Bill Text: HI HB1411 | 2011 | Regular Session | Amended
Bill Title: Mortgage Foreclosures; Appropriation
Spectrum: Partisan Bill (Democrat 21-0)
Status: (Enrolled - Dead) 2011-04-18 - (H) Bill scheduled for Conference Committee Meeting on Wednesday, 04-20-11 9:45AM in conference room 016. [HB1411 Detail]
Download: Hawaii-2011-HB1411-Amended.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
1411 |
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TWENTY-SIXTH LEGISLATURE, 2011 |
H.D. 2 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO MORTGAGE FORECLOSURES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Chapter 454M, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§454M- Unlicensed foreclosure actions voided. Any action taken in connection with a mortgage foreclosure under chapter 667 by a person who engages in the business of mortgage servicing without a license as provided in this chapter shall be void for purposes of chapter 667."
SECTION 2. Chapter 667, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:
"Part . Mandatory FORECLOSURE dispute resolution
§667-A Definitions. As used in this part:
"Association" has the same meaning as in sections 514B-3 and 421J-2.
"Dispute resolution" means a facilitated negotiation between a mortgagor and mortgagee for the purpose of reaching an agreement for mortgage loan modification or other agreement in an attempt to avoid foreclosure or to mitigate damages if foreclosure is unavoidable.
"Neutral" means the person assigned to facilitate the dispute resolution process required by this part.
§667-B Dispute resolution required before foreclosure. (a) Before a circuit court may order a judgment of foreclosure pursuant to section 667-1 or before a public sale may be conducted pursuant to section 667-25 for a residential property that is occupied by the mortgagor as a primary residence, the foreclosing mortgagee shall, at the election of the mortgagor, participate in dispute resolution pursuant to this part to attempt to reach a negotiated agreement to avoid foreclosure or to mitigate damages if foreclosure is unavoidable.
(b) Dispute resolution required by this part shall be conducted through the center for alternative dispute resolution established by section 613-2.
(c) This part shall not apply to judicial or nonjudicial foreclosures of association liens that arise under a declaration filed pursuant to chapter 514A or 514B or to a mortgagor who has previously participated in dispute resolution under this part for the same property on the same mortgage loan.
§667-C Notice of dispute resolution required. (a) Notice of a foreclosure action in circuit court pursuant to section 667-1 or notice of default and intention to foreclose served pursuant to section 667-22(e) shall include notice that the foreclosing mortgagee is required, at the election of the mortgagor, to participate in dispute resolution pursuant to this part for the purpose of attempting to avoid foreclosure.
(b) The notice required by subsection (a) shall include:
(1) The name and contact information of a person or entity with the authority to negotiate a loan modification on behalf of the mortgagee;
(2) Contact information for at least one local housing counseling agency approved by the United States Department of Housing and Urban Development;
(3) A form for the mortgagor to use to elect or to waive dispute resolution pursuant to this part that shall contain the mailing address of the center for alternative dispute resolution and instructions for the return of the form to the center for alternative dispute resolution;
(4) A description of the information that the mortgagor is required to provide to the center for alternative dispute resolution;
(5) A certification under penalty of perjury that the mortgagor electing dispute resolution is an owner-occupant of the subject property, including supporting documentation; and
(6) Contact information for an accredited consumer credit counseling agency in the State.
§667-D Election of dispute resolution; stay of foreclosure proceedings. (a) No later than thirty days after receipt of notice of dispute resolution under section 667-C, a mortgagor shall contact the center for alternative dispute resolution to indicate whether or not the mortgagor elects to pursue dispute resolution pursuant to this part.
(b) Upon receipt of notice that a mortgagor has elected to pursue dispute resolution, the mortgagor’s right to convert to a judicial foreclosure under section 667-M shall terminate.
(c) Upon receipt of notice that a mortgagor has elected to pursue dispute resolution, the center for alternative dispute resolution shall process the notice, assign the matter to a neutral, and schedule the dispute resolution no later than seventy-five days after receipt of the mortgagor's election to pursue dispute resolution according to rules adopted by the supreme court. All foreclosure proceedings shall be stayed effective upon receipt by the center for alternative dispute resolution of the notice of election to pursue dispute resolution pending the outcome of the dispute resolution process.
(d) If a mortgagor elects to waive dispute resolution or fails to give notice within the time specified to the center for alternative dispute resolution of the mortgagor's election to pursue dispute resolution, the center for alternative dispute resolution shall notify the court, the bureau of conveyances, or the land court, as appropriate, and the foreclosure process shall proceed as provided by law.
§667-E Dispute resolution process; requirements. (a) Parties to a dispute resolution process conducted pursuant to this part shall consist of the mortgagor or the mortgagor's representative and the mortgagee or the mortgagee's representative; provided that any representative of the mortgagee who participates in the dispute resolution shall be authorized to negotiate a loan modification on behalf of the mortgagee or shall have direct access by telephone or other immediately available communications medium at all times during the dispute resolution process to a person who is so authorized. All parties may be represented by counsel in the dispute resolution process; provided that the mortgagor may be represented by a housing counselor who is certified by the United States Department of Housing and Urban Development.
(b) Thirty days prior to participating in a scheduled dispute resolution process pursuant to this part, the mortgagor shall have consulted with a certified housing counselor with a local housing counseling agency approved by the United States Department of Housing and Urban Development.
(c) Prior to a dispute resolution process scheduled pursuant to this part, the mortgagor and the mortgagee shall provide the center for alternative dispute resolution with any information that the center for alternative dispute resolution may request. Information required by this subsection shall include financial and employment information to be provided by the mortgagor and loan information, including:
(1) The original mortgage agreement, and any subsequent mortgage agreements and assignments;
(2) The promissory note, signed by both the mortgagor and the mortgagee, and any endorsements and allonges on the note; and
(3) Any other documents that amended or altered the terms of the original mortgage agreement that were signed by the mortgagor and the mortgagee or any successors or assigns of the mortgagor or the mortgagee.
(d) A dispute resolution pursuant to this part shall take place at a community mediation center or other site specified by the center for alternative dispute resolution and shall consist of one meeting of up to four hours in duration between the parties and the neutral during which the parties shall present the dispute and attempt to conclude the dispute resolution process. The neutral may extend the time allowed for the dispute resolution at the discretion of the neutral.
(e) If the mortgagee fails to attend the dispute resolution, fails to comply with the requirements of this part or the rules of the supreme court adopted pursuant to this part, or participates through a representative that does not meet the requirements of subsection (a), the neutral shall notify the court, the bureau of conveyances, or the land court, as appropriate. After receipt of notice pursuant to this subsection, the court shall not issue a judgment of foreclosure and neither the land court nor the bureau of conveyances shall record a notice of sale or other conveyance document for the subject property; provided that in the case of a judicial foreclosure, the court may order a loan modification according to terms determined proper by the court.
(f) If the mortgagor fails to attend the dispute resolution or fails to comply with the requirements of this part or the rules of the supreme court adopted pursuant to this part, the neutral shall notify the court, the bureau of conveyances, or the land court, as appropriate, that the requirements of this part have been met and the foreclosure process shall proceed as provided by law.
(g) If, despite the participation by both parties in the dispute resolution process and compliance with the requirements of this part and the rules of the supreme court adopted pursuant to this part, the parties are not able to come to an agreement, the neutral shall notify the court, the bureau of conveyances, or the land court, as appropriate, that the requirements of this part have been met. Upon receipt of notice pursuant to this subsection, the foreclosure process shall proceed as provided by law.
(h) If the parties to a dispute resolution come to an agreement to resolve the matters at issue in the dispute resolution before the dispute resolution scheduled pursuant to this section, the parties shall notify the neutral of the resolution no later than two business days before the scheduled dispute resolution. No fees shall be refunded if the parties come to an agreement prior to or outside of a dispute resolution conducted pursuant to this part.
(i) The dispute resolution process shall conclude within sixty days from the first scheduled meeting between the parties to the dispute resolution and the neutral.
§667-F Outcome of dispute resolution. (a) When the parties to dispute resolution have complied with the requirements of this part and the rules of the supreme court adopted pursuant to this part and have reached an agreement, the agreement shall be memorialized in a resolution document that shall be filed with the circuit court, the land court, or the bureau of conveyances, as appropriate. The resolution document shall be a contract between the parties and shall be enforceable in a private contract action in a court of appropriate jurisdiction in the event of breach by either party. If the resolution document allows for foreclosure or other transfer of the subject property, the court shall order foreclosure and the land court or bureau of conveyances shall record a notice of sale or other conveyance document upon presentation by the mortgagee, as appropriate.
(b) The parties to a dispute resolution may enter into a temporary modification agreement as an outcome of a dispute resolution conducted pursuant to this part; provided that any temporary modification agreements shall include an expiration date, which shall be a date certain upon which the parties shall have complied with their respective obligations under the agreement. A temporary modification agreement shall be a private contract memorialized, filed, and enforceable according to subsection (a).
§667-G Confidentiality. Personal financial information and other sensitive personal information disclosed in the course of mortgage foreclosure dispute resolution pursuant to this part shall be confidential and shall not be subject to public disclosure.
§667-H Neutral qualifications. The supreme court shall adopt rules for qualifications and training of neutrals for mortgage foreclosure dispute resolution pursuant to this part; provided that neutrals shall possess sufficient knowledge in the areas of law, real estate, or finance and shall receive sufficient training to be able to effectuate the purposes of this part.
§667-I Fee. The center for alternative dispute resolution may charge a fee not to exceed $400 for dispute resolution services provided pursuant to this part. Any fee for dispute resolution services shall be divided equally between the mortgagee and the mortgagor. All fees collected pursuant to this section shall be deposited into the mortgage foreclosure dispute resolution special fund established by section 667-L.
§667-J Applicability. This part shall apply to foreclosures, whether by action or by power of sale, of residential real property that is occupied by the mortgagor as a primary residence; provided that this part shall not apply to actions by an association to foreclose on a lien for amounts owed to the association.
§667-K Rules. The supreme court may adopt rules for the administration of this part, including rules to:
(1) Ensure that dispute resolution occurs in an orderly and timely manner;
(2) Require each party to provide any information that the facilitator deems necessary;
(3) Protect the dispute resolution process from abuse and ensure that each party complies with this part and the rules adopted by the supreme court pursuant to this part;
(4) Establish qualifications and training requirements for neutrals; and
(5) Protect from disclosure personal financial information and other sensitive personal information obtained in the course of foreclosure dispute resolution from disclosure.
§667-L Mortgage foreclosure dispute resolution special fund. (a) There is established outside of the state treasury a special fund to be known as the mortgage foreclosure dispute resolution special fund to be administered by the supreme court to implement the mandatory dispute resolution in foreclosure proceedings required by this part. The fund shall consist of contributions from the sources identified in subsections (c) and (d). Interest earned from the balance of the fund shall become a part of the fund. The supreme court shall adopt rules regarding the distribution of moneys from the fund.
(b) The supreme court may allow expenditure of moneys from the fund directly by the center for alternative dispute resolution.
(c) All persons who bring an action in the circuit court for foreclosure pursuant to section 667-1, who record an affidavit in the land court pursuant to section 501-118, or who record a conveyance document in the bureau of conveyances for a property subject to a nonjudicial power of sale foreclosure shall pay a fee of $ for deposit into the mortgage foreclosure dispute resolution special fund.
(d) Fees for mortgage foreclosure dispute resolution charged pursuant to section 667-I shall be deposited into the mortgage foreclosure dispute resolution special fund."
SECTION 3. Chapter 667, Hawaii Revised Statutes, is amended by adding eight new sections to part II to be appropriately designated and to read as follows:
"§667-M Conversion; residential property; conditions. (a) An owner-occupant of a residential property that is being foreclosed nonjudicially under this part may convert the action to a judicial foreclosure under the following conditions:
(1) A complaint conforming to section 667-N shall be filed with the circuit court in the circuit where the residential property is located, stating that the owner-occupant of the property elects to convert the nonjudicial foreclosure to a judicial foreclosure proceeding;
(2) The complaint described in paragraph (1) shall be filed with the circuit court no later than twenty days after the notice of default and intention to foreclose is served on the owner-occupant as required by section 667-22;
(3) Within forty-five days of the filing of the complaint, all owners of an interest in the residential property whose interests are pledged or otherwise encumbered by the mortgage that is being foreclosed and all persons who have signed the promissory note or other instrument evidencing the debt secured by the mortgage that is being foreclosed, including without limitation co-obligors and guarantors, shall file a statement in the circuit court action that they agree to submit themselves to the judicial process and the jurisdiction of the circuit court. If this condition is not satisfied, the circuit court action shall be dismissed with prejudice as to the right of any owner-occupant to convert the action to a judicial proceeding, and the mortgagee may proceed nonjudicially;
(4) The filing of the complaint shall automatically stay the nonjudicial foreclosure action unless and until the judicial proceeding has been dismissed;
(5) The person filing the complaint shall have an affirmative duty to promptly notify the Hawaii attorney who is handling the nonjudicial foreclosure about the filing of the conversion;
(6) All parties joined in the converted judicial proceeding may assert therein any claims and defenses that they could have asserted had the action originally been commenced as a judicial foreclosure action; and
(7) Notwithstanding chapter 607, the fee for filing the complaint shall be not more than $400.
(b) This section shall not apply to nonjudicial foreclosures of association liens that arise under a declaration filed pursuant to chapter 514A or 514B.
(c) Upon receipt by the center for dispute resolution of notice that a mortgagor has elected to pursue dispute resolution pursuant to section 667-D, the mortgagor's right to convert to a judicial foreclosure under this section shall be terminated.
§667-N Complaint; residential property; required contents. The complaint authorized under section 667-M shall contain at a minimum the following:
(1) A caption setting forth the name of the court, the title of the action, and the file number. The title of the action shall include the names of the filing party as plaintiff and the foreclosing party as the defendant;
(2) The name, mailing address, and telephone number of the filing party;
(3) The address or tax map key number and the certificate of title or transfer certificate of title number if within the land court's jurisdiction, of the property subject to the foreclosure action;
(4) A statement identifying all other owners of an interest in the residential property whose interests are pledged or otherwise encumbered by the mortgage that is being foreclosed and all persons who have signed the promissory note or other instrument evidencing the debt secured by the mortgage that is being foreclosed, including without limitation co-obligors and guarantors;
(5) A certification under penalty of perjury that the filing party is an owner-occupant of the subject property and seeks to convert the nonjudicial foreclosure to a judicial proceeding;
(6) A statement certifying that the filing party served a copy of the complaint on the attorney identified in the notice of default and intention to foreclose either by personal delivery at, or by postage prepaid United States mail to, the address of the attorney as set forth in the notice of default and intention to foreclose; and
(7) A copy of the notice of default and intention to foreclose that was served on the filing party and for which the filing party is seeking to convert to a judicial proceeding.
§667-O Notice of default and intention to foreclose; residential property; required statement on conversion. (a) The notice of default and intention to foreclose that is served as required under sections 667-22 shall include, in addition to the contents required under section 667-22, a statement printed in not less than 14-point font as follows:
"If the property being foreclosed is improved and used for residential purposes, an Owner-occupant of the property (defined under part Ii of chapter 667 of the Hawaii Revised Statutes, as a person who, at the time this notice is served, owns an interest in the residential property that is subject to the mortgage being foreclosed and the residential property has been the primary residence continuously for not less than one hundred eighty days) has the right to convert a nonjudicial foreclosure proceeding to a judicial foreclosure where claims and defenses may be considered by a court of law. To exercise this right, the owner-occupant shall complete and file the attached form with the circuit court in the circuit where the property is located within twenty days after service of this notice.
In addition, all owners of an interest in the residential property whose interests have been pledged or otherwise encumbered by the mortgage that is being foreclosed and all persons who have signed the promissory note or other instrument evidencing the debt secured by the mortgage that is being foreclosed, including, without limitation, co-obligors and guarantors, shall file a statement in the circuit court action that they agree to submit themselves to the judicial process and the jurisdiction of the circuit court within ninety days of the filing of the attached form. Failure to satisfy this condition will result in dismissal of the circuit court action.
An owner-occupant shall promptly notify the Hawaii attorney listed in this notice about the filing of the conversion form.
a foreclosing lender who completes a nonjudicial foreclosure of residential property shall be prohibited under hawaii law from pursuing a deficiency judgment against an owner-occupant who does not own a fee simple or leasehold interest in any other real property. if this action is converted to a judicial proceeding, however, then all remedies available to a lender may be asserted, including the right to seek a deficiency judgment."
(b) The statement required by this section shall not be required to be included in the public notice of public sale published pursuant to section 667-27. Nothing in this section shall be construed to set a minimum font size for the published notice of sale.
§667-P Bar against deficiency judgments; owner-occupant of residential property. The mortgagee or other person who completes, pursuant to this part, the nonjudicial foreclosure of a mortgage or other lien on residential property shall not be entitled to pursue or obtain a deficiency judgment against an owner-occupant of the residential property who, at the time the notice of default and intention to foreclose is served, does not have a fee simple or leasehold ownership interest in any other real property; provided, however, that nothing in this section shall prohibit any other mortgagee or person who holds a lien on the residential property subject to the nonjudicial foreclosure, whose lien is subordinate to the mortgage being foreclosed and is extinguished by the nonjudicial foreclosure sale, from pursuing a monetary judgment against that owner-occupant.
§667-Q Duty of foreclosing mortgagee to maintain mortgaged property. (a) Subject to subsection (b), from the deadline date in the notice of default and intention to foreclose until the recordation of the affidavit and conveyance document, for any period of time in which the mortgaged property is not occupied by the mortgagor, the foreclosing mortgagee shall:
(1) Ensure that the mortgaged property complies with all applicable building and housing laws materially affecting health and safety;
(2) Keep the mortgaged property in a clean and safe condition;
(3) Make all repairs and arrangements necessary to put and keep the mortgaged property in a habitable condition;
(4) Maintain all electrical, plumbing, and other facilities and appliances in good working order and condition;
(5) Make payments for all utility fees for the mortgaged property; and
(6) Make regular payments for any association fees and real property taxes owing on the mortgaged property.
(b) Subsection (a) shall not apply from the deadline date in the notice of default and intention to foreclose until the date of the public sale for any period of time in which the foreclosing mortgagee permits the mortgagor to occupy or otherwise possess the mortgaged property.
(c) The costs of maintenance borne by the foreclosing mortgagee under subsection (a) shall be added to the costs of the public sale under section 667-31(a). The costs of maintenance under subsection (b) shall be borne by the mortgagor.
§667-R Prohibited conduct. It shall be a prohibited practice for any foreclosing mortgagee to engage in any of the following practices:
(1) Holding a public sale on a date, at a time, or at a place other than that described in the public notice of the public sale;
(2) Specifying a fictitious place in the public notice of the public sale;
(3) Conducting a postponed public sale on a date other than the date described in the new public notice of the public sale;
(4) Delaying the conveyance of the conveyance document deed to a bona fide purchaser who purchases in good faith for more than forty-five days after the completion of the public sale;
(5) Completing nonjudicial foreclosure proceedings during "short sale" escrows for bid prices that are less than a purchaser's offer to purchase;
(6) Completing nonjudicial foreclosure proceedings during loan modification negotiations with the mortgagor; or
(7) Completing nonjudicial foreclosure proceedings against a mortgagor who has been accepted or is being evaluated for consideration into a federal loan modification program before obtaining a certificate or other documentation confirming that the mortgagor is no longer eligible or an active participant of that federal program.
§667-S Unfair or deceptive act or practice. Any foreclosing mortgagee who violates section 667-Q or 667-R shall be guilty of an unfair or deceptive act or practice under section 480-2.
§667-T Foreclosure notice. Notwithstanding any law or agreement to the contrary, any person who forecloses on a property within a planned community, a condominium apartment or unit, or an apartment in a cooperative housing project shall notify, by way of registered or certified mail, the board of directors of the planned community association, the association of owners of the condominium project, or the cooperative housing project in which the property to be foreclosed is located, of the foreclosure at the time foreclosure proceedings are begun. The notice, at a minimum, shall identify the property, condominium apartment or unit, or cooperative apartment that is the subject of the foreclosure and identify the name or names of the person or persons bringing foreclosure proceedings. This section shall not apply when the planned community association, condominium association of owners, or cooperative housing corporation is a party in a foreclosure action. This section shall not affect civil proceedings against parties other than the planned community association, association of owners, or cooperative housing corporation."
SECTION 4. Chapter 667, Hawaii Revised Statutes, is amended by adding three new sections to part III to be appropriately designated and to read as follows:
"§667-U Invalid notice. (a) Any notices made pursuant to this chapter may be issued only by persons authorized by a foreclosing mortgagee or lender pursuant to an affiliate statement signed by that foreclosing mortgagee or lender and recorded at the bureau of conveyances identifying the agency or affiliate relationship and the authority granted or conferred to that agent or representative.
(b) The bureau of conveyances document number for the affiliate statement required under subsection (a) shall be included in any notice required to be personally served upon the mortgagor or borrower under this chapter.
(c) Any notice provided by a mortgage servicer, including an agent, employee, or representative of that mortgage servicer, shall be issued only by a mortgage servicer that has been listed in the affiliate statement filed by the foreclosing mortgagee or lender under subsection (a); provided further that the mortgage servicer shall be licensed under or otherwise exempt from chapter 454M. The agency relationship or affiliation of the mortgage servicer and the foreclosing mortgagee or lender and any authority granted or conferred to that mortgage servicer shall be described in the affiliate statement filed under both subsection (a) and section 454M-5(a)(4)(F).
§667-V Actions and communications with the mortgagor in connection with a foreclosure. Once a foreclosure has been initiated under either part I or part II, a foreclosing mortgagee shall be estopped from denying liability for any action or communication respecting the subject property that is received by the mortgagor from a mortgage servicer, a lender, the foreclosing mortgagee, or the foreclosing mortgagee's affiliate as named in the affiliate statement filed with the bureau of conveyances pursuant to section 667-U. This section shall also apply to any actions and communications made by the agents, employees, or representatives of the lender, foreclosing mortgagee, mortgage servicer, or foreclosing mortgagee's affiliate.
§667-W Suspension of foreclosure actions by junior lienholders. Upon initiation of a foreclosure action in part I or part II by a foreclosing mortgagee as defined in section 667-21(b), no junior lienholder shall be permitted to initiate or continue with a foreclosure until the foreclosure initiated by the foreclosing mortgagee has been concluded by either a judgment issued by a court pursuant to section 667-1, the recording of an affidavit after public sale pursuant to section 667-33, or the filing of a resolution document under the dispute resolution provisions of section 667-F; provided that a junior lienholder shall be permitted to initiate or continue with a foreclosure if the resolution document allows for foreclosure."
SECTION 5. Section 454M-2, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b) [A] No person [is]
shall be engaged in the business of mortgage servicing [if the person
provides those services] in this State [even if] unless the
person providing services has [no] a physical presence in the
State[.] pursuant to section 454M-5(a)(5)."
SECTION 6. Section 454M-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) A mortgage servicer licensed or acting under this chapter, in addition to duties imposed by law, shall:
(1) Safeguard and account for any money handled for the borrower;
(2) Act with reasonable skill, care, timeliness, promptness, and diligence;
(3) Disclose to the commissioner in the application
and yearly renewal a complete, current schedule of the ranges of costs and fees
it charges borrowers for its servicing-related activities; [and]
(4) File with [the commissioner upon request] its
yearly renewal statement a report in a form and format acceptable to the
director detailing the servicer's activities in this State, including:
(A) The number of mortgage loans the servicer is servicing;
(B) The type and characteristics of such loans in this State;
(C) The number of serviced loans in default, along with a breakdown of thirty-, sixty-, and ninety-day delinquencies;
(D) Information on loss mitigation activities, including details on workout arrangements undertaken;
(E) Information on foreclosures commenced in
this State; [and]
(F) The affiliations of the mortgage servicer, including any lenders or mortgagees for which the mortgage servicer is providing service, any subsidiary or parent entities, and a description of the authority held by the mortgage servicer through its affiliations; and
[(F)] (G) Any other information that
the commissioner may require[.];
and
(5) Maintain an office in the State that is staffed by at least one agent or employee for the purposes of addressing consumer inquiries or complaints and accepting service of process; provided that the mortgage servicer has actively serviced at least mortgage loans in the State within the previous calendar year."
SECTION 7. Section 454M-10, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454M-10[]] Penalty.
Any person who violates any provision of this chapter may be subject to an
administrative fine of not more than [$5,000] $7,000 for each
violation."
SECTION 8. Section 514A-90, Hawaii Revised Statutes, is amended by amending subsection (h) to read as follows:
"(h) The amount of the special assessment
assessed under subsection (g) shall not exceed the total amount of unpaid
regular monthly common assessments that were assessed during the [six] twelve
months immediately preceding the completion of the judicial or nonjudicial
power of sale foreclosure. In no event shall the amount of the special
assessment exceed the sum of [$3,600.] $7,200."
SECTION 9. Section 514B-146, Hawaii Revised Statutes, is amended by amending subsection (h) to read as follows:
"(h)
The amount of the special assessment assessed under subsection (g) shall not
exceed the total amount of unpaid regular monthly common assessments that were
assessed during the [six] twelve months immediately preceding the
completion of the judicial or nonjudicial power of sale foreclosure. In no
event shall the amount of the special assessment exceed the sum of [$3,600.]
$7,200."
SECTION 10. Section 613-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) There is established within the judiciary the center for alternative dispute resolution. The center shall facilitate the effective, timely, and voluntary resolution of disputes. Through these resolutions, it shall help reduce public and private costs of litigation and increase satisfaction with the justice system. The center shall accomplish its purposes by:
(1) Providing, where feasible and agreed to by the parties, the consultative resources and technical assistance needed to achieve voluntary resolutions for cases that affect the public interest or the work of state and county agencies. These cases shall include but not be limited to:
(A) Public disputes involving actual or threatened court actions over the allocation or management of public resources or the siting of public facilities;
(B) Complex litigation cases in which a court or a regulatory or administrative agency has determined that the dispute involves multiple parties or formidable technical, procedural, or factual issues, or both;
(C) Policy roundtables in which the center, at
the request of an executive, legislative, or judicial decisionmaker, convenes
and chairs advisory discussions on matters pertaining to standards or rules; [and]
(D) Foreclosures subject to part of chapter 667; and
[(D)] (E) Other cases directly
referred by judges, legislators, agency heads, or appointed government
officials;
(2) Promoting in a systematic manner the appropriate use of alternative dispute resolution; and
(3) Disseminating to government agencies and to the community at large up-to-date information on the methods and applications of alternative dispute resolution."
SECTION 11. Chapter 667, Hawaii Revised Statutes, is amended by amending the title of part I to read as follows:
"PART
I. FORECLOSURE BY ACTION [OR
FORECLOSURE
BY POWER OF SALE]"
SECTION 12. Section 667-1, Hawaii Revised Statutes, is amended to read as follows:
"§667-1 Foreclosure by action.
The circuit court may assess the amount due upon a mortgage, whether of real or
personal property, without the intervention of a jury[,] and, subject
to the requirements of part , shall render judgment for the amount awarded[,]
and the foreclosure of the mortgage. Execution may be issued on the judgment[,]
as ordered by the court."
SECTION 13. Section 667-5.5, Hawaii Revised Statutes, is amended to read as follows:
"§667-5.5 Foreclosure notice. Notwithstanding any law or agreement to the contrary, any person who forecloses on a property under this part within a planned community, a condominium apartment or unit, or an apartment in a cooperative housing project shall notify, by way of registered or certified mail, the board of directors of the planned community association, the association of owners of the condominium project, or the cooperative housing project in which the property to be foreclosed is located, of the foreclosure at the time foreclosure proceedings are begun. The notice, at a minimum, shall identify the property, condominium apartment or unit, or cooperative apartment which is the subject of the foreclosure and identify the name or names of the person or persons bringing foreclosure proceedings. This section shall not apply when the planned community association, condominium association of owners, or cooperative housing corporation is a party in a foreclosure action. This section shall not affect civil proceedings against parties other than the planned community association, association of owners, or cooperative housing corporation."
SECTION 14. Section 667-10, Hawaii Revised Statutes, is amended to read as follows:
"§667-10 Power unaffected by transfer;
surplus after sale. No sale or transfer by the mortgagor shall impair or
annul any right or power of attorney given in the mortgage to the mortgagee to
sell or transfer the mortgaged property, as attorney or agent of the mortgagor,
except as otherwise provided by chapters 501 and 502. When public sale is made
of the mortgaged property under this [chapter,] part, the
remainder of the proceeds, if any, shall be paid over to the owner of the
mortgaged property, after deducting the amount of claim and all expenses
attending the same."
SECTION 15. Chapter 667, Hawaii Revised Statutes, is amended by amending the title of part II to read as follows:
"[[]PART
II.[] ALTERNATE] POWER OF SALE FORECLOSURE PROCESS"
SECTION 16. Section 667-21, Hawaii Revised Statutes, is amended to read as follows:
"[[]§667-21[] Alternate
power] Power of sale foreclosure process; definitions.
(a) The process in this part is [an alternative power of sale process to
the foreclosure by action and the foreclosure by power of sale in part I.] a
power of sale foreclosure process.
(b) As used in this part:
"Association" has the same meaning as the term is defined in section 514B-3.
"Borrower" means the borrower, maker, cosigner, or guarantor under a mortgage agreement.
"Foreclosing mortgagee" means the mortgagee that intends to conduct a power of sale foreclosure; provided that the mortgagee is a federally insured bank, a federally insured savings and loan association, a federally insured savings bank, a depository financial services loan company, a nondepository financial services loan company, a credit union insured by the National Credit Union Administration, a bank holding company, a foreign lender as defined in section 207-11, or an institutional investor as defined in section 454-1.
Unless the context clearly indicates otherwise, as used in this part, a "foreclosing mortgagee" shall encompass all of the following entities:
(1) The foreclosing mortgagee;
(2) The lender that has an ownership interest in the promissory note on the mortgage agreement or a security interest represented by the mortgage for the subject property;
(3) Any mortgage servicer, who services the mortgage loan of the mortgagor; and
(4) The agents, employees, trustees, and representatives of a lender, the foreclosing mortgagee, a mortgagee, and a mortgage servicer.
"Mailed" means to be sent by regular mail, postage prepaid, and by certified, registered, or express mail, postage prepaid and return receipt requested.
"Mortgage" means a mortgage, security agreement, or other document under which property is mortgaged, encumbered, pledged, or otherwise rendered subject to a lien for the purpose of securing the payment of money or the performance of an obligation.
"Mortgage agreement" includes the mortgage, the note or debt document, or any document amending any of the foregoing.
"Mortgaged property" means the property that is subject to the lien of the mortgage.
"Mortgagee" means the current holder of record of the mortgagee's or the lender's interest under the mortgage, or the current mortgagee's or lender's duly authorized agent.
"Mortgagor" means the mortgagor or borrower named in the mortgage and, unless the context otherwise indicates, includes the current owner of record of the mortgaged property whose interest is subject to the mortgage.
"Nonjudicial foreclosure" means foreclosure under the power of sale foreclosure process under part II.
"Open house" means a public showing of the mortgaged property during a scheduled time period.
"Owner-occupant" means a person who, at the time that a notice of default and intention to foreclose is served on the mortgagor under the power of sale:
(1) Owns an interest in the residential property, and the interest is encumbered by the mortgage being foreclosed; and
(2) The residential property is and has been the person's primary residence for a continuous period of not less than one hundred eighty days immediately preceding the date on which the notice is served.
"Power of sale" or "power of sale foreclosure" means a nonjudicial foreclosure under this part when the mortgage contains, authorizes, permits, or provides for a power of sale, a power of sale foreclosure, a power of sale remedy, or a nonjudicial foreclosure.
"Property" means property (real, personal, or mixed), an interest in property (including fee simple, leasehold, life estate, reversionary interest, and any other estate under applicable law), or other interests that can be subject to the lien of a mortgage.
"Record" or "recorded" means a document is recorded or filed with the office of the assistant registrar of the land court under chapter 501 or recorded with the registrar of conveyances under chapter 502, or both, as applicable.
"Residential property" means real property that is improved and used for residential purposes.
"Served" means to have service of the notice of default and intention to foreclose made in accordance with the service of process or the service of summons under the Hawaii rules of civil procedure, and under sections 634-35 and 634-36."
SECTION 17. Section 667-22, Hawaii Revised Statutes, is amended to read as follows:
"§667-22 Notice of default[;] and
intention to foreclose; contents; distribution. (a) When the
mortgagor or the borrower has breached the mortgage agreement, and when the
foreclosing mortgagee intends to conduct a power of sale foreclosure under this
part, the foreclosing mortgagee shall prepare a written notice of default and
intention to foreclose addressed to the mortgagor, the borrower, and any
guarantor. The notice of default and intention to foreclose shall
state:
(1) The name and address of the current mortgagee;
(2) The name and last known address of the mortgagor, the borrower, and any guarantor;
(3) The address or a description of the location of
the mortgaged property, [and] the tax map key number, and the
certificate of title or transfer certificate of title number if within the
jurisdiction of the land court, of the mortgaged property;
(4) The description of the default, and if the default is a monetary default, an itemization of the delinquent amount shall be given;
(5) The action that must be taken to cure the default, including the amount to cure the default, together with the estimated amount of the foreclosing mortgagee's attorney's fees and costs, and all other fees and costs estimated to be incurred by the foreclosing mortgagee related to the default by the deadline date;
(6) The date by which the default must be cured,
which deadline date shall be at least [sixty] ninety days after
the date of the notice of default[;] and intention to foreclose;
(7) That if the default is not cured by the deadline
date stated in the notice of default[,] and intention to foreclose,
the entire unpaid balance of the moneys owed to the mortgagee under the
mortgage agreement will be due, that the mortgagee intends to conduct a power
of sale foreclosure to sell the mortgaged property at a public sale without any
court action and without going to court, and that the mortgagee or any other
person may acquire the mortgaged property at the public sale; [and]
(8) The name, address, [including] electronic
address, and telephone number of the attorney who is representing the
foreclosing mortgagee; provided that the attorney shall be licensed to practice
law in the State and physically located in the State[.]; and
(9) Notice of the right of the mortgagor to elect to participate in a dispute resolution process as required by part .
(b) The notice of default and intention to foreclose shall also contain wording substantially similar to the following in all capital letters:
"IF THE DEFAULT ON THE LOAN CONTINUES AFTER THE DEADLINE DATE IN THIS NOTICE, THE MORTGAGED PROPERTY MAY BE FORECLOSED AND SOLD WITHOUT ANY COURT ACTION AND WITHOUT GOING TO COURT.
YOU MAY HAVE CERTAIN LEGAL RIGHTS OR DEFENSES. FOR ADVICE, YOU SHOULD CONSULT WITH AN ATTORNEY LICENSED IN THIS STATE.
AFTER THE DEADLINE DATE IN THIS NOTICE, TWO PUBLIC SHOWINGS (OPEN HOUSES) OF THE PROPERTY BY THE LENDER WILL BE HELD, BUT ONLY IF ALL MORTGAGORS (OWNERS) OF THE PROPERTY SO AGREE. TO SHOW THAT ALL OWNERS AGREE TO ALLOW TWO OPEN HOUSES BY THE LENDER, ALL OWNERS MUST SIGN A LETTER SHOWING THEY AGREE. ALL OWNERS MUST SEND THE SIGNED LETTER TO THIS OFFICE AT THE ADDRESS GIVEN IN THIS NOTICE.
THIS OFFICE MUST ACTUALLY RECEIVE THE SIGNED LETTER BY THE DEADLINE DATE IN THIS NOTICE. THE SIGNED LETTER MUST BE SENT TO THIS OFFICE BY CERTIFIED MAIL, REGISTERED MAIL, OR EXPRESS MAIL, POSTAGE PREPAID AND RETURN RECEIPT REQUESTED.
IF THE SIGNED LETTER IS NOT RECEIVED BY THIS OFFICE BY THE DEADLINE DATE, THE PROPERTY WILL THEN BE SOLD WITHOUT ANY OPEN HOUSES BEING HELD.
EVEN IF THIS OFFICE RECEIVES THE SIGNED LETTER TO ALLOW THE LENDER TO HOLD TWO OPEN HOUSES OF THE PROPERTY, IF ALL OWNERS LATER DO NOT COOPERATE TO ALLOW THE OPEN HOUSES, THE PROPERTY WILL BE SOLD WITHOUT ANY OPEN HOUSES BEING HELD.
ALL FUTURE NOTICES AND CORRESPONDENCE WILL BE MAILED TO YOU AT THE ADDRESS AT WHICH YOU RECEIVED THIS NOTICE UNLESS YOU SEND WRITTEN INSTRUCTIONS TO THIS OFFICE INFORMING THIS OFFICE OF A DIFFERENT ADDRESS. THE WRITTEN INSTRUCTIONS MUST BE SENT TO THIS OFFICE BY CERTIFIED MAIL, REGISTERED MAIL, OR EXPRESS MAIL, POSTAGE PREPAID AND RETURN RECEIPT REQUESTED."
(c) The notice of default and intention to foreclose shall include:
(1) A copy of the original mortgage agreement, and any subsequent mortgage agreements and assignments;
(2) The promissory note, signed by both the mortgagor and the mortgagee, and any endorsements and allonges on the note; and
(3) Any other documents that amended or altered the terms of the original mortgage agreement that were signed by the mortgagor and the mortgagee or any successors or assigns of the mortgagor or the mortgagee.
(d) The notice of default and intention to foreclose shall also include contact information for at least one local housing counseling agency approved by the United States Department of Housing and Urban Development.
[(c)] (e) The foreclosing
mortgagee shall have the notice of default and intention to foreclose
served on:
(1) The mortgagor and the borrower[;] in
the same manner as service of a civil complaint under chapter 634 and the
Hawaii rules of civil procedure, as they may be amended from time to time;
(2) Any prior or junior creditors having a recorded lien on the mortgaged property before the recordation of the notice of default and intention to foreclose under section 667-23;
(3) The state director of taxation;
(4) The director of finance of the county where the mortgaged property is located; and
(5) Any other person entitled to receive notice under
[section 667-5.5.] this part."
SECTION 18. Section 667-23, Hawaii Revised Statutes, is amended to read as follows:
"[[]§667-23[]]
Recordation of notice of default[.] and intention to foreclose.
Before the deadline date in the notice of default[,] and intention to
foreclose, the notice [of default] shall be recorded in a
recordable form [shall be recorded] in a manner similar to recordation
of notices of pendency of action under section 501-151 or section 634-51, or
both, as applicable. The recorded notice of default and intention to
foreclose shall have the same effect as a notice of pendency of action.
From and after the recordation of the notice of default[,] and
intention to foreclose, any person who becomes a purchaser or encumbrancer
of the mortgaged property shall be deemed to have constructive notice of the
power of sale foreclosure and shall be bound by the foreclosure."
SECTION 19. Section 667-24, Hawaii Revised Statutes, is amended to read as follows:
"[[]§667-24[]] Cure of
default. (a) If the default is cured as required by the notice of
default[,] and intention to foreclose, or if the parties have reached
an agreement to avoid foreclosure pursuant to part , the foreclosing
mortgagee shall rescind the notice of default[.] and intention to
foreclose. Within fourteen days of the date of the cure[,] or an
agreement reached by the parties through a dispute resolution process pursuant
to part , the foreclosing mortgagee shall so notify any person who was
served with the notice of default[.] and intention to foreclose.
If the notice of default and intention to foreclose was recorded, a
release of the notice of default and intention to foreclose shall be
recorded.
(b) If the default is not cured, as
required by the notice of default[,] and intention to foreclose or if
the parties have not reached an agreement to avoid foreclosure pursuant to
part , the foreclosing mortgagee, without filing a court
action and without going to court, may foreclose the mortgage under power of
sale to sell the mortgaged property at a public sale."
SECTION 20. Section 667-25, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:
"(a) [The] Subject to the
requirements of part , public sale of the mortgaged property shall take
place on the later of the following:
(1) At least sixty days after the public notice of the public sale is distributed under section 667-27; or
(2) At least fourteen days after the date of the publication of the third public notice advertisement under section 667-27.
(b) The public sale of the mortgaged property
shall be held only in the county where the mortgaged property is
located[. However, if the borrower, the mortgagor, and the foreclosing
mortgagee all agree in writing, the public sale may be held in a different
county in the State.]; provided that the public sale shall be held only
on grounds or at facilities under the administration of the State, as follows:
(1) At the state capitol, for a public sale of mortgaged property located in the city and county of Honolulu;
(2) At a state facility or on public lands in Hilo, for a public sale of mortgaged property located in the eastern portion of the county of Hawaii;
(3) At a state facility or on public lands in Kona, for a public sale of mortgaged property located in the western portion of the county of Hawaii;
(4) At a state building or on public lands in Maui, for a public sale of mortgaged property located in the county of Maui; and
(5) At a state building or on public lands in Kauai, for a public sale of mortgaged property located in the county of Kauai;
provided further that no public sale shall be held on grounds or at facilities under the administration of the judiciary. The public sale shall be held during business hours on a business day."
SECTION 21. Section 667-26, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) If the default is not cured as
stated in the notice of default[,] and intention to foreclose,
the foreclosing mortgagee shall conduct two open houses of the mortgaged
property before the public sale; provided that the foreclosing mortgagee timely
received the signed letter of agreement from the mortgagor as required by the
notice of default[.] and intention to foreclose. Only two open
houses shall be required even if the date of the public sale is
postponed."
SECTION 22. Section 667-27, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (a) to read:
"(a) The foreclosing mortgagee shall prepare the public notice of the public sale. The public notice shall state:
(1) The date, time, and place of the public sale;
(2) The dates and times of the two open houses of the
mortgaged property, or if there will not [to] be any open houses, the
public notice shall so state;
(3) The unpaid balance of the moneys owed to the mortgagee under the mortgage agreement;
(4) A description of the mortgaged property, including the address or description of the location of the mortgaged property, and the tax map key number of the mortgaged property;
(5) The name of the mortgagor and the borrower;
(6) The name of the foreclosing mortgagee;
(7) The name of any prior or junior creditors having a recorded lien on the mortgaged property before the recordation of the notice of default and intention to foreclose under section 667-23;
(8) The name, the address in the State, and the
telephone number in the State of the person in the State conducting the public
sale; [and]
(9) The terms and conditions of the public sale[.];
and
(10) An estimate of the opening bid."
2. By amending subsections (c) and (d) to read:
"(c) If the default is not cured as
required by the notice of default[,] and intention to foreclose,
the foreclosing mortgagee shall have a copy of the public notice of the public
sale of the mortgaged property:
(1) Mailed or delivered to the mortgagor and the borrower at their respective last known addresses;
(2) Mailed or delivered to any prior or junior creditors having a recorded lien on the mortgaged property before the recordation of the notice of default and intention to foreclose under section 667-23;
(3) Mailed or delivered to the state director of taxation;
(4) Mailed or delivered to the director of finance of the county where the mortgaged property is located;
(5) Posted on the mortgaged property or on such other real property of which the mortgaged property is a part; and
(6) Mailed or delivered to any other person entitled
to receive notice under section [667-5.5.] 667-T.
(d) The foreclosing mortgagee shall have the
public notice of the public sale published in the classified section of a daily
newspaper [of] having the largest general circulation expressly
in the county where the mortgaged property is located. The public notice shall
be published once each week for three consecutive weeks (three publications).
The public sale shall take place no sooner than fourteen days after the date of
the publication of the third public notice advertisement."
SECTION 23. Section 667-28, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:
"(a) The public sale may be either postponed or canceled by the foreclosing mortgagee. Notice of the postponement or the cancellation of the public sale shall be:
(1) Announced by the foreclosing mortgagee at the date, time, and place of the last scheduled public sale; and
(2) Provided, upon request, to any other person who
is entitled to receive the notice of default and intention to foreclose
under section [667-22(c).] 667-22(e).
(b) If there is a postponement of the public
sale of the mortgaged property, a new public notice of the public sale shall be
published once in the format described in section 667-27. The new public
notice shall state that it is a notice of a postponed sale. The public sale
shall take place no sooner than fourteen days after the date of the publication
of the new public notice. [No sooner] Not less than fourteen
days before the date of the public sale, a copy of the new public notice shall
be posted on the mortgaged property or on such other real property of which the
mortgaged property is a part, and it shall be mailed or delivered to the
mortgagor, to the borrower, and to any other person entitled to receive notice
under section 667-27. Notwithstanding the foregoing, upon the fourth
postponement of every series of four consecutive postponements, the foreclosing
mortgagee shall follow all of the public notice of public sale requirements of
section 667-27, including the requirements of mailing and posting under section
667-27(c) and of publication under section 667-27(d)."
SECTION 24. Section 667-29, Hawaii Revised Statutes, is amended to read as follows:
"[[]§667-29[]]
Authorized bidder; successful bidder. Any person, including the foreclosing
mortgagee, shall be authorized to bid for the mortgaged property at the public
sale and to purchase the mortgaged property. The highest bidder who meets the
requirements of the terms and conditions of the public sale shall be the
successful bidder. The public sale shall be considered as being held when the
mortgaged property is declared by the foreclosing mortgagee as being sold to
the successful bidder. When the public sale is held, the successful bidder at
the public sale, as the purchaser, shall make a nonrefundable downpayment to
the foreclosing mortgagee of not less than ten per cent of the highest
successful bid price. If the successful bidder is the foreclosing mortgagee or
any other mortgagee having a recorded lien on the mortgaged property before the
recordation of the notice of default and intention to foreclose under
section 667-23, the downpayment requirement may be satisfied by offset and a
credit bid up to the amount of the mortgage debt."
SECTION 25. Section 667-31, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) After the purchaser completes the
purchase by paying the full purchase price and the costs for the purchase, the
mortgaged property shall be conveyed to the purchaser by a conveyance
document. The conveyance document shall be in a recordable form and shall be
signed by the foreclosing mortgagee in the foreclosing mortgagee's name. The
mortgagor or borrower shall not be required to sign the conveyance
document [on his or her own behalf]."
SECTION 26. Section 667-32, Hawaii Revised Statutes, is amended to read as follows:
"[[]§667-32[]] Affidavit
after public sale; contents. (a) After the public sale is held, the
foreclosing mortgagee shall sign an affidavit under penalty of perjury:
(1) Stating that the power of sale foreclosure was made pursuant to the power of sale provision in the mortgage;
(2) Stating that the power of sale foreclosure was conducted as required by this part;
(3) Summarizing what was done by the foreclosing mortgagee;
(4) Attaching a copy of the recorded notice of
default[;] and intention to foreclose;
(5) Attaching a copy of the last public notice of the
public sale[.];
(6) Attaching a copy of the affiliate statement filed at the bureau of conveyances as required under section 667-U; and
(7) Attaching a copy of the statement filed with the commissioner of financial institutions of the mortgage servicer affiliations as required under section 454M-5(a)(4)(F), describing the authority held by the mortgage servicer through its affiliations.
(b) The recitals in the affidavit required under subsection (a) may, but need not, be substantially in the following form:
"(1) I am duly authorized to represent or act on behalf of (name of mortgagee) ("foreclosing mortgagee") regarding the following power of sale foreclosure. I am signing this affidavit in accordance with the alternate power of sale foreclosure law (Chapter 667, Part II, Hawaii Revised Statutes);
(2) The foreclosing mortgagee is a "foreclosing mortgagee" as defined in the power of sale foreclosure law;
(3) The power of sale foreclosure is of a mortgage made by (name of mortgagor) ("mortgagor"), dated , and recorded in the (bureau of conveyances or office of the assistant registrar of the land court) as (recordation information). The mortgaged property is located at: (address or description of location) and is identified by tax map key number: . The legal description of the mortgaged property is attached as Exhibit "A". The name of the borrower, if different from the mortgagor, is ("borrower");
(4) Pursuant to the power of sale provision of the mortgage, the power of sale foreclosure was conducted as required by the power of sale foreclosure law. The following is a summary of what was done:
(A) A notice of default and intention to foreclose was served on the mortgagor, the borrower, and the following person: . The notice of default and intention to foreclose was served on the following date and in the following manner: ;
(B) The date of the notice of default and intention to foreclose was (date). The deadline in the notice for curing the default was (date), which deadline date was at least sixty days after the date of the notice;
(C) The notice of default and intention to foreclose was recorded before the deadline date in the (bureau of conveyances or office of the assistant registrar of the land court). The notice was recorded on (date) as document no. . A copy of the recorded notice is attached as Exhibit "1";
(D) The default was not cured by the deadline
date in the notice of default[;] and intention to foreclose;
(E) A public notice of the public sale was initially published in the classified section of the , a daily newspaper of general circulation in the county where the mortgaged property is located, once each week for three consecutive weeks on the following dates: . A copy of the affidavit of publication for the last public notice of the public sale is attached as Exhibit "2". The date of the public sale was (date). The last publication was not less than fourteen days before the date of the public sale;
(F) The public notice of the public sale was
sent to the mortgagor, to the borrower, to the state director of taxation, to
the director of finance of the county where the mortgaged property is located,
and to the following: .
The public notice was sent on the following dates and in the following manner:
.
Those dates were after the deadline date in the notice of default[,] and
intention to foreclose, and those dates were at least sixty days before the
date of the public sale;
(G) The public notice of the public sale was posted on the mortgaged property or on such other real property of which the mortgaged property is a part on (date). That date was at least sixty days before the date of the public sale;
(H) Two public showings (open houses) of the mortgaged property were held (or were not held because the mortgagor did not cooperate);
(I) A public sale of the mortgaged property was held on a business day during business hours on: (date), at (time), at the following location: . The highest successful bidder was (name) with the highest successful bid price of $ ; and
(J) At the time the public sale was held, the default was not cured and there was no circuit court foreclosure action pending in the circuit where the mortgaged property is located; and
(5) This affidavit is signed under penalty of perjury.""
SECTION 27. Section 667-39, Hawaii Revised Statutes, is amended to read as follows:
"[[]§667-39[]] Right to
enforce this part. (a) The foreclosing mortgagee, any other
creditor having a recorded lien on the mortgaged property before the
recordation of the notice of default and intention to foreclose under
section 667-23, the borrower, and the mortgagor, may enforce this part by
bringing an action in the circuit court of the circuit where the mortgaged
property is located.
(b) The remedies provided in this part are cumulative and shall not abridge the right of a party to bring action under any other law, including but not limited to section 454M-9."
SECTION 28. Section 667-41, Hawaii Revised Statutes, is amended to read as follows:
"[[]§667-41[]] Public
information requirement. [All] Beginning on September 1, 2011,
all financial institutions, mortgagees, lenders, business entities and organizations
without limitation, and persons, who intend to use the power of sale
foreclosure under this part, under the conditions required by this part, shall
also develop informational materials to educate and inform borrowers and
mortgagors. These materials shall be made available to the public[,] and
provided to the mortgagors of all mortgage agreements entered into,
including the borrowers at the time of application for a mortgage or loan, or
other contract containing a power of sale foreclosure provision. These
materials, among other things, shall inform the borrower that the financial
institution and other business entities and persons who are authorized under
this part to exercise the power of sale foreclosure, in the event of the
borrower's default, have the option of pursuing either a judicial or
nonjudicial foreclosure as provided by law. These informational materials
shall fully and completely explain these remedies[.] in simple and
understandable terms."
SECTION 29. Section 667-5, Hawaii Revised Statutes, is repealed.
["§667-5 Foreclosure under power of
sale; notice; affidavit after sale. (a) When a power of sale is
contained in a mortgage, and where the mortgagee, the mortgagee's successor in
interest, or any person authorized by the power to act in the premises, desires
to foreclose under power of sale upon breach of a condition of the mortgage,
the mortgagee, successor, or person shall be represented by an attorney who is
licensed to practice law in the State and is physically located in the State.
The attorney shall:
(1) Give notice of the mortgagee's,
successor's, or person's intention to foreclose the mortgage and of the sale of
the mortgaged property, by publication of the notice once in each of three
successive weeks (three publications), the last publication to be not less than
fourteen days before the day of sale, in a newspaper having a general
circulation in the county in which the mortgaged property lies; and
(2) Give any notices and do all acts as are
authorized or required by the power contained in the mortgage.
(b) Copies of the notice required under
subsection (a) shall be:
(1) Filed with the state director of
taxation; and
(2) Posted on the premises not less than
twenty-one days before the day of sale.
(c) Upon the request of any person entitled
to notice pursuant to this section and sections 667-5.5 and 667-6, the
attorney, the mortgagee, successor, or person represented by the attorney shall
disclose to the requestor the following information:
(1) The amount to cure the default,
together with the estimated amount of the foreclosing mortgagee's attorneys'
fees and costs, and all other fees and costs estimated to be incurred by the
foreclosing mortgagee related to the default prior to the auction within five
business days of the request; and
(2) The sale price of the mortgaged
property once auctioned.
(d) Any sale, of which notice has been
given as aforesaid, may be postponed from time to time by public announcement
made by the mortgagee or by some person acting on the mortgagee's behalf. Upon
request made by any person who is entitled to notice pursuant to section
667-5.5 or 667-6, or this section, the mortgagee or person acting on the
mortgagee's behalf shall provide the date and time of a postponed auction, or
if the auction is canceled, information that the auction was canceled. The
mortgagee within thirty days after selling the property in pursuance of the
power, shall file a copy of the notice of sale and the mortgagee's affidavit,
setting forth the mortgagee's acts in the premises fully and particularly, in
the bureau of conveyances.
(e) The affidavit and copy of the notice
shall be recorded and indexed by the registrar, in the manner provided in
chapter 501 or 502, as the case may be.
(f) This section is inapplicable if the
mortgagee is foreclosing as to personal property only."]
SECTION 30. Section 667-6, Hawaii Revised Statutes, is repealed.
["§667-6 Notice to mortgage
creditors. Whenever a mortgage creditor having a mortgage lien on
certain premises desires notice that another mortgage creditor having a
mortgage lien on the same premises intends to foreclose the mortgage and sell
the mortgaged property pursuant to a power of sale under section 667-5, the
mortgage creditor may submit a written request to the mortgagee foreclosing or
who may foreclose the mortgage by power of sale, to receive notice of the
mortgagee's intention to foreclose the mortgage under power of sale. This
request for notice may be submitted any time after the recordation or filing of
the subject mortgage at the bureau of conveyances or the land court, but must
be submitted prior to the completion of the publication of the mortgagee's
notice of intention to foreclose the mortgage and of the sale of the mortgaged
property. This request shall be signed by the mortgage creditor, or its
authorized representative, desiring to receive notice, specifying the name and
address of the person to whom the notice is to be mailed. The mortgagee
receiving the request shall thereafter give notice to all mortgage creditors
who have timely submitted their request. The notice shall be sent by mail or
otherwise communicated to the mortgage creditors, not less than seven calendar
days prior to the date of sale.
No request for copy of any notice pursuant
to this section nor any statement or allegation in any such request nor any
record thereof shall affect the title to real property or be deemed notice to
any person that any party requesting copy of the notice has or claims any
right, title, or interest in, or lien or charge upon the property described in
the mortgage referred to therein."]
SECTION 31. Section 667-7, Hawaii Revised Statutes, is repealed.
["§667-7 Notice, contents;
affidavit. (a) The notice of intention of foreclosure shall
contain:
(1) A description of the mortgaged property;
and
(2) A statement of the time and place
proposed for the sale thereof at any time after the expiration of four weeks
from the date when first advertised.
(b) The affidavit described under section
667-5 may lawfully be made by any person duly authorized to act for the
mortgagee, and in such capacity conducting the foreclosure."]
SECTION 32. Section 667-8, Hawaii Revised Statutes, is repealed.
["§667-8 Affidavit as evidence,
when. If it appears by the affidavit that the affiant has in all
respects complied with the requirements of the power of sale and the statute,
in relation to all things to be done by the affiant before selling the
property, and has sold the same in the manner required by the power, the
affidavit, or a duly certified copy of the record thereof, shall be admitted as
evidence that the power of sale was duly executed."]
SECTION 33. Section 667-9, Hawaii Revised Statutes, is repealed.
["§667-9 Dower barred, when.
If the mortgage was executed by a man having at the time no lawful wife, or if
the mortgagor being married, his wife joined in the deed in token of her
release of dower, the sale of the property in the mode aforesaid shall be
effectual to bar all claim and possibility of dower in the property."]
SECTION 34. Section 667-34, Hawaii Revised Statutes, is repealed.
["[§667-34] Foreclosure sale;
conclusive presumptions. Unless an appeal is taken as set forth in
section 667-35, any foreclosure sale held in accordance with this part shall be
conclusively presumed to have been conducted in a legal, fair, and reasonable
manner. The sale price shall be conclusively presumed to be reasonable and
equal to the fair market value of the property based on the circumstances and
on the economic conditions at the time of the sale. The statements in the
recorded affidavit shall be conclusive evidence as to the facts stated therein
for any purpose, in any court and in any proceeding, and in favor of bona fide
purchasers and encumbrancers for value without notice. The purchaser of the mortgaged
property shall be conclusively presumed to be a bona fide purchaser.
Encumbrancers for value include liens placed by lenders who provide the
purchaser with purchase money in exchange for a mortgage or other security
interest in the newly-conveyed property."]
SECTION 35. Section 667-35, Hawaii Revised Statutes, is repealed.
["[§667-35] Appeal to circuit
court. The borrower, the mortgagor, and any creditor having a
recorded lien on the mortgaged property before the recordation of the notice of
default under section 667-23, shall have the right to file an appeal in the
circuit court where the mortgaged property is located to contest the
presumptions set forth in section 667-34, and the statements contained in the
affidavit required by section 667-32. No appeal shall be filed later than
thirty days after the recordation of the affidavit. Failure to timely appeal
shall result in the statements in the affidavit and the presumptions set forth
in section 667-34 becoming conclusive in accordance with the terms of that
section."]
SECTION 36. Section 667-37, Hawaii Revised Statutes, is repealed.
["[§667-37] Judicial action of
foreclosure before public sale. This part shall not prohibit the
borrower, the foreclosing mortgagee, or any other creditor having a recorded
lien on the mortgaged property before the recordation of the notice of default
under section 667-23, from filing an action for the judicial foreclosure of the
mortgaged property in the circuit court of the circuit where the mortgaged
property is located; provided that the action is filed before the public sale
is held. While that circuit court foreclosure action is pending, the power of
sale foreclosure process shall be stayed."]
SECTION 37. Section 667-38, Hawaii Revised Statutes, is repealed.
["[§667-38] Recordation; full
satisfaction of debt by borrower. The recordation of both the
conveyance document and the affidavit shall operate as full satisfaction of the
debt owed by the borrower to the foreclosing mortgagee even if the foreclosing
mortgagee receives nothing from the sale proceeds, unless the debt is secured
by other collateral, or except as otherwise provided by law. The debts of
other lien creditors are unaffected except as provided in this part."]
SECTION 38. Section 667-42, Hawaii Revised Statutes, is repealed.
["[§667-42] Application
of this part. The requirements of this part shall apply only to new
mortgages, loans, agreements, and contracts containing power of sale
foreclosure language executed by the borrowers or mortgagors after July 1,
1999."]
SECTION 39. Upon the effective date of this Act, the judiciary is requested to consider creating and adopting a form for the conversion complaint established under section 3 of this Act.
SECTION 40. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2011-2012 to be deposited into the mortgage foreclosure dispute resolution special fund established pursuant to section 667-L, Hawaii Revised Statutes, and used to pay for the initial costs associated with establishing a dispute resolution program at the center for alternative dispute resolution for use by mortgagors and mortgagees to avoid or mitigate the damages of foreclosure.
The sum appropriated shall be expended by the judiciary for the purposes of this Act; provided that upon receipt of sufficient moneys to accomplish its purpose, the mortgage foreclosure dispute resolution special fund shall reimburse the general fund for the appropriation made pursuant to this Act.
SECTION 41. In codifying the new sections added by sections 2, 3, and 4 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.
SECTION 42. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 43. This Act shall take effect on July 1, 2050; provided that sections 2, 8, and 9 shall be repealed on July 1, 2053; provided that on July 1, 2053, sections 514A-90 and 514B-146, Hawaii Revised Statutes, shall be reenacted in the form in which they read on June 30, 2050; and provided further that if any other Act of the legislature effectuates a moratorium on nonjudicial foreclosures and whose termination date is subsequent to July 1, 2050, the moratorium shall be terminated on July 1, 2050.
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Report Title:
Mortgage Foreclosures
Description:
Repeals the old non-judicial foreclosure process. Clarifies the new non-judicial foreclosure process. Strengthens laws regarding mortgage servicers. Broadens the duties of the Center for Alternative Dispute Resolution. Effective July 1, 2050. (HB1411 HD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
