Kauai Foreclosures – the Basics of foreclosure

As the number of foreclosure on our island of Kauai continues to increase, I decided to provide this blog as the consummate resource for those seeking value in purchasing foreclosured properties on the Garden Island of Kauai.  The bulk of the foreclosures that we are seeing on Kauai are considered “non-judicial” foreclosures. This is the method that most lenders and banks prefer. Technical explanation is provided below:

Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the “Power of Sale Foreclosure Guidelines”.

Power of Sale Foreclosure Guidelines
If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:

  1. The notice of intent to foreclose must be published once a week for three (3) successive weeks, the last publication to be not less than fourteen (14) days before the day of sale, in a newspaper having a general circulation in the county in which the mortgaged property is located. Note: many of the properties being foreclosed in Kauai are not in our local newspaper, the Garden Island.Copies of the notice must be mailed or delivered to the mortgagor, the borrower, any prior or junior creditors, the state director of taxation and any other person entitled to receive notice. Additionally, the notice must be posted on the premises not less than twenty-one (21) days before the day of sale.Said notice must state: 1) The date, time, and place of the public sale; 2) The dates and times of the two (2) open houses of the mortgaged property, or if there will not to be any open houses, the public notice shall so state; 3) The unpaid balance of the moneys owed to the mortgagee under the mortgage agreement; 4) A description of the mortgaged property, including the address or description of the location of the mortgaged property, and the tax map key number of the mortgaged property; 5) The name of the mortgagor and the borrower; 6) the name of the lender; 7) The name of any prior or junior creditors having a recorded lien on the mortgaged property before the recordation of the notice of default; 8) The name, the address in the State, and the telephone number in the State of the person in the State conducting the public sale; and 9) The terms and conditions of the public sale.

    Additional wording, as required by the State of Hawaii, may be found here.

  2. Up until three (3) days before the sale, the borrower may cure the default and stop the sale by paying the lien debt, costs and reasonable attorney’s fees, unless otherwise agreed to between the lender and the borrower.
  3. The sale, which may be held no earlier than fourteen (14) days after the last ad is published, is to be made at auction to the highest bidder.
  4. Any sale, in which notice has been given, may be postponed from time to time by public announcement made by the lender or their representative.

There are no rights of redemption in Hawaii.This means once a seller is foreclosed on, the seller cannot go back and reposess the property from whomever purchases it.

One of my sources for foreclosures tracks the foreclosure when the original Notice of Default is filed by the lender. When i provide buyers and sellers lists of foreclosed properties, all have been served their notice of default, however, not all of these delinquent properties have an established auction date. There is a window of opportunity while the property is being foreclosed on to purchase as a short sale as well. This is a more difficult process and I will provide an additional post to articulate the nature of short sales and the pro’s and con’s of getting involved with them.

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