Signed into law by Governor Abercrombie on June 29, Act 182 received little media coverage yet its effect on the foreclosure process in Hawaii is sure to have significant ramifications. The new Act is meant to resolve unintended consequences (‘flaws’, as scrutinized by the media and public) of Act 48. To provide a brief background, Act 48 was intended as a solution to protect owner-occupants at default from facing what was widely considered to be antiquated non-judicial foreclosure procedures. However, lienholders chose to skirt the new protections afforded by Act 48 by implementing policies whereby all new foreclosures were processed judicially. Hence, although some owner-occupants were ‘saved’ from non-judicial foreclosure, now through judicial foreclosure they can face deficiency judgments – not to mention that under-staffed, under-funded courts are now backlogged by the wave of judicial foreclosures.
- Act 48 had placed a one-year moratorium on Part I of the non-judicial foreclosure law, now Act 182 has been completely eliminated Part I.
- Mediation, which is only available for non-judicial foreclosures of owner-occupant residential properties by lenders, has now become permanent.
- Borrowers can convert a non-judicial foreclosure to judicial. This protection becomes permanent under Act 182, whereas it was temporary under Act 48.
- Establishes a separate non-judicial foreclosure and assessment lien process for AOAO and HOAs. Very critical.