Hawaii Foreclosure Law Overview
For a Hawaii foreclosure, most borrowers who stop making their mortgage payments will almost always face a judicial foreclosure. In the past, the majority of foreclosures in Hawaii were nonjudicial, however, lenders switched to judicial foreclosures to bypass Hawaii’s Mortgage Foreclosure Dispute Resolution (MFDR) program. In that program, the owner-occupant meets with the lender or its representative to attempt to work out a way to prevent foreclosure. Lenders avoid having to participate in this kind of dispute resolution by filing the judicial foreclosure instead.
In a Hawaii foreclosure, you’ll most likely get the right to:
- get a preforeclosure notice called a “breach letter”
- apply for loss mitigation
- get notice of the foreclosure and the chance to respond in court
- receive special protections if you’re in the military
- pay off the loan to prevent a foreclosure sale, and
- get any excess money after a foreclosure sale.
A Hawaii foreclosure in court begins when the lender files the appropriate documents with the court asking the court to rule that the borrower is in default. The lender is required to deliver notice of the court filing to the borrower, or publishes the notice if they have trouble contacting the borrower. If the borrower does not respond to the court filings within 20 days, they are found in default regardless of the loan status. The lender can then proceed with scheduling the foreclosure sale. However, the borrower may file a notice of appeal within 30 days after the court has declared them in default.
Up to three days prior to the sale, the borrower may cure the default by paying the debt and associated costs.This will halt the sale.
Notice of Sale & Auction
For Hawaii foreclosure that goes non-judicial, the notice of foreclosure sale must include the description of the property, the terms of the sale, names of all the parties involved, and the time and location of the sale. At least 21 days prior to the sale, a copy of the notice must be posted on the property and mailed or delivered to the borrower. The lender is also responsible for publishing the notice of sale in a local newspaper once per week for three weeks, with the last publication at least 14 days before the day of sale. The sale is by auction and the highest bidder gains the property. The auction can be rescheduled, but all the notices of sale must be resent and republished, which adds time to the foreclosure..
For judicial foreclosures, a commissioner is appointed by the court to sell the property at public auction. The commissioner publishes the notice of sale in a local paper. The notice includes the auction date. Any party may bid at the auction and the winning bidder will be required to pay 10 percent of the bid in the form of cash or a cashier’s check at that time. The highest bidder may not get the property, as additional bidding can continue at a confirmation hearing after the auction. If the court finds the price fair, the sale is confirmed.
Hawaii offers no redemption rights for the borrower once a sale is confirmed.