REPORT TITLE:
Non-judicial Foreclosures

DESCRIPTION:
Removes redundant language; requires that public notice of public
sale be mailed or delivered rather than "sent"; requires
foreclosing mortgagee to prepare public information regarding
foreclosure process to be provided with first notice of default;
and requires OCP to approve public information. (SD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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                                     S.B. NO.           S.D. 2
                                                        
                                                        

 

RELATING TO FORECLOSURES.



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

 1      SECTION 1.  The purpose of this Act is to clarify the
 
 2 alternate power of sale foreclosure process.  The term
 
 3 "guarantor" is omitted in the notice of default provision, as it
 
 4 is already included in the definition of "borrower."  The
 
 5 requirement that a public notice of public sale be "sent" is
 
 6 clarified to require that the public notice be mailed or
 
 7 delivered.  The office of consumer protection is required to
 
 8 approve any public information materials used by a foreclosing
 
 9 mortgagee.  Finally, a foreclosing mortgagee is required to
 
10 provide the mortgagor with the public information with the first
 
11 notice of default, or pending the office of consumer protection's
 
12 approval of the public information, a copy of chapter 667, part
 
13 II, Hawaii Revised Statutes.
 
14      SECTION 2.  Section 667-22, Hawaii Revised Statutes, is
 
15 amended by amending subsection (a) to read as follows:
 
16      "(a)  When the mortgagor or the borrower has breached the
 
17 mortgage agreement, and when the foreclosing mortgagee intends to
 
18 conduct a power of sale foreclosure under this part, the
 
19 foreclosing mortgagee shall prepare a written notice of default
 
20 addressed to the mortgagor[, the borrower, and any guarantor.]
 
21 and all borrowers.  The notice of default shall state:
 
22      (1)  The name and address of the current mortgagee;
 
23      (2)  The name and last known address of the mortgagor[, the
 
24           borrower, and any guarantor;] and all borrowers;
 
25      (3)  The address or a description of the location of the
 
26           mortgaged property, and the tax map key number of the
 
27           mortgaged property;
 
28      (4)  The description of the default, and if the default is a
 
29           monetary default, an itemization of the delinquent
 
30           amount shall be given;
 
31      (5)  The action that must be taken to cure the default,
 
32           including the amount to cure the default, together with
 
33           the estimated amount of the foreclosing mortgagee's
 
34           attorney's fees and costs, and all other fees and costs
 
35           estimated to be incurred by the foreclosing mortgagee
 
36           related to the default by the deadline date;
 
37      (6)  The date by which the default must be cured, which
 
38           deadline date shall be at least sixty days after the
 
39           date of the notice of default; 
 
40      (7)  That if the default is not cured by the deadline date
 
41           stated in the notice of default, the entire unpaid
 
42           balance of the moneys owed to the mortgagee under the
 
43           mortgage agreement will be due, that the mortgagee
 
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 1           intends to conduct a power of sale foreclosure to sell
 
 2           the mortgaged property at a public sale without any
 
 3           court action and without going to court, and that the
 
 4           mortgagee or any other person may acquire the mortgaged
 
 5           property at the public sale; and
 
 6      (8)  The name, address in the State, and the telephone
 
 7           number in the State of the person representing the
 
 8           foreclosing mortgagee.
 
 9      The foreclosing mortgagee shall include with the first
 
10 notice of default a copy of the public information material
 
11 prepared pursuant to section 667-41.  If the public information
 
12 material is not yet prepared by the foreclosing mortgagee and
 
13 approved by the office of consumer protection pursuant to section
 
14 667-41, the mortgagee shall include with the first notice of
 
15 default a copy of part II, chapter 667."
 
16      SECTION 3.  Section 667-31, Hawaii Revised Statutes, is
 
17 amended by amending subsection (a) to read as follows:
 
18      "(a)  After the purchaser completes the purchase by paying
 
19 the full purchase price and the costs for the purchase, the
 
20 mortgaged property shall be conveyed to the purchaser by a
 
21 conveyance document.  The conveyance document shall be in a
 
22 recordable form and shall be signed by the foreclosing mortgagee
 
23 in the foreclosing mortgagee's name[.  The mortgagor or borrower
 

 
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 1 shall sign the conveyance document on his or her own behalf.] and
 
 2 as attorney-in-fact for the mortgagor.  The foreclosing mortgagee
 
 3 is appointed under this section as the attorney-in-fact for the
 
 4 mortgagor to sign the conveyance document."
 
 5      SECTION 4.  Section 667-32, Hawaii Revised Statutes, is
 
 6 amended by amending subsection (b) to read as follows:
 
 7      "(b)  The recitals in the affidavit required under
 
 8 subsection (a) may, but need not, be substantially in the
 
 9 following form:
 
10      "(1) I am duly authorized to represent or act on behalf of
 
11                                (name of mortgagee) ("foreclosing
 
12           mortgagee") regarding the following power of sale
 
13           foreclosure.  I am signing this affidavit in accordance
 
14           with the alternate power of sale foreclosure law
 
15           (Chapter 667, Part II, Hawaii Revised Statutes);
 
16      (2)  The foreclosing mortgagee is a "foreclosing mortgagee"
 
17           as defined in the power of sale foreclosure law;
 
18      (3)  The power of sale foreclosure is of a mortgage made by
 
19                                (name of mortgagor) ("mortgagor"),
 
20           dated                      >       
 
21           (bureau of conveyances or office of the assistant
 
22           registrar of the land court) as                
 
23           (recordation information).  The mortgaged property is
 

 
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 1           located at:                       (address or
 
 2           description of location) and is identified by tax map
 
 3           key number:            .  The legal description of the
 
 4           mortgaged property is attached as Exhibit "A".  The
 
 5           name of the borrower, if different from the mortgagor,
 
 6           is                      ("borrower");
 
 7      (4)  Pursuant to the power of sale provision of the
 
 8           mortgage, the power of sale foreclosure was conducted
 
 9           as required by the power of sale foreclosure law.  The
 
10           following is a summary of what was done:
 
11           (A)  A notice of default was served on the mortgagor,
 
12                the borrower, and the following person:
 
13                                    .  The notice of default was
 
14                served on the following date and in the following
 
15                manner:                      ;
 
16           (B)  The date of the notice of default was           
 
17                (date).  The deadline in the notice for curing the
 
18                default was            (date), which deadline date
 
19                was at least sixty days after the date of the
 
20                notice;
 
21           (C)  The notice of default was recorded before the
 
22                deadline date in the                 (bureau of
 
23                conveyances or office of the assistant registrar
 

 
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 1                of the land court).  The notice was recorded on
 
 2                                       .  A
 
 3                copy of the recorded notice is attached as Exhibit
 
 4                "1";
 
 5           (D)  The default was not cured by the deadline date in
 
 6                the notice of default;
 
 7           (E)  A public notice of the public sale was initially
 
 8                published in the classified section of the
 
 9                                    , a daily newspaper of general
 
10                circulation in the county where the mortgaged
 
11                property is located, once each week for three
 
12                consecutive weeks on the following dates:
 
13                               .  A copy of the affidavit of
 
14                publication for the last public notice of the
 
15                public sale is attached as Exhibit "2".  The date
 
16                of the public sale was            (date).  The
 
17                last publication was not less than fourteen days
 
18                before the date of the public sale;
 
19           (F)  The public notice of the public sale was [sent]
 
20                mailed or delivered to the mortgagor, to the
 
21                borrower, to the state director of taxation, to
 
22                the director of finance of the county where the
 
23                mortgaged property is located, and to the
 

 
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 1                following:                      .  The public
 
 2                notice was sent on the following dates and in the
 
 3                following manner:                      .  Those
 
 4                dates were after the deadline date in the notice
 
 5                of default, and those dates were at least sixty
 
 6                days before the date of the public sale;
 
 7           (G)  The public notice of the public sale was posted on
 
 8                the mortgaged property or on such other real
 
 9                property of which the mortgaged property is a part
 
10                on            (date).  That date was at least
 
11                sixty days before the date of the public sale;
 
12           (H)  Two public showings (open houses) of the mortgaged
 
13                property were held (or were not held because the
 
14                mortgagor did not cooperate);
 
15           (I)  A public sale of the mortgaged property was held
 
16                on a business day during business hours on:
 
17                                      (time), at the
 
18                following location:                      .  The
 
19                highest successful bidder was                     
 
20                (name) with the highest successful bid price of
 
21                $          ; and
 
22           (J)  At the time the public sale was held, the default
 
23                was not cured and there was no circuit court
 

 
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 1                foreclosure action pending in the circuit where
 
 2                the mortgaged property is located; and
 
 3 [[](5)[]] This affidavit is signed under penalty of perjury."
 
 4      SECTION 5.  Section 667-41, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "[[]§667-41[]]  Public information requirement.  All
 
 7 financial institutions, mortgagees, lenders, business entities
 
 8 and  organizations without limitation, and persons, who intend to
 
 9 use the power of sale foreclosure under this part, under the
 
10 conditions required by this part, shall also develop
 
11 informational materials to educate and inform borrowers and
 
12 mortgagors.  [These materials shall be made available to the
 
13 public, including the borrowers at the time of application for a
 
14 mortgage or loan, or other contract containing a power of sale
 
15 foreclosure provision.]  These materials, among other things,
 
16 shall inform the borrower that the financial institution and
 
17 other business entities and persons who are authorized under this
 
18 part to exercise the power of sale foreclosure, in the event of
 
19 the borrower's default, have the option of pursuing either a
 
20 judicial or nonjudicial foreclosure as provided by law.  These
 
21 informational materials shall fully and completely explain these
 
22 remedies.  Any public information prepared pursuant to this
 
23 section shall be approved by the office of consumer protection."
 

 
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 1      SECTION 6.  Statutory material to be repealed is bracketed.
 
 2 New statutory material is underscored.
 
 3      SECTION 7.  This Act shall take effect upon its approval.