Hawaii Foreclosure Process: Notices, Auction, and Options

In Hawaii, the foreclosure process can take one of two forms: a judicial foreclosure filed as a lawsuit in circuit court, or a non-judicial foreclosure carried out under a power of sale clause in the mortgage. Both are governed by Hawaii Revised Statutes Chapter 667, and both are preceded by a federal waiting period that gives you at least 120 days to work out an alternative before the lender can file anything.

What Has to Happen Before Foreclosure Can Start

Federal mortgage servicing rules bar your lender from filing any foreclosure paperwork until you are more than 120 days past due. That four-month window exists so you have time to apply for a loan modification or other loss mitigation.¹

If you submit a complete loss mitigation application during that window, the servicer cannot move the foreclosure forward while your application is pending. That rule, often called the dual-tracking ban, continues to apply after day 120: the servicer must finish evaluating you for every available option before taking the next step toward a sale.¹

You also have the right during this period to send your servicer a Qualified Written Request if you believe your account has an error or you need information about how payments were applied. The servicer must acknowledge the letter within five business days and respond within 30 business days, and cannot charge you a fee.²

Judicial Foreclosure

A judicial foreclosure begins when the lender files a lawsuit in the circuit court for the county where the property sits and simultaneously records a notice of pending action, called a lis pendens, with the Bureau of Conveyances. That recording warns anyone searching the title that the property is tied up in litigation and effectively blocks you from selling or refinancing while the case is open.

You are served with the complaint and have a limited window to file a written response. If you do not answer, or if you answer without raising a valid defense, the lender will move for summary judgment and a decree of foreclosure. Hawaii federal courts have granted that relief where borrowers failed to oppose the lender’s motion.³

If you do respond, one defense worth examining is whether the lender can actually prove it holds the note and mortgage. The Hawaii Supreme Court has held that establishing that chain of ownership is a prerequisite to foreclosure, and a gap in the lender’s proof can defeat the case.⁴

Once the judge signs the decree, the court appoints a commissioner to appraise the property, advertise the auction, and run the public sale. The commissioner must publish notice in a local newspaper once a week for at least three consecutive weeks before the auction. Skipping or shortening that publication can void the sale. Commissioner fees come out of the proceeds, and attorney fees and court costs are added to the debt you would need to pay off to save the home.

The judicial path is slower than the alternative, which cuts both ways: more time for the debt to grow, but also more opportunities to raise defenses, challenge the lender’s standing, and negotiate under court supervision.

Non-Judicial (Power of Sale) Foreclosure

If your mortgage contains a power of sale clause, the lender can foreclose without filing a lawsuit. HRS Section 667-21 authorizes this alternative.⁵ The Hawaii Supreme Court has confirmed that a valid power of sale provision must exist in the mortgage, or in an enforceable related agreement, before a lender can take this route.⁶

The 60-Day Notice of Default

The process starts with a written notice of default and intention to foreclose. The notice must itemize the delinquent amount, the estimated attorney fees and costs, and the deadline to cure the default. That deadline must be at least 60 days from the date of the notice.⁷

The notice must also include contact information for approved housing and credit counselors.⁷ If you pay the full delinquent amount plus fees within the 60 days, the default is cured and the foreclosure stops.

Mortgage Foreclosure Dispute Resolution

Hawaii offers owner-occupants a Mortgage Foreclosure Dispute Resolution program, run through the Department of Commerce and Consumer Affairs, that lets you sit down with the lender to explore alternatives before the auction. You have to file a request and pay the filing fee during the response window, then bring financial records so the mediator and lender can look at whether a modification or repayment plan is realistic.⁸

If you skip that window, the lender can keep moving. If you participate and the lender refuses to negotiate in good faith, that failure can delay or derail the foreclosure, and participating builds a record you can use later in court.

Notice of Public Sale

After the cure period expires, the lender publishes a notice of sale in the classified section of a newspaper of general circulation in the county, once a week for three consecutive weeks. The sale cannot happen sooner than 14 days after the third publication, and the notice must also be posted on the property itself.⁹

For owner-occupied properties, the notice may run on a state website maintained by the Department of Commerce and Consumer Affairs instead, provided at least one newspaper publication still runs at least 14 days before the sale.⁹ Precise compliance matters. Because no judge is supervising, a lender that cuts corners on publication or posting may see the sale voided, and you can petition the court to convert the proceeding to a judicial foreclosure if you believe the process was defective.

The Auction and Any Shortfall

Whichever route gets you to the auction, the mechanics are similar. The property is sold at a public sale and bidders must put down a nonrefundable deposit of at least 10 percent of their winning bid.¹⁰

The foreclosing lender can bid at its own auction with a credit bid, meaning it bids the amount of the debt you owe rather than putting up cash. If the lender holds a lien recorded before the notice of default, that credit bid can satisfy the 10 percent deposit.¹⁰ When the lender is the only bidder, the property often sells for exactly the debt, which leaves you no surplus and potentially a deficiency.

In a judicial case, the auction is not final until the court holds a confirmation hearing. The judge reviews whether the bidding was fair and whether the price was reasonable, then approves the sale. The commissioner records a deed to the winning bidder, and prior liens are generally wiped out. Non-judicial sales do not require court confirmation, which is one reason they move faster.

If the sale does not cover the full mortgage balance plus fees, the gap is called a deficiency. In a judicial foreclosure, the lender can ask the court for a deficiency judgment in the same lawsuit. Non-judicial foreclosures also allow deficiency proceedings under certain conditions, but the lender must follow the procedures in HRS Chapter 667. A deficiency becomes a personal debt that follows you after the property is gone, so if one is on the table, that is one of the strongest reasons to bring in an attorney.

After the Sale

If former occupants do not leave voluntarily, the new owner can obtain a writ of possession, which authorizes law enforcement to remove occupants and their belongings.¹¹

Tenants have separate protections under the federal Protecting Tenants at Foreclosure Act. A bona fide lease generally must be honored through its term. If the new owner plans to move in personally, or if the tenancy is month-to-month, the new owner must still give at least 90 days’ notice, and must file a formal eviction if the tenant does not leave.

Taxes on Forgiven Debt

If the lender writes off any portion of the remaining balance, the IRS generally treats the forgiven amount as taxable income. You will receive a Form 1099-C and must include it on your return.¹²

Exceptions exist. If your total liabilities exceed the fair market value of all your assets when the debt is canceled, you qualify as insolvent and can exclude the forgiven amount up to the amount of your insolvency; the IRS provides a worksheet in Publication 4681 for the calculation.¹² A bankruptcy discharge is another exclusion. Whether the loan was recourse or nonrecourse affects whether the forgiven amount counts as canceled debt income, gain on the disposition, or both.

Ways to Stop or Avoid Foreclosure

Missing payments does not make foreclosure inevitable. Each of the alternatives below requires the lender’s cooperation and comes with trade-offs.

Loan modification. The lender restructures the loan to lower the payment, usually by cutting the interest rate, extending the term, or adding past-due amounts to the end of the loan. The dispute resolution program is one way to negotiate this.
Short sale. You sell the home for less than the balance with the lender’s advance approval. The lender absorbs the difference but may reserve the right to pursue a deficiency. Expect to document hardship with bank statements, tax returns, and a market analysis, and expect the review to take 30 to 90 days or longer after an offer comes in.
Deed in lieu of foreclosure. You hand the title to the lender voluntarily. Lenders usually require you to try to sell the property at fair market value first, and they want clear title. A deed in lieu still shows on your credit report and can still generate canceled debt income.
Bankruptcy. Filing Chapter 7 or Chapter 13 triggers an automatic stay that immediately halts foreclosure activity, and creditors who violate the stay face contempt and damages. A Chapter 13 plan can let you catch up on missed payments over three to five years while keeping the home, though the lender can ask the bankruptcy court to lift the stay if plan payments stop or there is no equity to protect.

Homeowner Assistance Fund

The federal Homeowner Assistance Fund, created under the American Rescue Plan Act, allocated nearly $10 billion to help homeowners who fell behind due to financial hardship associated with COVID-19. Hawaii received funding, and the money can cover mortgage payments, insurance, utilities, and other housing costs. The program is winding down, with Treasury publishing compliance data through the third quarter of 2025 and some participants closing out awards before September 30, 2026. If you are behind, check whether HAF funds are still available in Hawaii before those dates pass.¹³

1
Consumer Financial Protection Bureau. Summary of the CFPB Foreclosure Avoidance Procedures
2
Consumer Financial Protection Bureau. What Is a Qualified Written Request
3
U.S. Government Publishing Office. United States of America v. Charles J. K. Johnston et al.
4
Justia. Bank of America, N.A. v. Reyes-Toledo
5
Justia. Hawaii Code 667-21 – Power of Sale Process
6
Hawaiʻi State Judiciary. Gilbert v. Malabe and Daisy D. Malabe vs. Association of Apartment Owners of Executive Centre
7
Justia. Hawaii Code 667-22 – Notice of Default and Intention to Foreclose
8
Hawaii State Judiciary. Mortgage Foreclosures
9
FindLaw. Hawaii Code 667-27 – Notice of Public Sale
10
Justia. Hawaii Code 667-29 – Authorized Bidder and Successful Bidder
11
Hawai’i State Judiciary. Writ of Possession
12
Internal Revenue Service. Publication 4681 – Canceled Debts, Foreclosures, Repossessions, and Abandonments
13
U.S. Department of the Treasury. Homeowner Assistance Fund