STAND. COM. REP. NO. 980

Honolulu, Hawaii

, 2005

RE: H.B. No. 783

H.D. 2

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Judiciary, to which was referred H.B. No. 783, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO MORTGAGE FORECLOSURES,"

begs leave to report as follows:

The purpose of this bill is to improve the nonjudicial foreclosure process by

(1) Repealing the 1874 power of sale process; and

(2) Amending the 1998 alternate power of sale foreclosure process as follows:

(A) Removing the restriction that only mortgages executed after July 1, 1999, may be foreclosed through the process;

(B) Limiting a purchaser's nonrefundable downpayment at the public sale of the mortgaged property to not more than ten percent of the highest successful bid;

(C) Removing the requirement that the borrower sign the conveyance document following the public sale of the mortgaged property and payment of the full purchase price; and

(D) Providing that the purchaser may take possession of the mortgaged property no sooner than 45 days after the public sale.

A concerned individual testified in support of this bill. The Hawaii Legislative Action Committee of the Community Associations Institute supported this bill with amendments. The Mortgage Bankers Association of Hawaii, Hawaii Financial Services Association, Hawaii Bankers Association, Cendant Timeshare Resort Group, Inc., and Fairfield Resorts, Inc. supported the intent of this measure. Hawaii HomeLoans, Inc., the Maluhia Trust, and a concerned individual opposed this bill.

Your Committee has amended this bill by:

(1) Deleting the provisions that repealed:

(A) The 1874 power of sale process;

(B) The restriction that only mortgages executed after July 1, 1999, may be foreclosed through the process; and

(C) The requirement that the borrower sign the conveyance document following the public sale of the mortgaged property and payment of the full purchase price;

(2) Providing that the purchaser may take possession of the mortgaged property no sooner than 40 days after the public sale;

(3) Adding to the definition of "foreclosing mortgagee":

(A) A mortgage broker licensed under chapter 454, Hawaii Revised Statutes; and

(B) A government-sponsored enterprise regulated by the Office of Federal Housing Enterprise Oversight;

(4) Adding to the definition of "mortgagee", the current mortgagee's or lender's nominee;

(5) Providing that in the notice of default, the foreclosing mortgagee:

(A) May require receipt of the signed letter of agreement by a date not less than ten days from the date of the notice of default and amending the sample notice of default accordingly; and

(B) Is required to propose four dates within a two-week period for the open houses of the mortgaged property, at least two of which must be on a Saturday or Sunday, and two of which must be selected by the mortgagor;

(6) Requiring the public notice of the public sale to include the telephone number and address of the foreclosing mortgagee;

(7) Requiring the foreclosing mortgagee and any prior or junior creditors having a recorded lien on the mortgaged property before recordation of the notice of default to provide information on the unpaid balance owed as of the date of the public sale and the daily accrual of interest, within three days of an inquiry from any person;

(8) Extending the time for filing appeals of public sales of mortgaged property, from 30 days after the recordation of the affidavit of public sale to 60 days;

(9) Specifying that the provisions of this measure shall not affect or impair any rights accrued before its effective date; and

(10) Making a technical, nonsubstantive amendment for consistency.

As affirmed by the record of votes of the members of your Committee on Judiciary that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 783, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 783, H.D. 2.

Respectfully submitted on behalf of the members of the Committee on Judiciary,

 

____________________________

SYLVIA LUKE, Chair