Bill Text: HI SB2429 | 2012 | Regular Session | Introduced

Hawaii Senate Bill 2429 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Mortgage Foreclosure Task Force

Spectrum: Partisan Bill (Democrat 13-0)

Status: (Engrossed - Dead) 2012-04-18 - (S) Conference committee meeting to reconvene on 04-20-12 10:00AM in conference room 016. [SB2429 Detail]

Download: Hawaii-2012-SB2429-Introduced.html

THE SENATE	S.B. NO.	2429
TWENTY-SIXTH LEGISLATURE, 2012
STATE OF HAWAII

A BILL FOR AN ACT

relating to foreclosures.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

PART I

SECTION 1. The legislature finds that Act 162, Session Laws of Hawaii 2010, established a mortgage foreclosure task force to develop policies and procedures to improve the way mortgage foreclosures are conducted in the State. Act 162 required the task force to submit its findings and recommendations, including any proposed legislation, to the legislature for the regular sessions of 2011 and 2012.

The task force held several public meetings over the legislative interim of 2010 to discuss the various items for review raised under Act 162. Based upon these discussions, the task force adopted recommendations, including proposed legislation, in its report to the legislature for the regular session of 2011. Some of the task force's recommendations were included in Act 48, Session Laws of Hawaii 2011, a far-reaching mortgage foreclosure reform measure that, among other things:

(1) Temporarily authorized mortgagors who are occupying, as a primary residence, real property that is subject to nonjudicial foreclosure to either:

(A) Participate in the mortgage foreclosure dispute resolution program established under Act 48; or

(B) Convert the nonjudicial foreclosure to a judicial foreclosure;

(2) Imposed a temporary moratorium on all new nonjudicial foreclosures conducted under part I of chapter 667, Hawaii Revised Statutes; and

(3) Specified prohibited conduct and consequences of violations for foreclosing mortgagees, including making any violation of the mortgage foreclosure law under chapter 667, Hawaii Revised Statutes, an unfair or deceptive act or practice subject to the enhanced penalties under chapter 480, Hawaii Revised Statutes.

The task force met again over several public meetings during the legislative interim of 2011 to continue its work under Act 162. The focus of these meetings was divided among these major issues:

(1) The new mortgage foreclosure provisions of Act 48, Session Laws of Hawaii 2011;

(2) Matters involving condominium and other homeowner associations, including association liens and the collection of unpaid assessments; and

(3) Mortgage foreclosure counseling and dispute resolution issues.

Based upon its deliberations on these issues, the task force adopted further recommendations in its report to the legislature for the regular session of 2012.

The purpose of this Act is to implement the recommendations of the mortgage foreclosure task force submitted to the legislature for the regular session of 2012.

PART II

SECTION 2. Chapter 421J, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§421J-A Association fiscal matters; lien for assessments. (a) All sums assessed by the association but unpaid for the share of the assessments chargeable to any unit shall constitute a lien on the unit with priority over all other liens, except:

(1) Liens for taxes and assessments lawfully imposed by governmental authority against the unit;

(2) All sums unpaid on any mortgage of record that was recorded prior to the recordation of a notice of a lien by the association and any costs and expenses, including attorneys' fees, provided in such mortgages; and

(3) Liens of a condominium association that are secured by the unit;

provided that a lien recorded by the association shall expire two years from the date of recordation; and provided further that no lien may be imposed by the association against any unit for any assessments arising solely from fines, penalties, or late fees.

The lien of the association may be foreclosed by action or by nonjudicial or power of sale foreclosure procedures set forth in chapter 667, by the managing agent or board, acting on behalf of the association. In any such foreclosure, the unit owner shall be required to pay a reasonable rental for the unit, if so provided in the association documents or the law, and the plaintiff in the foreclosure shall be entitled to the appointment of a receiver to collect the rental owed by the unit owner or any tenant of the unit. If the association is the plaintiff, it may request that its managing agent be appointed as receiver to collect the rent from the tenant. The managing agent or board, acting on behalf of the association, unless prohibited by the declaration, may bid on the unit at foreclosure sale and acquire and hold, lease, mortgage, and convey the unit. Action to recover a money judgment for unpaid assessments shall be maintainable without foreclosing or waiving the lien securing the unpaid assessments owed.

(b) Except as provided in subsection (e), when the mortgagee of a mortgage of record or other purchaser of a unit obtains title to the unit as a result of foreclosure of the mortgage, the acquirer of title and the acquirer's successors and assigns shall not be liable for the share of the assessments by the association chargeable to the unit that became due prior to the acquisition of title to the unit by the acquirer. The unpaid share of assessments shall be deemed to be assessments collectible from all of the unit owners, including the acquirer and the acquirer's successors and assigns. The mortgagee of record or other purchaser of the unit shall be deemed to acquire title and shall be required to pay the unit's share of assessments beginning:

(1) Thirty-six days after the order confirming the sale to the purchaser has been filed with the court;

(2) Sixty days after the hearing at which the court grants the motion to confirm the sale to the purchaser;

(3) Thirty days after the public sale in a nonjudicial power of sale foreclosure conducted pursuant to chapter 667; or

(4) Upon the recording of the instrument of conveyance;

whichever occurs first; provided that the mortgagee of record or other purchaser of the unit shall not be deemed to acquire title under paragraph (1), (2), or (3), if transfer of title is delayed past the thirty-six days specified in paragraph (1), the sixty days specified in paragraph (2), or the thirty days specified in paragraph (3), when a person who appears at the hearing on the motion or a party to the foreclosure action requests reconsideration of the motion or order to confirm sale, objects to the form of the proposed order to confirm sale, appeals the decision of the court to grant the motion to confirm sale, or the debtor or mortgagor declares bankruptcy or is involuntarily placed into bankruptcy. In any such case, the mortgagee of record or other purchaser of the unit shall be deemed to acquire title upon recordation of the instrument of conveyance.

(c) Except as provided in section 667-B(c), no unit owner shall withhold any assessment claimed by the association. A unit owner who disputes the amount of an assessment may request a written statement clearly indicating:

(1) The amount of regular and special assessments included in the assessment, including the due date of each amount claimed;

(2) The amount of any penalty, late fee, lien filing fee, and any other charge included in the assessment;

(3) The amount of attorneys' fees and costs, if any, included in the assessment;

(4) That under Hawaii law, a unit owner has no right to withhold assessments for any reason;

(5) That a unit owner has a right to demand mediation or arbitration to resolve disputes about the amount or validity of an association's assessment; provided that the unit owner immediately pays the assessment in full and keeps assessments current; and

(6) That payment in full of the assessment does not prevent the unit owner from contesting the assessment or receiving a refund of amounts not owed.

Nothing in this section shall limit the rights of a unit owner to the protection of all fair debt collection procedures mandated under federal and state law.

(d) A unit owner who pays an association the full amount claimed by the association may file in small claims court or require the association to mediate to resolve any disputes concerning the amount or validity of the association's claim. If the unit owner and the association are unable to resolve the dispute through mediation, either party may file for arbitration under chapter 658A; provided that a unit owner may only file for arbitration if all amounts claimed by the association are paid in full on or before the date of filing. If the unit owner fails to keep all association assessments current during the arbitration, the association may ask the arbitrator to temporarily suspend the arbitration proceedings. If the unit owner pays all association assessments within thirty days of the date of suspension, the unit owner may ask the arbitrator to recommence the arbitration proceedings. If the unit owner fails to pay all association assessments by the end of the thirty-day period, the association may ask the arbitrator to dismiss the arbitration proceedings. The unit owner shall be entitled to a refund of any amounts paid to the association that are not owed.

(e) In conjunction with or as an alternative to foreclosure proceedings under subsection (a), where a unit is owner-occupied, the association may authorize its managing agent or board, after sixty days written notice to the unit owner and to the unit's first mortgagee of the nonpayment of the unit's share of the assessments, to terminate the delinquent unit's access to the common elements and cease supplying a delinquent unit with any and all services normally supplied or paid for by the association. Any terminated services and privileges shall be restored upon payment of all delinquent assessments, but need not be restored until payment in full is received.

(f) Before the board or managing agent may take the actions permitted under subsection (e), the board shall adopt a written policy providing for such actions and have the policy approved by a majority vote of the unit owners at an annual or special meeting of the association or by the written consent of a majority of the unit owners unless the association documents already permit the process.

(g) Subject to this subsection and subsections (h) and (i), the board may specially assess the amount of the unpaid regular monthly common assessments for assessments against a person who, in a judicial or nonjudicial power of sale foreclosure, purchases a delinquent unit; provided that:

(1) A purchaser who holds a mortgage on a delinquent unit that was recorded prior to the filing of a notice of lien by the association and who acquires the delinquent unit through a judicial or nonjudicial foreclosure proceeding, including purchasing the delinquent unit at a foreclosure auction, shall not be obligated to make, nor be liable for, payment of the special assessment as provided for under this subsection; and

(2) A person who subsequently purchases the delinquent unit from the mortgagee referred to in paragraph (1) shall be obligated to make, and shall be liable for, payment of the special assessment provided for under this subsection; and provided further that the mortgagee or subsequent purchaser may require the association to provide, at no charge, a notice of the association's intent to claim a lien against the delinquent unit for the amount of the special assessment, prior to the subsequent purchaser's acquisition of title to the delinquent unit. The notice shall state the amount of the special assessment, how that amount was calculated, and the legal description of the unit.

(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 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 $7,200.

(i) For purposes of subsections (g) and (h), the following definitions shall apply, unless the context requires otherwise:

"Completion" means:

(1) In a nonjudicial power of sale foreclosure, when the affidavit required under section 667-33 is recorded; and

(2) In a judicial foreclosure, when a purchaser is deemed to acquire title pursuant to subsection (b).

"Regular monthly common assessments" does not include:

(1) Any other special assessment, except for a special assessment imposed on all units as part of a budget adopted pursuant to the association documents;

(2) Late charges, fines, or penalties;

(3) Interest assessed by the association;

(4) Any lien arising out of the assessment; or

(5) Any fees or costs related to the collection or enforcement of the assessment, including attorneys' fees and court costs.

(j) The cost of a release of any lien filed pursuant to this section shall be paid by the party requesting the release.

§421J-B Association fiscal matters; collection of unpaid assessments from tenants or rental agents. (a) If a unit owner rents or leases the unit and is in default for thirty days or more in the payment of the unit's share of the regular assessments, the board, for as long as the default continues, may demand in writing and receive each month from any tenant occupying the unit or rental agent renting the unit, an amount sufficient to pay all sums due from the unit owner to the association, including interest, if any, but the amount shall not exceed the tenant's rent due each month. The tenant's payment under this section shall discharge that amount of payment from the tenant's rent obligation, and any contractual provision to the contrary shall be void as a matter of law.

(b) Before taking any action under this section, the board shall give to the delinquent unit owner written notice of its intent to collect the rent owed. The notice shall:

(1) Be sent both by first-class and certified mail;

(2) Set forth the exact amount the association claims is due and owing by the unit owner; and

(3) Indicate the intent of the board to collect such amount from the rent, along with any other amounts that become due and remain unpaid.

(d) The payment of any portion of the unit's share of regular assessments by the tenant pursuant to a written demand by the board is a complete defense, to the extent of the amount demanded and paid by the tenant, in an action for nonpayment of rent brought by the unit owner against a tenant.

(e) The board may not demand payment from the tenant pursuant to this section if:

(1) A commissioner or receiver has been appointed to take charge of the premises pending a mortgage foreclosure;

(2) A mortgagee is in possession pending a mortgage foreclosure; or

(3) The tenant is served with a court order directing payment to a third party.

(f) In the event of any conflict between this section and any provision of chapter 521, the conflict shall be resolved in favor of this section; provided that if the tenant is entitled to an offset of rent under chapter 521, the tenant may deduct the offset from the amount due to the association, up to the limits stated in chapter 521. Nothing herein precludes the unit owner or tenant from seeking equitable relief from a court of competent jurisdiction or seeking a judicial determination of the amount owed.

(g) Before the board may take the actions permitted under subsection (a), the board shall adopt a written policy providing for the actions and have the policy approved by a majority vote of the unit owners at an annual or special meeting of the association or by the written consent of a quorum of the unit owners."

SECTION 3. Chapter 667, Hawaii Revised Statutes, is amended as follows:

1. By adding a new part I to read:

"PART I. GENERAL PROVISIONS

§667-1 Definitions. As used in this chapter:

"Approved budget and credit counselor" means a Hawaii-based budget and credit counseling agency that has received approval from a United States trustee or bankruptcy administrator to provide instructional courses concerning personal financial management pursuant to title 11 United States Code section 111.

"Approved housing counselor" means a Hawaii-based housing counseling agency that has received approval from the United States Department of Housing and Urban Development to provide housing counseling services pursuant to section 106(a)(2) of the Housing and Urban Development Act of 1968, title 12 United States Code section 1701x, as the agency appears on the United States Department of Housing and Urban Development website.

"Assessment" has the same meaning as "assessment" in chapter 421J and "common expense" in chapter 514B.

"Association" has the same meaning as defined in sections 421J-2 and 514B-3.

"Association documents" has the same meaning as defined in section 421J-2 and includes the "declaration" defined in section 514B-3 and the "bylaws" described in section 514B-108, respectively.

"Association lien" has the same meaning as the lien established under section 421J-A or 514B-146.

"Borrower" means the borrower, maker, cosigner, or guarantor under a mortgage agreement.

"Department" means the department of commerce and consumer affairs.

"Director" means the director of commerce and consumer affairs.

"Dispute resolution" means a facilitated negotiation under part V 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.

"Foreclosure notice" means notice of intention to foreclose given pursuant to section 667-5 or notice of default and intention to foreclose prepared pursuant to section 667-22.

"Mailed" means to be sent by first class mail, postage prepaid, unless otherwise expressly directed in this chapter.

"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.

"Neutral" means a person who is a dispute resolution specialist assigned to facilitate the dispute resolution process required by part V.

"Nonjudicial foreclosure" means foreclosure under power of sale.

"Open house" means a public showing of the mortgaged property during a scheduled time period.

"Owner-occupant" means a person, at the time that a notice of default and intention to foreclose is served on the mortgagor under the power of sale:

(1) Who owns an interest in the residential property, and the interest is encumbered by the mortgage being foreclosed; and

(2) For whom the residential property 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.

"Power of sale" or "power of sale foreclosure" means a nonjudicial foreclosure 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" means to record or file a document in the office of the assistant registrar of the land court under chapter 501 or to record a document in the bureau of conveyances under chapter 502, or both, as applicable.

"Residential property" means real property that is improved and used for residential purposes.

"Serve", when referring to providing notice of intention to foreclose or notice of default and intention to foreclose pursuant to a nonjudicial foreclosure, 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, excluding however, any return or affidavit of service obligations required therein.

"Time share interest" has the same meaning as in section 514E-1.

"Unit" has the same meaning as in sections 421J-2 and 514B-3.

"Unit owner" has the same meaning as "member" in section 421J-2 and "unit owner" in section 514B-3."

2. By adding a new part to be appropriately designated and to read:

"PART . ASSOCIATION ALTERNATE POWER OF SALE

FORECLOSURE PROCESS

§667-A Alternate power of sale process. The process in this part is an alternative power of sale process for associations to the foreclosure by action and the foreclosure by power of sale in part IA.

§667-B Notice of default and intention to foreclose; contents; distribution. (a) When a unit owner has failed to pay an assessment, and when the association intends to conduct a power of sale foreclosure under this part, the association shall prepare a written notice of default and intention to foreclose addressed to the unit owner. The notice of default and intention to foreclose shall state:

(1) The name and address of the association;

(2) The name and last known address of the unit owners;

(3) With respect to the unit, the address or a description of its location, tax map key number, and certificate of title or transfer certificate of title number if registered in the land court;

(4) The description of the default or, if the default is a monetary default, an itemization of the delinquent amount;

(5) The action required to cure the default, including the delinquent amount and the estimated amount of the association's attorney's fees and costs, and all other fees and costs related to the default estimated to be incurred by the association by the deadline date;

(6) The date by which the default must be cured, which shall be within sixty days after service of the notice of default and intention to foreclose;

(7) A statement 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 association will become due, that the association intends to conduct a power of sale foreclosure to sell the unit at a public sale without any court action and without going to court, and that the mortgagee or any other person may acquire the unit at the public sale;

(8) The name, address, electronic address, and telephone number of the attorney who is representing the association; 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 unit owner to submit a payment plan within thirty days pursuant to subsection (c).

(b) The notice of default and intention to foreclose shall also contain wording substantially similar to the following in all capital letters and printed in not less than fourteen-point font:

"IF THE DEFAULT ON THE PAYMENT OF ASSESSMENTS CONTINUES AFTER THE DEADLINE DATE IN THIS NOTICE, THE UNIT 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 UNIT BY THE ASSOCIATION WILL BE HELD, BUT ONLY IF ALL OWNERS OF THE PROPERTY WHO ALSO CURRENTLY RESIDE AT THE UNIT SO AGREE. TO SHOW THAT ALL OWNERS RESIDING AT THE UNIT AGREE TO ALLOW TWO OPEN HOUSES BY THE ASSOCIATION, THEY MUST SIGN A LETTER SHOWING THEY AGREE. THE SIGNED LETTER MUST BE SENT 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 UNIT WILL THEN BE SOLD WITHOUT ANY OPEN HOUSES BEING HELD.

EVEN IF THIS OFFICE RECEIVES THE SIGNED LETTER TO ALLOW THE ASSOCIATION TO HOLD TWO OPEN HOUSES OF THE UNIT, IF ALL OWNERS LATER DO NOT COOPERATE TO ALLOW THE OPEN HOUSES, THE UNIT 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) A unit owner may submit a payment plan within thirty days after service of a notice of default and intention to foreclose on the unit owner. The unit owner shall submit the payment plan to the association or its attorney by certified mail return receipt requested or by hand delivery. A unit owner may also cure the default within sixty days after service of a notice of default and intention to foreclose on the unit owner by paying the association the full amount of the default, including the foreclosing association's attorneys' fees and costs, and all other fees and costs related to the default that are incurred or estimated to be incurred by the foreclosing association. The association shall not reject a reasonable payment plan; provided that a reasonable payment plan shall require the unit owner to pay, at a minimum, the current maintenance fee and some amount owed on the past due balance. From and after the date that the unit owner gives written notice to the association of its intent to cure the default or timely submits a payment plan, any nonjudicial foreclosure of the lien shall be stayed during the sixty-day period to cure the default or during the term of the payment plan or a longer period that is agreed upon by the parties. A unit owner's failure to strictly perform any agreed-upon payment plan shall entitle the association to pursue its remedies without further delay.

For purposes of this section, a reasonable payment plan shall be a plan that provides for:

(1) Timely payment of all assessments that become due after the date that the payment plan is proposed; and

(2) Additional monthly payments of an amount sufficient to cure the default, within a reasonable period under the circumstances as determined by the board of directors in its discretion; provided that a period of up to twelve months shall be deemed reasonable; and provided further that the board of directors shall have the discretion to agree to a payment plan in excess of twelve months.

(d) The notice of default and intention to foreclose shall also include contact information for approved housing counselors and approved budget and credit counselors.

(e) The association shall have the notice of default and intention to foreclose served on:

(1) The unit owner;

(2) Any prior or junior creditors who have a recorded lien on the unit before the recordation of the notice of default and intention to foreclose under section 667‑C;

(3) The state director of taxation;

(4) The director of finance of the county where the unit is located; and

(5) Any other person entitled to receive notice under section 667-5.5.

§667-C Recordation of notice of default and intention to foreclose. Before the deadline date in the notice of default and intention to foreclose, the notice shall be recorded in a recordable form 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 unit shall be deemed to have constructive notice of the power of sale foreclosure and shall be bound by the foreclosure.

§667-D 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 agreed on a payment plan, the association shall rescind the notice of default and intention to foreclose. Within fourteen days of the date of the cure or an agreement on a payment plan, the association 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 the parties have not agreed on a payment plan, the association, without filing a court action and without going to court, may foreclose the association's lien under power of sale to sell the unit at a public sale.

§667-E Date of public sale of unit; place of sale. (a) The public sale of the unit 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-G; or

(2) At least fourteen days after the date of the publication of the third public notice advertisement under section 667-G(d).

(b) The public sale of the unit shall be held only in the county where the unit is located; 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 a unit located in the city and county of Honolulu;

(2) At a state facility in Hilo, for a public sale of a unit located in the districts of Hamakua, North Hilo, South Hilo, or Puna;

(3) At a state facility in Kailua-Kona, for a public sale of a unit located in the districts of North Kohala, South Kohala, North Kona, South Kona, or Kau;

(4) At a state facility in the county seat of Maui, for a public sale of a unit located in the county of Maui; and

(5) At a state facility in the county seat of Kauai, for a public sale of a unit located in the county of Kauai;

as designated by the department of accounting and general services; 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.

(c) The public sale of the unit shall be conducted by the association on the date, at the time, and at the place described in the public notice of the public sale.

§667-F Public showing of unit. (a) If the default is not cured as stated in the notice of default and intention to foreclose, the association shall conduct two open houses of the unit before the public sale; provided that the association timely received the signed letter of agreement from the unit owner 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.

(b) Even if the signed letter of agreement is timely received, if there is no subsequent cooperation by the unit owner to allow two open houses, the public sale may be held without any open houses of the unit. If the public notice of the public sale advertised the dates and times of the open houses, but there were no open houses because of the lack of cooperation by the unit owner, the public sale may still be held as advertised, and the public notice of the public sale may not need to be republished.

§667-G Public notice of public sale; contents; distribution; publication. (a) The association 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 unit, or if there will not be any open houses, the public notice shall so state;

(3) The unpaid balance of the moneys owed to the association;

(4) A description of the unit, including the address and the tax map key number of the unit;

(5) The name of the unit owner;

(6) The name of the association;

(7) The name of any prior or junior creditors having a recorded lien on the unit before the recordation of the notice of default and intention to foreclose under section 667-C;

(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.

(b) The public notice shall also contain wording substantially similar to the following in all capital letters:

"THE DEFAULT UNDER THE ASSOCIATION DOCUMENTS MAY BE CURED NO LATER THAN THREE BUSINESS DAYS BEFORE THE DATE OF THE PUBLIC SALE OF THE UNIT BY PAYING THE ENTIRE AMOUNT THAT WOULD BE OWED TO THE ASSOCIATION PLUS THE ASSOCIATION'S ATTORNEY'S FEES AND COSTS, AND ALL OTHER FEES AND COSTS INCURRED BY THE FORECLOSING ASSOCIATION RELATED TO THE DEFAULT, UNLESS OTHERWISE AGREED TO BETWEEN THE ASSOCIATION AND THE UNIT OWNER. THERE IS NO RIGHT TO CURE THE DEFAULT OR ANY RIGHT OF REDEMPTION AFTER THAT TIME. IF THE DEFAULT IS SO CURED, THE PUBLIC SALE SHALL BE CANCELED."

(c) If the default is not cured as required by the notice of default and intention to foreclose, the association shall have a copy of the public notice of the public sale of the unit:

(1) Mailed or delivered to the unit owners at their respective last known addresses;

(2) Mailed or delivered to any prior or junior creditors having a recorded lien on the unit before the recordation of the notice of default and intention to foreclose under section 667-C;

(3) Mailed or delivered to the state director of taxation;

(4) Mailed or delivered to the director of finance of the county where the unit is located;

(5) Posted on the unit or on such other real property of which the unit is a part; and

(6) Mailed or delivered to any other person entitled to receive notice under section 667-5.5 or 667-21.5.

(d) The association shall have the public notice of the public sale printed in not less than seven-point font and published in the classified section of a daily newspaper of general circulation in the real property tax zone in which the unit is located, as shown on the applicable county real property tax maps kept by each respective county's real property tax assessment division, except for the county of Kalawao which shall be considered its own geographic area for the purposes of this subsection. The public notice shall be published once each week for three consecutive weeks, constituting 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.

§667-H Postponement, cancellation of sale. (a) The public sale may be either postponed or canceled by the association. Notice of the postponement or the cancellation of the public sale shall be:

(1) Announced by the association at the date, time, and place of the last scheduled public sale; and

(2) Provided to any other person who is entitled to receive the notice of default under section 667-B.

(b) If there is a postponement of the public sale of the unit, a new public notice of the public sale shall be published once in the format described in section 667-G. 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. Not less than fourteen days before the date of the public sale, a copy of the new public notice shall be posted on the unit or on another real property of which the unit is a part, and it shall be mailed or delivered to the unit owner, and to any other person entitled to receive notice under section 667-B(e).

(c) Upon the fourth postponement of every series of four consecutive postponements, the association shall follow all of the public notice of public sale requirements of section 667-G, including the requirements of mailing and posting under section 667-G(c) and of publication under section 667-G(d).

(d) The default under the association documents may be cured no later than three business days before the date of the public sale of the unit by paying the entire amount that would be owed to the association if the payments under the association documents had not been accelerated, plus the association's attorney's fees and costs, and all other fees and costs incurred by the association related to the default, unless otherwise agreed to between the association and the unit owner. There is no right to cure the default or any right of redemption after that time. If the default is so cured, the public sale shall be canceled.

§667-I Authorized bidder; successful bidder. Any person, including the association, shall be authorized to bid for the unit at the public sale and to purchase the unit. 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 unit is declared by the association 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 association of not less than ten per cent of the highest successful bid price. If the successful bidder is the association or any other person having a recorded lien on the unit before the recordation of the notice of default and intention to foreclose under section 667-C, the downpayment requirement may be satisfied by offset and a credit bid up to the amount of the lien debt.

§667-J Successful bidder's failure to comply; forfeiture of downpayment. If the successful bidder later fails to comply with the terms and conditions of the public sale or fails to complete the purchase within forty-five days after the public sale is held, the downpayment shall be forfeited by that bidder. The forfeited downpayment shall be credited by the association first towards the association's attorney's fees and costs, then towards the fees and costs of the power of sale foreclosure, and any balance towards the moneys owed to the association. The association, in its discretion, may then accept the bid of the next highest bidder who meets the requirements of the terms and conditions of the public sale or may begin the public sale process again.

§667-K Conveyance of property on payment of purchase price; distribution of sale proceeds. (a) After the purchaser completes the purchase by paying the full purchase price and the costs for the purchase, the unit 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 association in the foreclosing mortgagee's name. The unit owner shall not be required to sign the conveyance document.

(b) From the sale proceeds, after paying:

(1) All liens and encumbrances in the order of priority as a matter of law;

(2) The association's attorney's fees and costs;

(3) The fees and costs; of the power of sale foreclosure; and

(4) The moneys owed to the association,

the balance of the sale proceeds shall be distributed by the association to junior creditors having valid liens on the unit in the order of their priority and not pro rata. Any remaining surplus after payment in full of all valid lien creditors shall be distributed to the unit owner.

(c) Lien creditors prior to the association shall not be forced to their right of recovery. However, the association and any prior lien creditor may agree in writing that the proceeds from the sale will be distributed by the association to the prior lien creditor towards the payment of moneys owed to the prior lien creditor before any moneys are paid to the association.

§667-L Affidavit after public sale; contents. (a) After the public sale is held, the association 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 law or association documents;

(2) Stating that the power of sale foreclosure was conducted as required by this part;

(3) Summarizing what was done by the association;

(4) Attaching a copy of the recorded notice of default and intention to foreclose; and

(5) Attaching a copy of the last public notice of the public sale.

(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 association) ("association") 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 , Hawaii Revised Statutes);

(2) The association is a "association" as defined in the power of sale foreclosure law;

(3) The power of sale foreclosure is of an association lien. If the lien was recorded, the lien was dated ____________________, and recorded in the ____________________ (bureau of conveyances or office of the assistant registrar of the land court) as ____________________ (recordation information). The unit is located at: ____________________ (address or description of location) and is identified by tax map key number: ____________________. The legal description of the property, which shall include the certificate of title or transfer certificate of title number if registered with the land court, is attached as Exhibit "A";

(4) Pursuant to the power of sale provision of law or association documents, 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 ____________________, in accordance with section 667-G(d), Hawaii Revised Statutes, 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 unit owner, to the state director of taxation, to the director of finance of the county where the unit 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 unit or on such other real property of which the unit 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 unit were held (or were not held because the unit owner did not cooperate);

(I) A public sale of the unit 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

(5) This affidavit is signed under penalty of perjury.

§667-M Recordation of affidavit, conveyance document; effect. (a) The affidavit required under section 667-L and the conveyance document shall be recorded no earlier than ten days after the public sale is held but not later than forty-five days after the public sale is held. The affidavit and the conveyance document may be recorded separately and on different days. After the recordation, the association shall mail or deliver a recorded copy to those persons entitled to receive the public notice of the public sale under section 667-G(c).

(b) When both the affidavit and the conveyance document are recorded:

(1) The sale of the unit is considered completed;

(2) All persons claiming by, through, or under the mortgagor and all other persons having liens on the unit junior to the lien of the association shall be forever barred of and from any and all right, title, interest, and claims at law or in equity in and to the unit and every part of the unit, except as otherwise provided by law;

(3) The lien of the association and all liens junior in priority to the lien of a association shall be automatically extinguished from the unit; and

(4) The purchaser shall be entitled to immediate and exclusive possession of the unit.

(c) The mortgagor and any person claiming by, through, or under the mortgagor and who is remaining in possession of the unit after the recordation of the affidavit and the conveyance document shall be considered a tenant at sufferance subject to eviction or ejectment. The purchaser may bring an action in the nature of summary possession under chapter 666, ejectment, or trespass or may bring any other appropriate action in a court where the unit is located to obtain a writ of possession, a writ of assistance, or any other relief. In any such action, the court shall award the prevailing party its reasonable attorneys' fees and costs and all other reasonable fees and costs, all of which are to be paid for by the non-prevailing party.

§667-N Recordation; full satisfaction of debt by borrower. The recordation of both the conveyance document and the affidavit shall not operate as full satisfaction of the debt owed by the unit owner to the association unless the sale proceeds from the unit or the amounts paid by a purchaser under the special assessment permitted by section 421J-A or 514B-146 are sufficient to satisfy the unit owner's debt to the association, including the association's legal fees and costs. The debts of other lien creditors are unaffected except as provided in this part.

§667-O Prohibited conduct. It shall be a prohibited practice for any association 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 or a properly noticed postponement;

(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; or

(4) Completing or attempting to complete nonjudicial foreclosure proceedings against a unit owner in violation of section 667-B(c)."

PART III

SECTION 4. 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 [~~at least $1,000 and~~] not more than $7,000 for each violation; provided that $1,000 of the aggregate fine amount shall be deposited into the mortgage foreclosure dispute resolution special fund established pursuant to section 667-86."

SECTION 5. Section 514A-90, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) All sums assessed by the association of apartment owners but unpaid for the share of the common expenses chargeable to any apartment constitute a lien on the apartment prior to all other liens, except:

(1) Liens for taxes and assessments lawfully imposed by governmental authority against the apartment; and

(2) All sums unpaid on any mortgage of record that was recorded prior to the recordation of notice of a lien by the association of apartment owners, and costs and expenses including attorneys' fees provided in such mortgages[.];

provided that a lien recorded by the association of apartment owners shall expire two years from the date of recordation; and provided further that no lien may be imposed by the association against any apartment for any assessments arising solely from fines, penalties, or late fees.

The lien of the association of apartment owners may be foreclosed by action or by nonjudicial or power of sale foreclosure procedures set forth in chapter 667, by the managing agent or board of directors, acting on behalf of the association of apartment owners[~~, in like manner as a mortgage of real property~~]. In any such foreclosure, the apartment owner shall be required to pay a reasonable rental for the apartment, if so provided in the bylaws[,] or the law, and the plaintiff in the foreclosure shall be entitled to the appointment of a receiver to collect the rental owed[.] by the apartment owner or any tenant of the apartment. If the association of apartment owners is the plaintiff, it may request that its managing agent be appointed as receiver to collect the rent from the tenant. The managing agent or board of directors, acting on behalf of the association of apartment owners, unless prohibited by the declaration, may bid on the apartment at foreclosure sale, and acquire and hold, lease, mortgage, and convey the apartment. Action to recover a money judgment for unpaid common expenses shall be maintainable without foreclosing or waiving the lien securing the unpaid common expenses owed.

(b) Except as provided in subsection (g), when the mortgagee of a mortgage of record or other purchaser of an apartment obtains title to the apartment as a result of foreclosure of the mortgage, the acquirer of title and the acquirer's successors and assigns shall not be liable for the share of the common expenses or assessments by the association of apartment owners chargeable to the apartment [~~which~~] that became due prior to the acquisition of title to the apartment by the acquirer. The unpaid share of common expenses or assessments shall be deemed to be common expenses collectible from all of the apartment owners, including the acquirer and the acquirer's successors and assigns. The mortgagee of record or other purchaser of the apartment shall be deemed to acquire title and shall be required to pay the apartment's share of common expenses and assessments beginning:

(1) Thirty-six days after the order confirming the sale to the purchaser has been filed with the court;

(2) Sixty days after the hearing at which the court grants the motion to confirm the sale to the purchaser;

(3) Thirty days after the public sale in a nonjudicial power of sale foreclosure conducted pursuant to [~~section 667-5;~~] chapter 667; or

(4) Upon the recording of the instrument of conveyance,

whichever occurs first; provided that the mortgagee of record or other purchaser of the apartment shall not be deemed to acquire title under paragraph (1), (2), or (3), if transfer of title is delayed past the thirty-six days specified in paragraph (1), the sixty days specified in paragraph (2), or the thirty days specified in paragraph (3), when a person who appears at the hearing on the motion or a party to the foreclosure action requests reconsideration of the motion or order to confirm sale, objects to the form of the proposed order to confirm sale, appeals the decision of the court to grant the motion to confirm sale, or the debtor or mortgagor declares bankruptcy or is involuntarily placed into bankruptcy. In any such case, the mortgagee of record or other purchaser of the apartment shall be deemed to acquire title upon recordation of the instrument of conveyance."

SECTION 6. Section 514B-146, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) All sums assessed by the association but unpaid for the share of the common expenses chargeable to any unit shall constitute a lien on the unit with priority over all other liens, except:

(1) Liens for taxes and assessments lawfully imposed by governmental authority against the unit; and

(2) All sums unpaid on any mortgage of record that was recorded prior to the recordation of a notice of a lien by the association, and costs and expenses including attorneys' fees provided in such mortgages[.];

The lien of the association may be foreclosed by action or by nonjudicial or power of sale foreclosure procedures set forth in chapter 667, by the managing agent or board, acting on behalf of the association[~~, in like manner as a mortgage of real property~~]. In any such foreclosure, the unit owner shall be required to pay a reasonable rental for the unit, if so provided in the bylaws[,] or the law, and the plaintiff in the foreclosure shall be entitled to the appointment of a receiver to collect the rental owed[.] by the unit owner or any tenant of the unit. If the association is the plaintiff, it may request that its managing agent be appointed as receiver to collect the rent from the tenant. The managing agent or board, acting on behalf of the association, unless prohibited by the declaration, may bid on the unit at foreclosure sale, and acquire and hold, lease, mortgage, and convey the unit. Action to recover a money judgment for unpaid common expenses shall be maintainable without foreclosing or waiving the lien securing the unpaid common expenses owed.

(b) Except as provided in subsection (g), when the mortgagee of a mortgage of record or other purchaser of a unit obtains title to the unit as a result of foreclosure of the mortgage, the acquirer of title and the acquirer's successors and assigns shall not be liable for the share of the common expenses or assessments by the association chargeable to the unit [~~which~~] that became due prior to the acquisition of title to the unit by the acquirer. The unpaid share of common expenses or assessments shall be deemed to be common expenses collectible from all of the unit owners, including the acquirer and the acquirer's successors and assigns. The mortgagee of record or other purchaser of the unit shall be deemed to acquire title and shall be required to pay the unit's share of common expenses and assessments beginning:

(1) Thirty-six days after the order confirming the sale to the purchaser has been filed with the court;

(2) Sixty days after the hearing at which the court grants the motion to confirm the sale to the purchaser;

(3) Thirty days after the public sale in a nonjudicial power of sale foreclosure conducted pursuant to [~~section 667‑5;~~] chapter 667; or

(4) Upon the recording of the instrument of conveyance;

SECTION 7. Section 607-5, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) The fees prescribed by the schedule in this section shall be paid to the clerk of the circuit court as costs of court by the person instituting the action or proceeding, or offering the paper for filing, or causing the document to be issued or the services to be performed in the circuit court; provided that nothing in the schedule shall apply to cases of adults charged with commission of a crime, or to proceedings under section 571-11(1), (2), or (9), to proceedings under chapter 333F or 334, to small estates including decedents' estates and protection of property of minors and persons under disability when the amount payable is fixed by another statute[, ~~or to nonjudicial foreclosures converted to judicial proceedings pursuant to section 667-53;~~ ~~and~~]; provided further that the fees prescribed by subsection (c)(32) shall be deposited by the clerk of the circuit court into the judiciary computer system special fund pursuant to section 601-3.7[.]; and provided further that the fees prescribed by subsection (b)(1a) shall be deposited by the clerk of the circuit court as provided in section 667-53(a)(6).

For the purpose of this section, "judgment" includes a decree and any order from which an appeal lies.

SCHEDULE

In the application of this schedule, each case assigned a new number or filed under the number previously assigned to a probate, trust, guardianship, or conservatorship, shall carry a fee for the institution or transfer of the action or proceeding as prescribed by part I, and in addition the fees prescribed by part II unless otherwise provided.

(b) PART I

Action or proceeding, general:

(1) Civil action or special proceeding, unless another item in part I applies.................................. $200

(1a) Petition for conversion of nonjudicial foreclosure to judicial foreclosure............................ $250

(2) Appeal to a circuit court....................... $100

(3) Transfer of action to circuit court from district court, in addition to district court fees................. $125

Trusts:

(4) Proceeding for (A) appointment of trustee; (B) appointment of successor; (C) resignation of trustee; (D) instructions; (E) approval of investment; (F) approval of sale, mortgage, lease, or other disposition of property; (G) approval of compromise of claim, for each such matter....... $100

(5) Proceeding for (A) removal of trustee; (B) order requiring accounting; (C) invalidation of action taken by trustee; (D) termination of trust, for each such matter...... $100

(6) Accounting, this fee to be paid for each account filed and to include the settlement of the account......... $10

(7) Vesting order................. no charge under part I

(8) Allowance of fees of trustees, attorneys, or other fees for services incurred in a proceeding for which a fee has been paid under this section no charge under part I

(8a) Registration of a trust, or release of registration, under chapter 560....................................... $3

(9) Any other proceeding relating to a trust......... $15

Conservatorship:

(10) Proceeding for (A) appointment; (B) appointment of successor; (C) resignation; (D) instructions, unless included in one of the foregoing proceedings; (E), (F), (G) approval of any matter listed in (E), (F), or (G) of item (4) in relation to a trust, for each such matter $100

(11) Proceeding of the nature listed in (A), (B), (C), or (D) of item (5) in relation to a trust, for each such matter................................................. $15

(12) Accounting, same as provided by item (6) in relation to a trust............................................ $10

(13) Any other proceeding relating to a

conservatorship............... no charge under part I

Guardianship:

(13a) Guardianship, including all matters of the nature listed in items (4) to (9), whether in family or circuit court ................................................ $100

Probate (decedents' estates). These fees include all matters of the nature listed in items (4) to (9), without additional charge:

(14) Probate, administration, domiciliary foreign personal representative, or ancillary administration, this fee to be paid once only for each decedent's estate....... $100

Family court cases:

(15) Matrimonial action (annulment, divorce, separation, or separate maintenance)........................... $100

(16) Adoption........................................ $100

(17) Guardianship, including all matters of the nature listed in items (4) to (9)........... As provided in item 13(a)

(18) Termination of parental rights no charge under part I

(19) Any other family court proceeding, except motions or other pleadings in matrimonial, adoption, and guardianship actions, but including without limitation custody proceedings even if in the form of an habeas corpus proceeding............. $15"

SECTION 8. Chapter 667, Hawaii Revised Statutes, is amended by designating:

1. Part I as part IA; and

2. Section 667-1 as section 667-1.5.

SECTION 9. Section 667-5, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(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 as follows:

(A) By serving, not less than twenty-one days before the date of sale, written notice of intent to foreclose on all persons entitled to notice under this part [~~in the same manner as service of a civil complaint~~ ~~under chapter 634~~ ~~and the Hawaii rules of civil procedure~~]; provided that in the case of nonjudicial foreclosure of a lien by an association against a mortgagor who is not an owner-occupant, the association shall mail the notice by certified or registered mail, not less than twenty-one days before the date of sale, to:

(i) The unit owner at the address shown in the records of the association and, if different, at the address of the unit being foreclosed; and

(ii) All mortgage creditors whose names are known or can be discovered by the association; and

(B) By publication of the notice once in each of three successive weeks, constituting three publications with the last publication to be not less than fourteen days before the day of sale, in a daily newspaper [~~having the largest~~] of general circulation in the [specific county in which the mortgaged property lies; provided that for property located in a county with a population of more than one hundred thousand but less than three hundred thousand, the public notice shall be published in the newspaper having the largest circulation expressly in the eastern or western half of the county, corresponding to the location of the subject property;] real property tax zone in which the mortgaged property is located, as shown on the applicable county real property tax maps kept by each respective county's real property tax assessment division, except for the county of Kalawao which shall be considered its own geographic area for the purposes of this subparagraph;

(2) Give notice of the mortgagor's right to elect to participate in the mortgage foreclosure dispute resolution program pursuant to section 667-75 or to convert the nonjudicial power of sale foreclosure to a judicial foreclosure pursuant to section 667-53; and

(3) Give any notices and do all acts as authorized or required by the power contained in the mortgage."

2. By amending subsection (d) to read:

"(d) Any sale, of which notice has been given pursuant to subsections (a) and (b), may be postponed from time to time by public announcement made by the mortgagee or by a 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, not earlier than ten days after the public sale but 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."

SECTION 10. Section 667-5.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§667-5.5[]] Foreclosure notice; planned communities; condominiums; cooperative housing projects. 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 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 following:

(1) The foreclosure at the time foreclosure proceedings are begun[.]; and

(2) Any election by an owner-occupant of the property that is the subject of the foreclosure to participate in the mortgage foreclosure dispute resolution program under part V.

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~~] Paragraph (1) shall not apply if 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 11. Section 667-6, Hawaii Revised Statutes, is amended to read as follows:

"§667-6 Notice to mortgage creditors. (a) Whenever a mortgage creditor [~~having~~] who has 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 who is foreclosing or who may foreclose the mortgage by power of sale, asking 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~~]; provided that the request is 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.

(b) 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.

(c) 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 12. 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 part, distribution of the proceeds of the sale shall be as specified in section 667-3, and the remainder of the proceeds, if any, shall be paid over to the owner of the mortgaged property, after deducting the amount of [~~claim~~] all claims and all expenses attending the same."

SECTION 13. Section 667-14, Hawaii Revised Statutes, is amended to read as follows:

"[[]§667-14[]] Recordation of foreclosure notice. The foreclosing mortgagee may record a copy of the foreclosure notice [~~with the assistant registrar of the land court or the bureau of conveyances, as appropriate,~~] in a manner similar to recordation of notices of pendency of action under section 501-151 or section 634-51, as applicable. The recorded notice shall have the same effect as a notice of pendency of action. [~~From and after~~] Upon the recordation of the notice, any person who thereafter 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 14. Section 667-15, Hawaii Revised Statutes, is amended to read as follows:

"[[]§667-15[]] Location of public sale following power of sale foreclosure. The public sale of the mortgaged property 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 in Hilo, for a public sale of mortgaged property located in the [~~eastern portion of the county of Hawaii;~~] districts of Hamakua, North Hilo, South Hilo, or Puna;

(3) At a state facility in Kailua-Kona, for a public sale of mortgaged property located in the [~~western portion of the county of Hawaii;~~] districts of North Kohala, South Kohala, North Kona, South Kona, or Kau;

(4) At a state facility in the county seat of Maui, for a public sale of mortgaged property located in the county of Maui; and

(5) At a state facility in the county seat of Kauai, for a public sale of mortgaged property located in the county of Kauai;

as designated by the department of accounting and general services; provided 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 15. Section 667-21, Hawaii Revised Statutes, is amended to read as follows:

"§667-21 Alternate power of sale 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.] IA.

[~~(b) As used in this part:~~

"Approved budget and credit counselor" means a budget and credit counseling agency that has received approval from a United States trustee or bankruptcy administrator to provide instructional courses concerning personal financial management pursuant to Title 11 United States Code, section 111.

"Approved housing counselor" means a housing counseling agency that has received approval from the United States Department of Housing and Urban Development to provide housing counseling services pursuant to section 106(a)(2) of the Housing and Urban Development Act of 1968, Title 12 United States Code, section 1701x.

~~"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)~~ ~~Any person 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 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.~~

~~"Nonjudicial foreclosure" means foreclosure under power of sale.~~

~~"Open house" means a public showing of the mortgaged property during a scheduled time period.~~

~~"Owner-occupant" means a person, at the time that a notice of default and intention to foreclose is served on the mortgagor under the power of sale:~~

~~(1)~~ ~~Who owns an interest in the residential property, and the interest is encumbered by the mortgage being foreclosed; and~~

~~(2)~~ ~~For whom the residential property 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.~~

"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.

"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 16. Section 667-21.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§667-21.5[]] Foreclosure notice; planned communities; condominiums; cooperative housing projects. 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 following:

(1) The foreclosure at the time foreclosure proceedings are begun[.]; and

(2) Any election by an owner-occupant of the property that is the subject of the foreclosure to participate in the mortgage foreclosure dispute resolution program under part V.

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~~] Paragraph (1) 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 17. Section 667-22, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(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 [~~all~~] the mortgagors, the borrowers, and any guarantors;

(3) [~~The~~] With respect to the mortgaged property, the address or a description of [~~the~~] its location [~~of the mortgaged property~~], [~~the~~] tax map key number, and [~~the~~] certificate of title or transfer certificate of title number if [~~within the jurisdiction of~~] registered in the land court[, ~~of the mortgaged property~~];

(4) The description of the default or, if the default is a monetary default, an itemization of the delinquent amount;

(5) The action required to cure the default, including the delinquent amount and the estimated amount of the foreclosing mortgagee's attorney's fees and costs, and all other fees and costs related to the default estimated to be incurred by the foreclosing mortgagee by the deadline date;

(6) The date by which the default must be cured, which shall be at least sixty days after the date of the notice of default and intention to foreclose;

(7) A statement 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 become 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;

(8) The name, address, 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 owner-occupant to elect to participate in any other process as established by law."

2. By amending subsections (d) and (e) to read:

"(d) The notice of default and intention to foreclose shall also include contact information for [~~local~~] approved housing counselors and approved budget and credit counselors.

(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 or the Hawaii rules of civil procedure, as they may be amended from time to time~~];

(2) Any prior or junior creditors who have 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;

(5) The department of commerce and consumer affairs, by filing the notice with the department when required; and

(6) Any other person entitled to receive notice under this part."

SECTION 18. 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 [~~a settlement document,~~] an agreement to resolve the nonjudicial foreclosure, the foreclosing mortgagee shall rescind the notice of default and intention to foreclose. Within fourteen days of the date of the cure or [~~a settlement document reached by the parties,~~] an agreement to resolve the nonjudicial foreclosure, 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, the parties have not reached [~~a settlement document pursuant to part V~~] an agreement to resolve the nonjudicial foreclosure and no report of noncompliance has been issued against the mortgagee under section 667-82, and the mortgagor has not elected to convert the foreclosure to a judicial action, 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 19. Section 667-25, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The public sale of the mortgaged property shall be held only in the county where the mortgaged property is located; 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 in Hilo, for a public sale of mortgaged property located in the [~~eastern portion of the county of Hawaii;~~] districts of Hamakua, North Hilo, South Hilo, or Puna;

(4) At a state facility in the county seat of Maui, for a public sale of mortgaged property located in the county of Maui; and

(5) At a state facility in the county seat of Kauai, for a public sale of mortgaged property located in the county of Kauai;

SECTION 20. 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 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 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 subsection (d) to read:

"(d) The foreclosing mortgagee shall have the public notice of the public sale printed in not less than seven-point font and published in the classified section of a daily newspaper [~~having the largest~~] of general circulation [~~specifically~~] in the [~~county~~ where the mortgaged property is located; provided that for property located in a county with a population of more than one hundred thousand but less than three hundred thousand, the public notice shall be published in the newspaper having the largest general circulation specifically in the western or eastern half of the county, as the case may be, in which the property is located.] real property tax zone in which the mortgaged property is located, as shown on the applicable county real property tax maps kept by each respective county's real property tax assessment division, except for the county of Kalawao which shall be considered its own geographic area for the purposes of this subsection. The public notice shall be published once each week for three consecutive weeks, constituting 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 21. Section 667-28, Hawaii Revised Statutes, is amended by amending subsection (a) 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 [~~announced~~]:

(1) Announced by the foreclosing mortgagee at the date, time, and place of the last scheduled public sale[.]; and

(2) Provided to any other person who is entitled to receive the notice of default under section 667-22."

SECTION 22. Section 667-32, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(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"~~] mortgagee as defined in [~~the power of sale~~ ~~foreclosure law~~;] section 667-1, Hawaii Revised Statutes, conducting a power of sale foreclosure;

(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, which shall include the certificate of title or transfer certificate of title number if registered in the land court, 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:

(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,~~] in accordance with section 667-27(d), Hawaii Revised Statutes, 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 23. Section 667-33, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The affidavit required under section 667-32 and the conveyance document shall be recorded [~~at any time~~] no earlier than ten days after the public sale is held but not later than forty-five days after the public sale is held. The affidavit and the conveyance document may be recorded separately and on different days. After the recordation, the foreclosing mortgagee shall mail or deliver a recorded copy to those persons entitled to receive the public notice of the public sale under section 667-27(c)."

SECTION 24. Section 667-37, Hawaii Revised Statutes, is amended to read as follows:

"§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. The power of sale foreclosure process shall be stayed during the pendency of the circuit court foreclosure action."

SECTION 25. Section 667-41, Hawaii Revised Statutes, is amended to read as follows:

"§667-41 Public information notice requirement. [~~Beginning on September 1, 2011, all~~] (a) 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.] provide the public information notice described in subsection (b) to the public, upon request, and to any applicant submitting a loan application where residential property is required to be used to secure the loan. The notice shall be provided to all applicants and all owners of the residential property (if different from the applicants) within three business days after the submission of a written loan application, or within three business days after the time residential property is required to be used to secure a loan, whether or not there is a written loan application. The purpose of the public information notice is to inform the public, applicants, and others that the financial institutions, mortgagees, lenders, organizations, and other business entities and persons who are authorized under this part to enforce the foreclosure rights in a mortgage, in the event of the borrower's default, have the option of pursuing either a judicial or nonjudicial foreclosure in the manner provided by law.

(b) The public information notice requirement shall be satisfied by the delivery of a separate notice that contains the following wording and is printed in not less than fourteen-point font:

PUBLIC INFORMATION NOTICE PURSUANT TO

HAWAII REVISED STATUTES SECTION 667-41

WHAT IS FORECLOSURE?

This notice informs you regarding a lender's right to foreclose in the event of a default on the loan you have applied for or are considering if your home is used to secure its repayment.

The mortgage agreement or contract that you may enter into states that in the event the amounts due under the loan are not paid when they are due, or for other reasons you do not perform your promises in the note and mortgage, all of which are known as defaults, the lender shall have the option to foreclose the mortgage, which will result in a sale of your home.

The entity or person who holds your mortgage ("Mortgagee") may send you a notice informing you that the Mortgagee is starting foreclosure proceedings. You should not wait for that to happen; take steps to prevent a foreclosure as soon as you are having trouble paying your mortgage. You should contact your lender or your lender's loan servicer, or you may contact a budget and credit counselor or housing counselor, to discuss your situation.

STEP ONE: NOTICE OF DEFAULT. The first step in the foreclosure process is the Mortgagee usually sends you a written notice of default, which occurs after you are past due on your mortgage payment. The Mortgagee will tell you in the notice how much time you have to pay the required amount that is past due and, by paying, will return your loan to good standing.

STEP TWO: PROCEEDING TO FORECLOSURE. If you do not pay the required amount past due by the deadline in the notice of default, the Mortgagee may elect to proceed to collect the balance due on your loan through foreclosure. In Hawaii, there are two types of foreclosures: judicial and nonjudicial.

In a JUDICIAL FORECLOSURE, the Mortgagee files a lawsuit against you in order to obtain a court judgment that you owe the balance due under your loan and to obtain an order to sell the property. The initial legal document you will receive in the lawsuit is called the complaint. You should consult an attorney of your choice who can advise you as to the steps needed to protect your rights. Judicial foreclosure involves the sale of the mortgaged property under the supervision of the court. You will receive notice of the foreclosure case hearings and the sale date and the judicial decision is announced after a hearing in court. The sale of the property must be approved by the court before it can be completed.

In a NONJUDICIAL FORECLOSURE, the process follows the procedures spelled out in Chapter 667 of the Hawaii Revised Statutes and in your mortgage. The nonjudicial procedures allow a Mortgagee to foreclose on and sell the property identified in the mortgage without filing a lawsuit or court supervision. This nonjudicial foreclosure is also called a power of sale foreclosure. The Mortgagee starts the process by giving you a written notice of default and of the Mortgagee's intent to sell the property.

After the required time has elapsed, you will be sent a notice of nonjudicial foreclosure sale, which will tell you the date and location of the sale.

In a NONJUDICIAL foreclosure, if you own an interest in the property you may have the right to participate in the Mortgage Foreclosure Dispute Resolution Program or to convert the nonjudicial foreclosure into a judicial foreclosure. The nonjudicial foreclosure may not proceed during the dispute resolution process or after it has been converted to a judicial foreclosure.

PLEASE NOTE: Even if a judicial or nonjudicial foreclosure has commenced, you may be able to reinstate the loan and keep your home if you pay the delinquent amount then due and the foreclosure expenses that your Mortgagee has incurred. You must contact the Mortgagee as soon as possible to determine whether reinstatement is possible.

STEP THREE: PUBLIC SALE. The sale of a foreclosed home is usually made through a public auction, where the highest bidder who can make a cash deposit of up to 10% of the bid can buy the property. In a judicial foreclosure, the court appoints a third party commissioner to advertise and conduct the sale. In a nonjudicial foreclosure, the Mortgagee advertises and conducts the sale. In both types of sales, the Mortgagee has the right to buy the property by submitting a credit bid based upon the balance owed on the mortgage, so long as its bid is higher than any other bids. If the Mortgagee buys the property, the Mortgagee has the right to re-sell it in a private sale at a later date.

STEP FOUR: DISBURSEMENT OF PROCEEDS; POTENTIAL DEFICIENCY JUDGMENT. After the foreclosure sale is completed, the proceeds are paid out to lien holders, including the Mortgagee, in the order set by law and lastly to you if there are any proceeds left.

In a JUDICIAL FORECLOSURE, the court tells the commissioner whom to pay and how much. If the property did not sell for enough to pay off the balance due under your loan, the Mortgagee has the right to ask the court for a deficiency judgment against you for the difference.

In a NONJUDICIAL FORECLOSURE, the Mortgagee distributes the proceeds from the sale. If the mortgaged property does not sell for enough to pay off the balance due under your loan, the Mortgagee may have the right to file a lawsuit against you to collect the deficiency. In many cases, after a nonjudicial foreclosure, a Mortgagee cannot or will not choose to file a lawsuit for a deficiency.

READ THE NOTE AND MORTGAGE CAREFULLY TO UNDERSTAND WHAT IS REQUIRED AND HOW TO AVOID FORECLOSURE, AND CONSULT WITH AN ATTORNEY REGARDING YOUR LEGAL RIGHTS.

(c) The requirements of this section shall apply only to written loan applications submitted, or to loans where residential property is required to be used as security, after August 31, 2012."

SECTION 26. Section 667-53, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) An owner-occupant of a residential property that is subject to nonjudicial foreclosure under part [I] IA or II may convert the action to a judicial foreclosure provided that:

(1) A petition conforming to section 667-54 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 no later than thirty days after the foreclosure notice is served on the owner-occupant as required by section 667-5 or 667-22;

(2) Within forty-five days of the filing of the petition, all owner-occupants and mortgagors 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; provided further that if this condition is not satisfied, the circuit court action may 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;

(3) Filing a petition pursuant to paragraph (1) shall automatically stay the nonjudicial foreclosure action unless and until the judicial proceeding has been dismissed;

(4) The person filing the petition pursuant to paragraph (1) shall have an affirmative duty to promptly notify the Hawaii attorney who is handling the nonjudicial foreclosure about the filing of the complaint for conversion;

(5) 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

(6) [~~Notwithstanding chapter 607, the~~] The fee for filing the petition shall be [~~not more than $525,~~ ~~of which~~] $250, which shall be deposited into the mortgage foreclosure dispute resolution special fund established under section 667‑86[~~; provided that if the mortgage foreclosure dispute resolution program under part V has not yet been implemented, the filing fee shall be not more than $300~~].

(b) This section shall not apply to foreclosures of association liens that arise under a declaration filed pursuant to chapter 421J, 514A, or 514B."

SECTION 27. Section 667-54, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"[[](a)[]] A petition filed pursuant to section 667‑53 shall contain at a minimum:

(1) A caption setting forth the name of the court, the title of the action, and the file number; provided that the title of the action shall include the names of the filing party as petitioner and the foreclosing party as the respondent;

(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,~~] registered in the land court, of the property subject to the foreclosure action;

(4) A statement identifying all other owner-occupants and mortgagors of the 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 petition on the attorney identified in the foreclosure notice under section 667-5 or 667-22 either by personal delivery at, or by postage prepaid United States mail to, the address of the attorney as set forth in the foreclosure notice under section 667-5 or 667-22; and

(7) A copy of the foreclosure notice that was served on the filing party pursuant to section 667-5 or 667-22 and for which the filing party is seeking to convert to a judicial proceeding."

SECTION 28. Section 667-55, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The foreclosure notice that is served as required under section 667-5 or 667-22 shall include, in addition to the contents required under section 667-5 or 667-22, a statement printed in not less than fourteen-point font as follows:

"If the property being foreclosed is improved and used for residential purposes, an Owner-occupant of the property (defined IN 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 TWO HUNDRED 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 thirty days after service of this notice.

In addition, all owner-OCCUPANTs AND MORTGAGORS of 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 to the judicial process and the jurisdiction of the circuit court within FORTY-FIVE days of the filing of the attached form. Failure to satisfy this condition MAY result in dismissal of the circuit court action WITH PREJUDICE.

An owner-occupant shall promptly notify the Hawaii attorney listed in this notice about the filing of the conversion form.

MORTGAGE FORECLOSURE DISPUTE RESOLUTION MAY BE AVAILABLE IN NONJUDICIAL FORECLOSURE ACTIONS AS AN ALTERNATIVE FOR OWNER-OCCUPANTS ATTEMPTING TO AVOID FORECLOSURE OR TO MITIGATE THE EFFECTS OF FORECLOSURE ON AN OWNER-OCCUPANT. HOWEVER, IF AN OWNER-OCCUPANT FILES FOR CONVERSION, DISPUTE RESOLUTION MAY NOT BE AVAILABLE UNLESS ORDERED BY A JUDGE.

a foreclosing lender who completes a nonjudicial foreclosure of residential property [~~shall~~] COULD be prohibited under hawaii law from pursuing a deficiency judgment against A MORTGAGOR [~~UNLESS THE DEBT IS SECURED BY OTHER COLLATERAL, OR AS OTHERWISE PROVIDED BY LAW~~]. 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."

SECTION 29. Section 667-56, Hawaii Revised Statutes, is amended to read as follows:

"[[]§667-56[]] 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 or a properly noticed postponement;

(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 delivery of the recorded, conformed copy of the conveyance document to a bona fide purchaser who purchases in good faith for more than [~~forty-five~~] sixty days after the completion of the public sale;

(5) Completing nonjudicial foreclosure proceedings during short sale escrows with a bona fide purchaser if the short sale offer is at least [~~five~~] ten per cent greater than the public sale price; provided that escrow is opened within ten days and closed within forty-five days of the public sale; and provided further that a bona fide short sale purchaser shall have priority over any other purchaser;

(6) Completing nonjudicial foreclosure proceedings during bona fide 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 for entry into a federal loan modification program before obtaining a certificate or other documentation confirming that the mortgagor is no longer eligible for, or an active participant of, that federal program."

SECTION 30. Section 667-57, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) Upon initiation of a foreclosure action pursuant to part [I] IA or part II by a foreclosing mortgagee [~~as defined in section 667-21(b)~~], no junior lienholder shall be permitted to initiate or continue a nonjudicial foreclosure pursuant to part [I] IA or part II until the foreclosure initiated by the foreclosing mortgagee has been concluded by a judgment issued by a court pursuant to section [~~667-1,~~] 667-1.5, the recording of an affidavit after public sale pursuant to section 667-5 or 667-33, or the filing of [~~a settlement document~~] an agreement under the mortgage foreclosure dispute resolution provisions of section 667-81.

(b) Upon initiation of a foreclosure action pursuant to part [I] IA or part II by a foreclosing mortgagee [~~as defined in section 667-21(b)~~], no junior lienholder shall be permitted to initiate a nonjudicial foreclosure pursuant to part II during the pendency of a stay pursuant to section 667-83; provided that a junior lienholder may initiate or continue with a nonjudicial foreclosure pursuant to part II if [~~the~~]:

(1) The junior lien foreclosure was initiated before the foreclosure action by the foreclosing mortgagee[.]; or

(2) The junior lienholder is an association and has not been provided notice of the foreclosure action pursuant to sections 667-5.5 or 667-21.5, or has not received written notification of a case opening pursuant to section 667-79."

SECTION 31. Section 667-58, Hawaii Revised Statutes, is amended to read as follows:

"[[]§667-58[]] Valid notice[.]; affiliate statement. (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).

(d) No attorney of a mortgage servicer, foreclosing mortgagee, or lender shall be required to be included in any affiliate statement of a foreclosing mortgagee or lender. No notice or other correspondence made by any attorney for the foreclosing mortgagee or lender shall be required to reference any affiliate statement made by the foreclosing mortgagee or lender. Any notice or other correspondence made by any attorney for a mortgage servicer shall reference, in accordance with subsection (b), the appropriate affiliate statement of the foreclosing mortgagee or lender authorizing the mortgage servicer to act."

SECTION 32. Section 667-59, Hawaii Revised Statutes, is amended to read as follows:

"[[]§667-59[]] Actions and communications with the mortgagor in connection with a foreclosure. A foreclosing mortgagee shall be bound by all agreements, obligations, representations, or inducements made on its behalf by its agents, including but not limited to its employees, representatives, mortgage servicers, or persons authorized by a foreclosing mortgagee or lender pursuant to an affiliate statement recorded in the bureau of conveyances pursuant to section 667-58.

[~~For purposes of this section, "foreclosing mortgagee" has the same meaning as in section 667-21.~~]"

SECTION 33. Section 667-60, Hawaii Revised Statutes, is amended to read as follows:

"[[]§667-60[]] Unfair or deceptive act or practice[.]; transfer of title. (a) Any foreclosing mortgagee who [~~violates~~] engages in any of the following violations of this chapter shall have committed an unfair or deceptive act or practice under section 480-2[.]:

(1) Failing to provide a borrower or mortgagor with, or failing to serve as required, the information required by sections 667-5, 667-22, or 667-55;

(2) Failing to publish, or to post, information on the mortgaged property, as required by sections 667-5, 667-27, or 667-28;

(3) Failing to take any action required by section 667-24 if the default is cured or an agreement is reached;

(4) Engaging in conduct prohibited under section 667-56;

(5) Holding a public sale in violation of section 667-25 or section 667-26;

(6) Failing to include in a public notice of public sale the information required by section 667-27 or section 667-28;

(7) Failing to provide the information required by section 667-41;

(8) With regard to mortgage foreclosure dispute resolution under part V:

(A) Failing to provide notice of the availability of dispute resolution as required by section 667-75;

(B) Participating in dispute resolution without authorization to negotiate a loan modification, or without access to a person so authorized, as required by section 667-80(a)(1);

(D) Completing a nonjudicial foreclosure if a neutral's closing report under section 667-82 indicates that the foreclosing mortgagee failed to comply with requirements of the mortgage foreclosure dispute resolution program;

(9) Completing a nonjudicial foreclosure while a stay is in effect under section 667-83;

(10) Failing to distribute sale proceeds as required by section 667-31;

(11) Making any false statement in the affidavit of public sale required by section 667-32; and

(12) Attempting to collect a deficiency in violation of section 667-38.

(b) Notwithstanding subsection (a), the transfer of title to the purchaser of the property as a result of a foreclosure under this chapter shall only be subject to avoidance under section 480-12 for violations described in subsection (a)(1) to (9) if such violations are shown to be substantial and material; provided that a foreclosure sale shall not be subject to avoidance under section 480-12 for violation of section 667-56(5).

(c) Any action to void the transfer of title to the purchaser of property under this chapter shall be filed in the circuit court of the circuit within which the foreclosed property is situated no later than one hundred eighty days following the recording of the affidavit required by section 667-5 or section 667-32, as applicable. If no such action is filed within the one hundred eighty-day period, then title to the property shall be deemed conclusively vested in the purchaser free and clear of any claim by the mortgagor or anyone claiming by, through, or under the mortgagor."

SECTION 34. Section 667-63, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) A mortgage creditor having a mortgage lien on a time share interest who desires notice that another mortgage creditor having a mortgage lien on the time share interest intends to foreclose and sell the mortgaged time share interest, pursuant to the power of sale under section 667-62, may submit a written request to the mortgagee who is foreclosing or who may foreclose the mortgage by power of sale, asking to receive notice of the mortgagee's intention to foreclose the mortgage under section 667-62. The request for notice:

(1) May be submitted any time after the recordation [~~or filing~~] of the subject mortgage [~~at the bureau of conveyances or the land court, but shall be~~]; provided that the request is submitted prior to completion of publication of notice of the intention to foreclose the mortgage and of the sale of the mortgaged time share interest;

(2) Shall be signed by the mortgage creditor desiring to receive notice, or its authorized representative; and

(3) Shall specify the name and address of the person to whom the notice is to be mailed."

SECTION 35. Section 667-71, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) This part shall not apply to actions by an association to foreclose on a lien for amounts owed to the association that arise under a declaration filed pursuant to chapter 421J, 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."

SECTION 36. Section 667-73, Hawaii Revised Statutes, is amended as follows by amending subsection (c) to read as follows:

"(c) The department is authorized to contract with county, state, or federal agencies, and with private organizations or approved housing counselors or approved budget and credit counselors for the performance of any of the functions of this part. These contracts shall not be subject to chapter 103D or 103F."

SECTION 37. Section 667-74, Hawaii Revised Statutes, is amended to read as follows:

"[[]§667-74[]] Availability of dispute resolution required before foreclosure. Before a public sale may be conducted pursuant to section 667-5 or 667-25 for a residential property that is occupied by an owner-occupant [~~as a primary residence~~], the foreclosing mortgagee [~~shall~~], at the election of the owner-occupant, shall participate in the mortgage foreclosure dispute resolution program under this part to attempt to negotiate an agreement that avoids foreclosure or mitigates damages in cases where foreclosure is unavoidable."

SECTION 38. Section 667-75, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The notice required by subsection (a) shall be printed in not less than fourteen-point font and include:

(1) The name and contact information of the mortgagor and the mortgagee;

(2) The subject property address and legal description, including tax map key number and the certificate of title or transfer certificate of title number if [~~within the land court's jurisdiction;~~] registered in the land court;

(3) The name and contact information of a person or entity authorized to negotiate a loan modification on behalf of the mortgagee;

(4) A statement that the mortgagor shall consult with an approved housing counselor or an approved budget and credit counselor at least thirty days prior to the first day of a scheduled dispute resolution session;

(5) Contact information for all [~~local~~] approved housing counselors;

(6) Contact information for all [~~local~~] approved budget and credit counselors;

(7) A statement that the mortgagor electing to participate in the mortgage foreclosure dispute resolution program shall provide a certification under penalty of perjury to the department that the mortgagor is an owner-occupant of the subject property, including supporting documentation;

(8) A general description of the information that an owner-occupant electing to participate in the mortgage foreclosure dispute resolution program is required to provide to participate in the program as described under section 667-80(c)(2);

(9) A statement that the owner-occupant shall elect to participate in the mortgage foreclosure dispute resolution program pursuant to this part no later than thirty days after the department's mailing of the notice or the right shall be waived."

SECTION 39. Section 667-77, Hawaii Revised Statutes, is amended to read as follows:

"[[]§667-77[]] Notification to mortgagor by department. Within ten days after the mortgagee's filing of a notice of default and intention to foreclose with the department, the department shall mail a written notification by registered or certified mail to the mortgagor that a notice of default and intention to foreclose has been filed with the department. The notification shall inform the mortgagor of an owner-occupant's right to elect to participate in the foreclosure dispute resolution program and shall include:

(1) Information about the mortgage foreclosure dispute resolution program;

(2) A form for an owner-occupant to elect or to waive participation in the mortgage foreclosure dispute resolution program pursuant to this part that shall contain instructions for the completion and return of the form to the department and the department's mailing address;

(3) A statement that the mortgagor electing to participate in the mortgage foreclosure dispute resolution program shall provide a certification under penalty of perjury to the department that the mortgagor is an owner-occupant of the subject property, including a description of acceptable supporting documentation as required by section 667-78(a)(2);

(4) A statement that the owner-occupant shall elect to participate in the mortgage foreclosure dispute resolution program pursuant to this part no later than thirty days after the department's mailing of the notice or the owner-occupant shall be deemed to have waived the option to participate in the mortgage foreclosure dispute resolution program;

(5) A description of the information required under section 667-80(c)(2) that the owner-occupant shall provide to the mortgagee and the neutral assigned to the dispute resolution;

(6) A statement that the owner-occupant shall consult with an approved housing counselor or approved budget and credit counselor at least thirty days prior to the first day of a scheduled dispute resolution session;

(7) Contact information for all [~~local~~] approved housing counselors;

(8) Contact information for all [~~local~~] approved budget and credit counselors; and

(9) Contact information for the department.

The notification shall be mailed to the subject property address and any other addresses for the mortgagor as provided in the mortgagee's notice of dispute resolution under [[]section[]] 667 75 and the foreclosure notice under section 667-5 or 667-22(a)."

SECTION 40. Section 667-78, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) An owner-occupant elects to participate in the mortgage foreclosure dispute resolution program by returning to the department:

(1) The completed program election form provided [~~pursuant~~]:

(A) Pursuant to section 667-77(2); or

(B) On a website maintained by the department;

(2) Certification under penalty of perjury that the mortgagor is an owner-occupant, accompanied with any supporting documentation, including copies of recent utility billing statements, voter registration records, real estate property tax records, or state identification forms; and

(3) A program fee of $300.

The completed form and fees shall be received by the department no later than thirty days after mailing of the department's notification pursuant to section 667‑77."

2. By amending subsection (c) to read:

"(c) If the owner-occupant does not elect to participate in dispute resolution pursuant to this part, the department shall notify the mortgagee within ten days of receiving an election form indicating nonelection or the termination of the thirty-day time period for election. After receiving the department's notification, the mortgagee may proceed with the nonjudicial foreclosure process according to the process provided in part [I] IA or part II of this chapter, as applicable."

SECTION 41. Section 667-79, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) If an owner-occupant elects to participate in the mortgage foreclosure dispute resolution program, the department shall open a dispute resolution case. Within twenty days of receipt of the owner-occupant's election form and fee in accordance with section 667-78, the department shall mail written notification of the case opening to the parties and, if applicable, the condominium or other homeowner association of the project where the owner-occupant's property is located, by registered mail, return receipt requested, which shall include:

(1) Notification of the date, time, and location of the dispute resolution session;

(2) An explanation of the dispute resolution process;

(3) Information about the dispute resolution program requirements; and

(4) Consequences and penalties for noncompliance.

The dispute resolution session shall be scheduled for a date no less than [~~thirty~~] forty and no more than [~~sixty~~] seventy days from the date of the notification of case opening, unless mutually agreed to by the parties and the neutral."

2. By amending subsection (c) to read:

"(c) The written notification of a case opening under this section shall operate as a stay of the foreclosure proceeding in accordance with section 667-83[,] and may be [~~filed or~~] recorded[~~, as appropriate, at the land court or bureau of conveyances~~]."

SECTION 42. Section 667-80, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) The parties to a dispute resolution process conducted under this part shall consist of the owner-occupant or the owner-occupant's representative, and the mortgagee or the mortgagee's representative; provided that:

(1) A 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, at all stages of the dispute resolution process, direct access by telephone, videoconference, or other immediately available contemporaneous telecommunications medium to a person who is so authorized;

(2) The mortgagee and owner-occupant may be represented by [~~counsel;~~] an attorney; and

(3) The owner-occupant may be assisted by an approved housing counselor or approved budget and credit counselor."

2. By amending subsection (c) to read:

"(c) The parties shall comply with all information requests from the department or neutral. No less than fifteen days prior to the first day of the scheduled dispute resolution session:

(1) The mortgagee shall provide to the department and the mortgagor:

(A) A copy of the promissory note, signed by the mortgagor, including any endorsements, allonges, amendments, or riders to the note evidencing the mortgage debt;

(B) A copy of the mortgage document and any amendments, riders, or other documentation evidencing the mortgagee's right of nonjudicial foreclosure and interest in the property including any interest as a successor or assignee; and

(2) The owner-occupant shall provide to the department and the mortgagee:

(A) Documentation showing income qualification for a loan modification, including any copies of pay stubs, W-2 forms, social security or disability income, retirement income, child support income, or any other income that the owner-occupant deems relevant to the owner-occupant's financial ability to repay the mortgage;

(B) Any records or correspondence available which may dispute that the mortgage loan is in default;

(D) Any records or correspondence available that indicate the parties are currently engaged in bona fide negotiations to modify the loan or negotiate a settlement of the delinquency;

(E) Names and contact information for approved housing counselors, approved budget and credit counselors, or representatives of the mortgagee, with whom the owner-occupant may have or is currently working with to address the delinquency; and

(F) Verification of counseling by an approved housing counselor or approved budget and credit counselor."

SECTION 43. Section 667-81, Hawaii Revised Statutes, is amended by amending subsections (b), (c), and (d) to read as follows:

"(b) If, despite the parties' participation in the dispute resolution process and compliance with the requirements of this part, the parties are not able to come to an agreement, the neutral shall file a closing report with the department that the parties met the program requirements. The mortgagee may [~~file or~~] record the report [~~at the bureau of conveyances or the land court, as appropriate~~]. Upon recording of the report pursuant to this subsection, the foreclosure process shall resume along the timeline as it existed on the date before the mortgagor elected dispute resolution, and may proceed as otherwise provided by law. The mortgagee shall notify the mortgagor of the recording date and document number of this report and the deadline date to cure default in an amended foreclosure notice. Nothing in this subsection shall be construed to require the neutral to wait the full sixty days allotted for dispute resolution to determine that the parties were unable to reach an agreement and file a report.

(c) If the parties have complied with the requirements of this part and have reached an agreement, the agreement shall be memorialized in [~~a settlement document~~] writing and signed by the parties or their authorized representatives. [If the parties or their authorized representatives participate in the dispute resolution session in person, the settlement document shall be signed in the presence of the neutral. If any of the parties or their authorized representatives participate in the dispute resolution through telephone, videoconference, or other immediately available contemporaneous telecommunications medium, the settlement document shall be signed and returned to the neutral no later than ten days after the conclusion of the dispute resolution session.] The parties shall be responsible for drafting any agreement reached[~~, and for filing or recording with the land court or the bureau of conveyances, as appropriate,~~] and enforcing the [~~settlement document.~~] agreement. [~~The neutral shall file the settlement document with the neutral's closing report.~~] The [~~settlement document~~] agreement 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 [~~settlement document~~] agreement allows for foreclosure or other transfer of the subject property, the stay of the foreclosure under section 667-83 shall be released upon [~~filing or recording~~] the [~~settlement document~~] recordation of the neutral's closing report [~~with the land court or bureau of conveyances, as appropriate~~]. Thereafter, the office of the assistant registrar of the land court or bureau of conveyances may record a notice of sale or other conveyance document, as appropriate.

(d) If the parties to a dispute resolution process reach an agreement which resolves the matters at issue in the dispute resolution before the first day of the scheduled dispute resolution session scheduled pursuant to this section, the parties shall notify the neutral by that date. The neutral shall thereafter issue a closing report that the parties have reached an agreement prior to the commencement of a dispute resolution session. If the agreement provides for foreclosure, the parties shall memorialize the agreement in a writing signed by both parties [~~and provided to the neutral. Any agreement authorizing foreclosure shall be attached to the neutral's closing report~~]. The parties may [~~file or~~] record the report [~~at the bureau of conveyances or the land court, as appropriate~~]. If the agreement authorizes foreclosure, the stay of the foreclosure under section 667-83 shall be released upon [~~filing or recording with the land court or bureau of conveyances, as appropriate.~~] the recordation of the report. Thereafter, the land court or bureau of conveyances may record a notice of sale or other conveyance document, as appropriate. No fees shall be refunded if the parties come to an agreement prior to a dispute resolution session conducted pursuant to this part."

SECTION 44. Section 667-82, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The neutral's closing report shall indicate if the mortgagee or the owner-occupant failed to comply with requirements of the mortgage foreclosure dispute resolution program.

(1) In the case of the mortgagee, failure to comply with the requirements of the program may consist of:

(A) Participation in dispute resolution without the authority to negotiate a loan modification or without access at all stages of the dispute resolution process to a person who is so authorized;

(B) Failure to provide the required information or documents;

(D) Refusal or failure to pay program fees under section 667-79 in a timely manner.

(2) In the case of the owner-occupant, failure to comply with the requirements of the program may consist of:

(A) Failure to provide the required information or documents; or

(B) Refusal to cooperate or participate in dispute resolution[.];

provided that failure by the mortgagee and the owner-occupant to reach an agreement to resolve the dispute shall not constitute failure by the mortgagee or the owner-occupant to comply with the requirements of the mortgage foreclosure dispute resolution program."

SECTION 45. Section 667-83, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The written notification of a case opening under section 667-79 shall operate as a stay of the foreclosure proceeding[,] and may be [~~filed or~~] recorded[~~, as appropriate, at the land court or bureau of conveyances.~~]; provided that the written notification shall not act as a stay on a foreclosure proceeding by an association unless the association has been provided notice pursuant to sections 667-5.5, 667-21.5, or 667-79."

SECTION 46. Section 667-86, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) All persons who record an affidavit in the office of the assistant registrar of the land court, pursuant to section 501-118, or who record a conveyance document in the bureau of conveyances for an owner-occupied property subject to a nonjudicial power of sale foreclosure shall pay a fee of $100, which shall be deposited into the mortgage foreclosure dispute resolution special fund on a quarterly basis."

PART IV

SECTION 47. Section 421J-A, 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 [~~twelve~~] six 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 [~~$7,200.~~] $3,600."

SECTION 48. 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 $7,000 for each violation[~~; provided that $1,000 of the~~ ~~aggregate~~ ~~fine~~ ~~amount~~ ~~shall be deposited into the mortgage foreclosure dispute resolution special fund established pursuant to section 667-86~~]."

SECTION 49. Section 667-53, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) An owner-occupant of a residential property that is subject to nonjudicial foreclosure under part IA or II may convert the action to a judicial foreclosure provided that:

(3) Filing a petition pursuant to paragraph (1) shall automatically stay the nonjudicial foreclosure action unless and until the judicial proceeding has been dismissed;

(6) The fee for filing the petition shall be $250, which shall be deposited into the [~~mortgage foreclosure dispute resolution special fund established under section 667‑86.~~] compliance resolution fund."

PART V

SECTION 50. Act 48, Session Laws of Hawaii 2011, is amended by amending section 45 to read as follows:

"SECTION 45. This Act shall take effect upon its approval; provided that:

(1) The mortgage foreclosure dispute resolution program established by section 1 of this Act shall be operative no later than October 1, 2011;

(2) Sections 1, 13, and 14 shall be repealed on September 30, 2014, and sections 514A-90(h) and 514B‑146(h), Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day before the effective date of this Act;

(3) Section 10 shall take effect on July 1, 2012;

[~~(4)~~ ~~Section 5 shall be repealed on December 31, 2012;~~]

[~~(5)~~] (4) Section 7 shall be repealed on September 30, 2014, and section 26-9(o), Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day before the effective date of this Act; and

[~~(6)~~] (5) Upon the repeal of section 1, all moneys remaining in the mortgage foreclosure dispute resolution special fund established under section 667-P, Hawaii Revised Statutes, shall be transferred to the compliance resolution fund established under section 26-9(o), Hawaii Revised Statutes."

PART VI

SECTION 51. Section 667-21.6, Hawaii Revised Statutes, is repealed.

["~~[§667-21.6] Foreclosure of association lien; cure of default.~~ If a unit owner notifies the association or its attorney by certified mail return receipt requested or by hand-delivery within five business days following a response to the unit owner's request for the amount to cure a default, together with an estimated amount of the foreclosing association's attorneys' fees and costs, and all other fees and costs related to the default estimated to be incurred by the foreclosing association, that it intends to cure the default, the association shall allow sixty calendar days to the unit owner to cure the default. The association shall not reject a reasonable payment plan for cure of the default; provided that a reasonable plan shall require the owner to pay at a minimum the current maintenance fee and some amount owed on the past due balance. From and after the date that the unit owner gives written notice to the association of its intent to cure the delinquency, any nonjudicial foreclosure of the lien shall be stayed pending the sixty-day period or a longer period that is agreed upon by the parties."]

SECTION 52. Section 667-50, Hawaii Revised Statutes, is repealed.

["[§667-50] Definitions. For purposes of this chapter, "foreclosure notice" shall mean notice of intention to foreclose given pursuant to section 667-5 or notice of default and intention to foreclose prepared pursuant to section 667-22."]

SECTION 53. Section 667-61, Hawaii Revised Statutes, is repealed.

["~~[§667-61]~~ Definitions. For the purposes of sections 667-62 to 667-65, "time share interest" shall have the same meaning as in section 514E-1."]

SECTION 54. Section 667-72, Hawaii Revised Statutes, is repealed.

["~~[§667-72] Definitions. As used in this part:~~

~~"Association" has the same meaning as in sections 514B-3 and 421J-2.~~

~~"Department" means the department of commerce and consumer affairs.~~

~~"Director" means the director of commerce and consumer affairs.~~

"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.

~~"Mortgagee" has the same meaning as the term is defined in section 667-21.~~

~~"Mortgagor" has the same meaning as the term is defined in section 667-21.~~

~~"Neutral" means a person who is a dispute resolution specialist assigned to facilitate the dispute resolution process required by this part.~~

~~"Owner-occupant" means a person, at the time that a notice of default and intention to foreclose is served on the mortgagor under the power of sale:~~

~~(1)~~ ~~Who owns an interest in the residential property, and the interest is encumbered by the mortgage being foreclosed; and~~

SECTION 55. In codifying the new sections added by sections 2 and 3 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 56. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 57. This Act shall take effect upon its approval; provided that:

(1) Section 7 of this Act, amending section 607-5(a) and (b), Hawaii Revised Statutes, and the amendments made to section 667-53(a)(6), Hawaii Revised Statutes, in section 26 of this Act, shall take effect on August 15, 2012;

(2) Section 25 of this Act, amending section 667-41, Hawaii Revised Statutes, shall take effect on September 1, 2012; and

(3) Sections 47, 48, and 49 in part IV of this Act, amending sections 421J-A(h), 454M-10, and 667‑53(a)(6), Hawaii Revised Statutes, shall take effect on September 30, 2014.

INTRODUCED BY:	_____________________________

Report Title:

Mortgage Foreclosures; Homeowner Association Liens and Assessments

Description:

Implements the 2011 recommendations of the mortgage foreclosure task force to address various issues relating to the mortgage foreclosures law and related issues affecting homeowner association liens and the collection of unpaid assessments.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

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Bill Text: HI SB2429 | 2012 | Regular Session | Introduced

Hawaii Senate Bill 2429 (Prior Session Legislation)

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