House Bill 1875 HD2 SD2 CD1, amending the mortgage foreclosure law to provide additional protections for Hawaii’s homeowners, passed its final floor vote before the full House and Senate today with a combined vote of 73 Ayes and 3 Noes.
“Once again, we won one for the homeowners, and I couldn’t be more pleased,” said Rep. Robert Herkes (District 5 – Puna, Ka’u, South Kona, North Kona) who serves as the Chair of the House Committee on Consumer Protection and Commerce. “The bill we passed last year had its critics, but our primary focus has always on helping and protecting the homeowner.”
Last Session, Governor Abercrombie signed Senate Bill 651 into law as Act 48 to protect Hawaii owner-occupants from predatory tactics of financial lending institutions.
The mortgage foreclosure task force – a legislatively created group composed of stakeholders with diverse interests including consumer advocates and professionals representing and affected by the mortgage industry, did a thorough, comprehensive analysis of Act 48. Their recommendations to refine Act 48 and to otherwise preserve the intent and spirit of the law were presented in HB1875.
The task force recommended that the legislature: (1) temper the provision relating to the Unfair Deceptive Acts or Practices (UDAP) law so lenders need not fear UDAP liability for minor violations; (2) make permanent the process allowing owner-occupants to convert their non-judicial foreclosure to a judicial foreclosure; (3) establish a separate non-judicial foreclosure and lien collection process for associations; (4) give similar rights and obligations to planned community associations; (5) provide specific language for informational notices to the public on the foreclosure process; and (6) provide technical clarifications and improvements of various provisions in Act 48.
The legislature adopted virtually all of the task force recommendations – with a few modifications and further amendments.
The bill fully repeals the Part I non-judicial process which was the mechanism used to non-judicially foreclose on homeowners before its moratorium under Act 48.
Under HB1875, a comprehensive lien collection and foreclosure process for condominium, homeowner, and planned community associations is established, which is in harmony with Hawaii’s mortgage foreclosure process.
The bill also calls for lenders’ attorneys filing judicial foreclosures on residential property to sign an affirmation stating that she or he verified the bank’s legal standing as well as the accuracy of the documents submitted to court. This requirement is akin to a court rule that has been applied to all judicial foreclosures in New York State.
The publication requirements for auction notices will also be revised to encourage competitive pricing while balancing the need for broad dissemination of auction information.
State agencies will also be authorized to publish auction notices electronically for a significantly lower price than print notices; so long as one print notice (as opposed to three) is published at least two weeks prior to an auction sale. The DCCA will spearhead this effort by creating a website for property subject to the dispute resolution program.
House Bill 1875 also makes the dispute resolution program permanent.
HB1875 may be viewed at:
- Political Pressure, New Competition Bring New Cuts In Star Advertiser Ad Rats (hawaiireporter.com)
- State Senator “Appalled” by Newspaper Lobbying Tactics (hawaiireporter.com)
- The States With the Most Homes in Foreclosure (247wallst.com)
- Some states see spike in foreclosures (washingtontimes.com)
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