Hawaii Adds Obstacles to Nonjudicial Foreclosures
Michelle Mierzwa, Esq.
By Michelle Mierzwa, Esq., Counsel, Cal-Western Reconveyance Corp.
On Thursday, May 5, 2011, the Governor of Hawaii signed into law Senate Bill 561, creating substantial questions regarding the ability to proceed with nonjudicial foreclosures in Hawaii. The Bill is 102 pages long, and contains several categories of revisions to current nonjudicial foreclosure law in Hawaii; highlights including the following:
- Public nonjudicial foreclosure sales can no longer be conducted at courthouse locations, and will be limited to designated locations on each island.
- Moratorium on any NEW nonjudicial foreclosure action under Part I (the manner in which most non-judicial sales are now processed) through July 1, 2012.
- Establishment of a Mortgage Foreclosure Dispute Resolution Program (Mediation) applicable to non-judicial foreclosures against owner occupant mortgagors.
- Option for owner occupant mortgagors to convert a non-judicial foreclosure action to a judicial foreclosure action.
- Prohibition of deficiency judgments against owner occupant mortgagors after non-judicial foreclosure, but not necessarily non-owner occupants.
- Enhancements to publication requirements for non-judicial foreclosures.
- Prohibitions on completing foreclosure sales during “bona fide loan modification negotiations” with the borrower.
- Additional licensing and physical presence requirements in Hawaii for loan servicers.
- Liability under the Unfair and Deceptive Business Practice Act for violations of the new law
Due to the rapid manner in which this Bill was pushed through the Legislature and signed by the Governor, with substantial revisions and enhancements made recently, it is unclear at this point whether nonjudicial foreclosures that commenced prior to the enactment of this Bill: (1) will be subject to the mediation program prior to sale; or (2) can be consummated without substantial enhancements in the notice procedures. |
