In Hawaii both judicial and non-judicial foreclosures take place. This is because both the Mortgage and the Trust Deed are used as instruments of security for the underlying loan. When a home owner in Hawaii allows their home loan to go into default, if the instrument of security is a Trust Deed which contains a power of sale clause, a non-judicial foreclosure takes place.
This means that the matter does not go through the courts and is therefore affected faster, more efficiently and with less cost involved for both parties. If the power of sale clause does not apply then the foreclosure process must be affected through judicial means. A judicial foreclosure has to go through the court system so it takes longer and is more expensive. However these are rare in Hawaii as it is essentially a title theory state.
Foreclosure by sale is the general methodology used, and very strict rules have to be followed because there is no court action and the home owner in default also has rights. The power of sale clause allows for a trustee to be appointed to act on behalf of the lender in the case of a default. This trustee is in place until such time as the indebtedness of the underlying loan is met in full.
The trustee is a legal firm which is well versed in the legalities concerning non-judicial foreclosures and they are required to serve notices to the correct places within the stipulated time frames. Typically these take 60 – 90 days to complete and the home owner is allowed to contest the action which delays the process further. There are no statutory rights of redemption in Hawaii, and the lender is allowed to pursue a deficiency judgment if the property sells for less than the loans value.