A new mortgage industry report shows that more homeowners in Hawai'i fell behind on their loan payments last year, suggesting that foreclosures will continue to rise this year.

The national Mortgage Bankers Association said yesterday that 7,535 residential property loans, or 4.5 percent of the loans statewide, were in foreclosure at the end of last year in Hawai'i, and that an additional 12,182 mortgages representing 7.3 percent of the market were delinquent but not yet in foreclosure.

That means nearly 12 percent of Hawai'i homes are in foreclosure or threatened by foreclosure.

"This is a continuance of where we've been heading in the recent past," said local foreclosure attorney Marvin Dang.

Some industry observers say most of the foreclosures are occurring on Neighbor Island resort property snapped up by second-home buyers during the housing market bubble.

However, foreclosures are also occurring, and increasing, in O'ahu neighborhoods, particularly on the 'Ewa Plain where expansion of inventory has been concentrated in recent years.

Of the 7,535 loans in foreclosure at the end of last year, 1,809 entered foreclosure in the fourth quarter, the report said. These so-called foreclosure starts represented 1 percent of the market.

Compared with other states and the District of Columbia, Hawai'i had the 14th highest percentage of foreclosure starts during the fourth quarter.

The state with the highest rate of foreclosure starts was Nevada, at 3 percent of the market.

Nationally, the average was 1.14 percent for foreclosure starts, which was nearly the same as Hawai'i's rate.

The trade group's chief economist, Jay Brinkmann, said one set of data in the survey suggests that the nation's wave of foreclosures may be starting to end.

That bright spot was the percentage of loans nationwide that are 30 days past due. The figure fell from 3.79 percent in the third quarter to 3.63 percent in the fourth quarter. It was the biggest decline for the period and only the fourth time since 1953 that the survey has recorded such a decrease. Typically, the quarter-to-quarter figure rises because of holiday spending and heating bills, the association said.

"This drop is important because 30-day delinquencies have historically been a leading indicator of serious delinquencies and foreclosures," Brinkmann said in a statement. "It also gives us growing confidence that the size of the problem now is about as bad as it will get."

At the national level, the Mortgage Bankers survey covers an estimated 85 percent of all outstanding mortgage loans, excluding second mortgages, on property containing up to four residential units. The data come from loans held by association members.

Some observers believe Hawai'i is lagging behind in a housing market recovery under way in some other states because home sales and prices in other states crashed earlier and have improved along with foreclosure rates, while the Hawai'i housing market experienced a more moderate downturn that is only beginning to show signs of improvement.

Continued weakness in the local economy that is heavily dependent on tourism is another factor.