Why Does Hawaii Have Fewer Foreclosures?

I sat in a Broker's Forum last week.  One of the speakers was the economist from Bank of Hawaii, Paul Brewbaker.

He said something I did not expect to hear.  Well let me start by sharing a little background for my surprise first.  For the last year or so, bankruptcies have been up nationwide in most markets.  Hawaii has consistently been among the lowest.  In my practice I rarely see buyers doing sub-prime, ARMS, stated income/ stated assets, 1% negative amortization or such.  I assumed that in Hawaii we had fewer foreclosures because we write less subprime loans.

After sharing his statistics and projections for our market Paul made a comment that blew my mind.  We in fact have as many subprime mortgages as the other markets.  We have even more than some parts of the country, that the most foreclosures.  That blew my mind.

So why is that?  Is it cultural?  Are the people in Hawaii just better at paying their bills?

When you consider:

• The average wage in Hawaii is lower than many parts of the country.
• The median price of a home is higher than all but a couple of markets.
• The cost of living is among the highest.

What else could it be? 

• Possibly we do a better job of putting people in loans they can afford
• We match up our buyers with the appropriate loan program.
• We have less mortgage fraud.
• Our appraisals are closer to reality.
• We are not as influenced by bad practices from other places, because we are so removed.
• Our local lenders are better at what they do.
• We have less out of state loan officers doing long distance hit and run lending.

So the next question:

Is it fair to our buyers that they will have fewer mortgage products and stricter lending requirements because of the abuse from other parts of the country?