Maui Real Estate

Jul: 13

Maui Foreclosure Guide – Part2:
Stages of Maui Foreclosure Process

Pre-foreclosure
The pre-foreclosure period is essentially the time when the lender notifies the home owner that they are in default of their loan and that foreclosure proceedings will begin. As already mentioned, in a non-judicial foreclosure, the lender must provide a notice of intent to foreclose.

Alternatively, with a judicial foreclosure, the lender must ask the court to rule that the borrower is in default. The appropriate documents are filed and the lender provides the borrower with notice of the court filing. Otherwise, if the lender is unable to establish contact with the borrower they may publish a notice of the court filings in a newspaper circulated in Maui.
From the time this notice is sent or published, the borrower has 20 days to respond. After 20 days they are automatically found to be in default and the lender is given the power to proceed with the sale of the property. If the borrower responds promptly to the notice, the court will hear both parties and determine if the borrower is in default. Once default has been established, the borrower may appeal the decision within 30 days.

Notice of Sale and Auction

In non-judicial foreclosures, the lender follows the agreed upon guidelines or the guidelines regarding power of sale as outlined above. If the borrower is unable to repay the debt, the property goes to auction and is sold to the highest bidder. From time to time the auctions are rescheduled at the convenience of the lender but this requires that notices be sent and published again.

In judicial foreclosures, the court appoints a commissioner to sell the property, also at an auction. A notice of sale is published by the commissioner in a local Maui newspaper indicating the date and time of the auction and any associated open houses. Anybody is free to bid on the property but the winning bidder must pay 10 per cent of the bid by cash or cashier’s check. Still, this does not ensure that the highest bidder will receive the property as continued bidding is allowed at a confirmation hearing. In fact, the sale is not final until confirmed by the court as a fair price and anybody may reopen the bidding before this point by offering 5 per cent more than the auction price.

Finally, while some states allow a property owner to redeem their property by paying off the outstanding debt, Hawaii does not offer any rights of redemption to borrowers after the court has confirmed the sale.