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 was 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:
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