Hawaii Foreclosure Laws

To ensure that lenders can regain their losses, they can file for a foreclosure on a defaulted property. Under the Hawaii foreclosure laws, a foreclosure can be categorized as judicial or non-judicial/out-of-court which depends on the condition of Power of Sale clause.

Hawaii Judicial Foreclosure

The absence of a Power of Sale clause in a mortgage or Deed of Trust results to a judicial foreclosure. The lender can file a lis pendens, a legal notice stating that there is a pending lawsuit filed for a property in order for a foreclosure to begin, to a state or federal court. Under judicial foreclosure, the lender is responsible for filing a lawsuit on a property deemed to be foreclosed. If, within 20 days, the defaulted borrower or homeowner failed to respond to the notice, the court can schedule a foreclosure sale of the property. Once the necessary foreclosure procedures are accomplished, an auction will follow. The property will be sold the highest bidder.

Non-Judicial/Out-of-Court Foreclosure

When a Power of Sale clause is present in a mortgage or Deed of Trust, an out-of-court foreclosure applies. This clause states that the lender has the right to begin a foreclosure if the borrower fails to meet his or her legal obligations to the lender. After the lender notifies the homeowner or borrower about the default in the loan agreement or debt contract, a foreclosure sale can be scheduled without the intervention of the state or federal court. The lender initiates a notice of foreclosure.

Hawaii Foreclosure Guidelines

• The trustee or lender publishes a Notice of Intent to Sell. Applicable for both judicial and non-judicial foreclosures.
• To halt the foreclosure proceedings, the borrower or homeowner can either file a Notice of Appeal or pay the default amount owed and costs.
• The inclusion of the Power of Sale in a mortgage results to a non-judicial foreclosure. On the other hand, the lack of it calls for a judicial foreclosure.
• The trustee shall prepare the Notice of Intent to Sell for the auction. Copies of the notice are sent to the parties involved in the public sale. A copy of notice will be sent to borrower at least 21 days before the auction.
• For 3 successive weeks, a Notice of Intent to Sell must be published once a week.
• The final publication of the Notice should not be less than 14 days before the auction.
• The notice must be posted on the distressed property not less than 21 days before the auction.
• The trustee or lender can postpone the auction through public announcement.

Foreclosure laws in Hawaii do not grant the original homeowner or borrower the rights to redemption. A typical judicial foreclosure can take up to 11 months while a typical out-of-court foreclosure can take up to 6 months. Hawaii foreclosure laws ensure that homeowners are protected; hence, homeowners are granted with the right to file for a Notice of Appeal. This Notice should be filed within 30 days of the court’s ruling. Another way to stop the foreclosure proceedings is to pay for the debt before the scheduled auction.