STAND. COM. REP. NO. 1375

 

Honolulu, Hawaii

                  

 

RE:    H.B. No. 25

       H.D. 2

       S.D. 2

 

 

 

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2013

State of Hawaii

 

Madam:

 

     Your Committee on Judiciary and Labor, to which was referred H.B. No. 25, H.D. 2, S.D. 1, entitled:

 

"A BILL FOR AN ACT RELATING TO SUSPENSION OF FORECLOSURE ACTIONS BY JUNIOR LIENHOLDERS,"

 

begs leave to report as follows:

 

     The purpose and intent of this measure is to:

 

     (1)  Allow a condominium association, as a junior lienholder, to commence or continue a nonjudicial foreclosure action on a property subject to a judicial foreclosure even if the lender has filed for foreclosure; and

 

     (2)  Preserve the right of owner-occupants to require the foreclosing mortgagee to participate in the dispute resolution process in situations where an association forecloses on residential real property occupied by one or more owner-occupant mortgagors for whom the unit is and has been the person's primary residence for a continuous period of not less than two hundred days immediately preceding the date on which the notice is served and the mortgagee subsequently forecloses its lien on the same property.

 

     Your Committee received testimony in support of this measure from the Office of Consumer Protection of the Department of Commerce and Consumer Affairs; Hawaii Council of Associations of Apartment Owners; Community Associations Institute, Hawaii Chapter; and three individuals.  Testimony in opposition to this measure was submitted by the Hawaii Financial Services Association, Hawaii Bankers Association, and one individual.

 

     Your Committee finds that under Hawaii's existing foreclosure law, an association cannot foreclose nonjudicially if a lender is foreclosing.  Even if an association has already begun a nonjudicial foreclosure before the lender begins the foreclosure, that association's nonjudicial foreclosure must be put on hold or converted to a judicial foreclosure.  The judicial foreclosure process can incur significant delays, during which time a property can fall into a state of disrepair, which negatively affects neighboring properties and the community as a whole.  This measure provides associations and their surrounding communities with a mechanism to mitigate the damage, neglect, and loss of revenue or value that results during the extended time that is currently required for a mortgagee to judicially foreclose on a property.

 

     Your Committee has amended this measure by inserting an effective date of July 1, 2050, to encourage further discussion.

 

     As affirmed by the record of votes of the members of your Committee on Judiciary and Labor that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 25, H.D. 2, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 25, H.D. 2, S.D. 2.

 

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

 

 

 

____________________________

CLAYTON HEE, Chair