Tuesday, July 20, 2010

Hawaii Foreclosures

We went to a foreclosure auction in Kailua-Kona this morning.  The sales are held at the flag pole at Hale Halawai in front of the mini Police department on Ali’i Drive. When banks foreclose on properties they sell them at foreclosure auctions, like the one at the Kona flag pole, around the State.

When a mortgage is in default, the bank will start the foreclosure action by notifying the owner and ultimately evicting the tenets and listing the property with a Foreclosure Commissioner, usually a local lawyer. A “Notice of Foreclosure Sale” or “Notice of Mortgagee’s Intention to Foreclose under Power of Sale” is advertised in the local newspapers with the terms and conditions of the sale. The property can be seen on advertised dates before the foreclosure sale date. In order to qualify to bid, a prospective buyer must bring 10% of the sale price in cash or cashier’s check as proof of payment. Even the bid is won, the court must confirm the sale by collecting the remainder of the money on an appointed date in the future. Anyone, including the bank, can bid more than the price agreed upon at the auction and overturn the sale or force the prospective buyer to bid more.  If the sale closes, the court provides a Commissioner’s Deed.  There is no warranty deed or title insurance, so if the title of the property has any liens against it, the buyer must get  it resolved and pay off other debts against the property to gain clear title to the property.

At the foreclosure sale today, three Foreclosure Commissioners presented their properties in Kona, Kamuela, and Waikoloa.  Many of the foreclosure sales were delayed to another date, which does not require a new ad in the newspaper.  Several of the sales had bids already submitted from the banks, which were accepted when no one in attendance came up with a higher bid.  The banks commonly  buy the properties they foreclosed at the auctions and then list them with an agent as an REO (real estate owned).

One sale did go through today for a property in Kailua-Kona.  The property that sold was a single family house with 3 bedrooms and 1.5 baths. On the surface it looks like the buyer got a pretty good deal. Zillow.com estimated its value in 2006 at $585,000 and the buyers won the auction at $120,000 which is about 20% of its 2006 estimated value.

This is a video of a Foreclosure Commissioner reviewing properties. They were either bought back by the bank or the sale postponed.

In this video Robert Kim, the Foreclosure Commissioner,auctioned a property for $120,000.


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