A mortgage allows many people to purchase a home who
would not otherwise be able to afford one.
When the owner fails to make payments on the loan, the lender often seeks
to foreclose on the home, which is the collateral for the mortgage.
In Hawaii, a foreclosure can be judicial or
non-judicial. A judicial foreclosure has
oversight by a judge and will go through a court process including a hearing
before a judge before the house is sold.
There are many statutory requirements for a non-judicial foreclosure
and they are only available in certain situations.
A judicial foreclosure begins with the lender filing a
lawsuit against the homeowner and asking the court to sell the property to
satisfy the mortgage debt. After the
judge issues an order allowing the sale of the property, a foreclosure commissioner
is appointed to dispose of the property in a way that is fair for all parties
involved while obtaining the highest price.
The commissioner will inspect the property, advertise the
auction and market the property to potential bidders. The commissioner will try to obtain the
highest feasible price for the property in order to satisfy as much of the debt
as possible.
A confirmation hearing will be set by the court after the
auction has taken place so the judge can determine if the sale to the highest
bidder should be approved. If additional
bidders appear at the court hearing, the judge may reopen bidding for the
property to see if a higher price can be obtained.
Once the judge has confirmed the sale to a bidder at auction
an escrow company distributes the proceeds of the auction in a way that will
satisfy the debt and give any excess to the previous owner of the house. Title is then transferred to the new owner.
