Hale O Maui buys the foreclosed homes it converts into affordable housing after the banks have taken ownership, not at auction.
Kojima was concerned about the impact of foreclosures on neighbors who are left behind. The remaining residents also have mortgages, she noted, and as a mounting number of foreclosures depresses property values, they risk getting "underwater" on their loans - where they owe the bank more than the home is worth.
"It can start to be a snowball effect," she said.
Andersen was pleased his program would be able to convert some of the foreclosed properties into affordable housing. But he said it was "sad" to see nice family homes sitting empty and damaged while families on Maui doubled- and tripled-up because they couldn't afford housing. He said the long-term solution needed to be finding a way to keep people from losing their homes in the first place.
"A lot more needs to be done in terms of loan modification, banks dealing with short sales (selling a home for less than the original loan), and other ways homeowners can get themselves out of foreclosure," he said.
* Ilima Loomis can be reached at email@example.com.