Homeowners in Hawaii should be able to have a judge of the state supervising procedures of foreclosures and who must be notified 21 days before their home is subject to foreclosure auction.
These are part of the recommendations from a task force of the state that represents the consumers and the mortgage industry. A report was delivered by the task force to the legislature, with suggestions to improve the procedures of foreclosures in Hawaii.
At present, lenders can file foreclosures without going to the courts and most of them choose this nonjudicial foreclosure process. But the task force suggested that to homeowners should be given the choice of placing their case before a judge.
Also at present, even though lenders must inform homeowners that their property is up for auction, there is no minimum period of notice and no specification of means of service.
The task force also made the recommendation that legislature must clarify law of the state to prevent lenders from getting deficiency judgments versus owner, occupants whose homes are sold by lenders as foreclosures, at a rate less than that owed on the mortgage. When the lender asks the homeowner to pay up the difference, it consists of a deficiency judgment.
The task force was constituted in order to reform the foreclosure procedures of the state. Members included representatives of mortgage trade associations, lawyer representing borrowers and other such groups.
In the period of six months, the group took a decision on 7 issues. The group expressed the desire for extra time to work on a few other issues which the legislature had entrusted them to study. Some of the issues are whether lenders gave borrowers adequate information about foreclosure counseling and also inform about the state’s 1998 foreclosure laws. The task force was asked to give preliminary opinions to the legislature in 2011 and a final report in 2012 session.
Of the recommendations, the most significant would be to allow the overseeing of the foreclosure case by the circuit court. The majority of Hawaii foreclosures are conducted away from the courts under an 1874 law. According to consumer advocates, the law provides little protection to borrowers when they feel that lenders are pursuing foreclosures improperly. Under the recommendation of the task force, a borrower can contact the circuit court to transform a nonjudicial foreclosure to a judicial foreclosure.
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