Call us right away. Most foreclosures in Hawaii are handled by the courts (judicial foreclosures). Your mortgage lender or Homeowners Association must provide a minimum 30-day notice of foreclosure to allow you to cure/repay your back payments (arrears). If you don’t cure the arrears, your mortgage company files a Complaint, and you must file an Answer within 20 days of service to avoid a default judgment against you. After you file an Answer, your case will go through discovery that can take anywhere from a few months to possibly years (depending on how aggressive your lender is), and at some point, most lenders file a Motion for Summary Judgment (MSJ) to obtain a foreclosure judgment.

The MSJ is one of the key phases of the foreclosure process that will determine the length of the process and in turn how much leverage you have against the lender to get a preferable resolution. If you defeat the MSJ, the case will continue to Trial and possibly for another MSJ before Trial if the lender feels it has new information that may justify granting an MSJ.

Absent lender fraud or serious wrongdoing, your lender is more likely than not to win at Trial and obtain a judgment. After the judgment, the Court appoints a Commissioner to handle the foreclosure sale via Auction. At that point, the Commissioner will contact you to seek permission to conduct three open houses that you may refuse. If you refuse, the Commissioner will file a Motion to Permit Sale without Open Houses and will usually schedule the Auction sale for about 3-5 weeks after the Motion is granted.

After the Auction, the lender must file a Motion to Approve the Sale. If the Court approves the Motion to Approve Sale, the lender must prepare the Order Granting it and give you 5 days to respond to it. After that, the lender will send the Order to the Court for the Judge to Sign. The moment the Judge signs the Order granting the sale, you no longer own the property, and your only remedy is seeking damages against your mortgage lender for wrongful foreclosure.

Filing a Chapter 13 bankruptcy at any time before the Judge signs the written Order Granting the sale will stay (pause) the proceeding to give you some time to cure the arrears via refinancing, loan modification, through a five-year repayment plan, or a non-distressed sale of the property. Foreclosure defense would usually buy you time too, but it is usually most effective before there’s a foreclosure judgment. For these reasons, it’s important to consult with an attorney as soon as possible. Ideally, before the Answer to the Complaint is due, and certainly at least 30 days before the MSJ hearing.

If you’re unsure what to do, schedule a free consultation right away. With phone consultation available, wherever you are in Hawaii, we can help get you on the right track.