Foreclosure Guidelines in Hawaii Highlights:
Judicial/ Non-Judicial Foreclosure: Both are available
Right of Redemption / Deficiency Judgment: Not Available / Available
Timeline: 60 Days, Can vary depending on individual cases
Deed of Trust / Mortgage as Security Instruments: Both
Both Judicial and Non-Judicial foreclosures on mortgages/ deed of trust are available in Hawaii.
Judicial Foreclosure Process:
If a ‘Power of Sale’ clause is not present in the mortgage / deed of trust document, a Judicial foreclosure process is followed. In the Judicial foreclosure process, a lawsuit is filed in the court to obtain a foreclosure order. After the court order is obtained, the property is auctioned off to the highest bidder.
Non-Judicial Foreclosure Process:
If a ‘Power of Sale’ clause is present in the mortgage / deed of trust document, a Non-Judicial foreclosure process followed. In the Power of Sale, the borrower authorizes the lender (bank) to foreclose the mortgage in case they default on the loan amount. The foreclosure sale proceedings can be executed by the lender or their agent, referred to as Trustee. The following guidelines may be followed for the same.
If the ‘Power of Sale’ document contains the place, date and other terms/conditions for the foreclosure sale, the same needs to be followed. Otherwise, the following procedure is followed.
A Newspaper advertisement needs to be published in a local newspaper of the county where the property belongs to. This advertisement contains the notice of intent of foreclose of the property. A total of three such advertisements should be placed for three consecutive weeks and the last advertisement should appear at least 14 days before the actual sale of the property.
The notice should also be sent by registered post/ hand-delivered to the borrower, prior creditors, mortgagor, state director of taxation and any other person required to be notified. This notice should also be pasted on the property at least before 21 days of the auction/ sale.
The notice should contain the following information: The name of the borrower, name of the lender, the name of the mortgagor, names of any prior or junior creditors, name/address/phone number of the person conducting the public sale, description of the property including its address and tax map key number, day/time/location of the public sale, whether there would be any open houses of the mortgage property and the date/ time for the same, the unpaid balance owed to the lender, terms and conditions of the auction/sale, etc.
Since there is no right of redemption to the borrower after the sale, they can pay up the remaining dues including the interest / attorney fees etc for up to three days before the sale to re-claim the property.
During the sale, the property is auctioned to the highest bidder. The lender has an option to file for deficiency judgment in case the amount offered by the highest bidder is lower than the total amount owed by the borrower.
The date of auction/ sale can be postponed by the lender, if required.