Foreclosures in Hawaii can be judicial (through the court system) or nonjudicial (out of court). Hawaii has a law that requires lenders to offer foreclosure mediation to a borrower if it uses the nonjudicial process. As a result, most lenders file judicial foreclosures so they don't have to participate in mediation.
If you’re facing a Hawaii foreclosure, you should learn as much as you can about the state’s foreclosure laws, including how the judicial foreclosure process works, what type of notice you’ll receive about the foreclosure, whether you can reinstate the mortgage before the foreclosure sale, and if you could be responsible for paying a deficiency after the foreclosure.
Read on to learn about the key features of Hawaii’s foreclosure law and find out the citations to the statutes so you can review the law yourself.
In the past, foreclosures in Hawaii were typically nonjudicial. But in 2011, the state implemented a “Mortgage Foreclosure Dispute Resolution Program” (foreclosure mediation) that applies to nonjudicial foreclosures. So, to bypass the mediation program, most lenders now use a judicial foreclosure process.
Because foreclosures in Hawaii are usually judicial, this article focuses on that process.
To begin the foreclosure, the foreclosing party files a complaint (a lawsuit) in court and provides the borrower with notice of the suit by serving him or her with a summons and complaint. (Haw. Rev. Stat. § 667-1.5). The borrower then has 20 days to respond.
If the foreclosing party wins the lawsuit, the borrower’s home will be sold and the proceeds paid to the foreclosing party in order to satisfy the mortgage loan debt. Prior to the sale, the foreclosing party must publish a notice of sale in a newspaper once each week for three weeks. (Haw. Rev. Stat. § 667-20).
“Reinstating” is when a borrower catches up on the defaulted mortgage's missed payments (plus fees and costs) in order to stop a foreclosure.
Hawaii law does not provide the borrower with the right to reinstate before the sale in a judicial foreclosure. But the terms of the mortgage might permit the borrower to reinstate or the foreclosing party could agree to a reinstatement.
Some states permit the foreclosed homeowner to redeem (repurchase) the home within a certain period of time after the foreclosure. In Hawaii, however, there is no right of redemption after the home has been foreclosed.
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a “deficiency.” Some states allow the lender to seek a personal judgment (called a “deficiency judgment”) against the borrower for this amount, while other states prohibit deficiency judgments with what are called anti-deficiency laws.
Hawaii does have an anti-deficiency law, but it only applies to nonjudicial foreclosures. (Haw. Rev. Stat. § 667-38). Deficiency judgments are allowed in judicial foreclosures.
If you want to learn more about the foreclosure process in Hawaii or want to find out if you have any potential defenses to a foreclosure, consider talking to a foreclosure lawyer.
It’s also a good idea to make an appointment to speak to a HUD-approved housing counselor, especially if you want to learn about different loss mitigation options.