During the typical foreclosure, a property is sold via foreclosure sale auction by the original home loan lender. A deficiency between the actual value of the sale price less the actual outstanding mortgage or home loan obligation often arises. This unpaid debt amount gives grounds for lenders to recover the unpaid amount, often through filing suit and obtaining judgment, via a deficiency judgment. In light of increasing foreclosures and other financial issues plaguing Americans across the United States, several states have implemented anti-deficiency measures to protect homeowners. Deficiency judgments Hawaii are not subject to many of the protections and provisions.
How the State of Hawaii Addresses Deficiency Judgments
Per the Hawaii Revised Statutes, Chapter 667, deficiency judgments are allowed in almost all instances of foreclosure, as well as in other cases. The following outlines when a homeowner facing foreclosure will be subject to and held responsible for a deficiency judgment:
- Following a judicial foreclosure process, a lender has a right to pursue deficiency judgments against foreclosed upon homeowners, if the sale amount of the foreclosed home did not cover all outstanding debt obligations, which will include principal amount owed on loan, fees of foreclosure, and costs of the foreclosure process.
- Following a non-judicial foreclosure process in Hawaii, a lender has the right to collect deficiency judgments from a borrower for the total amount owed on a loan, plus costs and fees associated with the foreclosure process, less the actual sale amount of the home in foreclosure.
It is notable that the aforementioned instances only cover cases involving actual foreclosure sale. In the state of Hawaii, any foreclosure proceeding is subject to a deficiency judgment. Furthermore, many foreclosure alternative are also subject to deficiency liens, if the lender elects to pursue it. This will include cases involving deed in lieu of foreclosure and short sales. For a homeowner, the ability to negotiate terms in any foreclosure prevention action are there, often by requesting a no deficiency clause in the agreements. However, without this specific provision agreed upon and included in a contract, a homeowner will be responsible for a deficiency lien following short sale or deed in lieu transactions.
Getting Legal Help with Deficiency Judgments in Hawaii
In reality, sufficient planning before actually undergoing the foreclosure process, whether judicial or non-judicial, may be able to prevent homeowners from being subject to deficiency judgments following the foreclosure process. Furthermore, the ability of a lender to recover deficiency liens on a given foreclosure sale will widely vary, based on the actual amount of debt owed by a homeowner and the sale price of the home at auction. Consult with a foreclosure lawyer in Hawaii to learn more about your specific rights and abilities to mitigate losses during the foreclosure process, including avoid deficiency judgments.
