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. (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        777
THE SENATE                              S.B. NO.           S. D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

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
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 addressed to the mortgagor[, the borrower, and any guarantor.]
 
 2 and all borrowers.  The notice of default shall state:
 
 3      (1)  The name and address of the current mortgagee;
 
 4      (2)  The name and last known address of the mortgagor[, the
 
 5           borrower, and any guarantor;] and all borrowers;
 
 6      (3)  The address or a description of the location of the
 
 7           mortgaged property, and the tax map key number of the
 
 8           mortgaged property;
 
 9      (4)  The description of the default, and if the default is a
 
10           monetary default, an itemization of the delinquent
 
11           amount shall be given;
 
12      (5)  The action that must be taken to cure the default,
 
13           including the amount to cure the default, together with
 
14           the estimated amount of the foreclosing mortgagee's
 
15           attorney's fees and costs, and all other fees and costs
 
16           estimated to be incurred by the foreclosing mortgagee
 
17           related to the default by the deadline date;
 
18      (6)  The date by which the default must be cured, which
 
19           deadline date shall be at least sixty days after the
 
20           date of the notice of default; 
 
21      (7)  That if the default is not cured by the deadline date
 
22           stated in the notice of default, the entire unpaid
 
23           balance of the moneys owed to the mortgagee under the
 

 
Page 4                                                     777
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           mortgage agreement will be due, that the mortgagee
 
 2           intends to conduct a power of sale foreclosure to sell
 
 3           the mortgaged property at a public sale without any
 
 4           court action and without going to court, and that the
 
 5           mortgagee or any other person may acquire the mortgaged
 
 6           property at the public sale; and
 
 7      (8)  The name, address in the State, and the telephone
 
 8           number in the State of the person representing the
 
 9           foreclosing mortgagee.
 
10      The foreclosing mortgagee shall include with the first
 
11 notice of default a copy of the public information material
 
12 prepared pursuant to section 667-41.  If the public information
 
13 material is not yet prepared by the foreclosing mortgagee and
 
14 approved by the office of consumer protection pursuant to section
 
15 667-41, the mortgagee shall include with the first notice of
 
16 default a copy of part II, chapter 667."
 
17      SECTION 3.  Section 667-32, Hawaii Revised Statutes, is
 
18 amended by amending subsection (b) to read as follows:
 
19      "(b)  The recitals in the affidavit required under
 
20 subsection (a) may, but need not, be substantially in the
 
21 following form:
 
22      "(1) I am duly authorized to represent or act on behalf of
 
23                                (name of mortgagee) ("foreclosing
 

 
Page 5                                                     777
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           mortgagee") regarding the following power of sale
 
 2           foreclosure.  I am signing this affidavit in accordance
 
 3           with the alternate power of sale foreclosure law
 
 4           (Chapter 667, Part II, Hawaii Revised Statutes);
 
 5      (2)  The foreclosing mortgagee is a "foreclosing mortgagee"
 
 6           as defined in the power of sale foreclosure law;
 
 7      (3)  The power of sale foreclosure is of a mortgage made by
 
 8                                (name of mortgagor) ("mortgagor"),
 
 9           dated           , and recorded in the                
 
10           (bureau of conveyances or office of the assistant
 
11           registrar of the land court) as                
 
12           (recordation information).  The mortgaged property is
 
13           located at:                       (address or
 
14           description of location) and is identified by tax map
 
15           key number:            .  The legal description of the
 
16           mortgaged property is attached as Exhibit "A".  The
 
17           name of the borrower, if different from the mortgagor,
 
18           is                      ("borrower");
 
19      (4)  Pursuant to the power of sale provision of the
 
20           mortgage, the power of sale foreclosure was conducted
 
21           as required by the power of sale foreclosure law.  The
 
22           following is a summary of what was done:
 
23           (A)  A notice of default was served on the mortgagor,
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1                the borrower, and the following person:
 
 2                                    .  The notice of default was
 
 3                served on the following date and in the following
 
 4                manner:                      ;
 
 5           (B)  The date of the notice of default was           
 
 6                (date).  The deadline in the notice for curing the
 
 7                default was            (date), which deadline date
 
 8                was at least sixty days after the date of the
 
 9                notice;
 
10           (C)  The notice of default was recorded before the
 
11                deadline date in the                 (bureau of
 
12                conveyances or office of the assistant registrar
 
13                of the land court).  The notice was recorded on
 
14                           (date) as document no.           .  A
 
15                copy of the recorded notice is attached as Exhibit
 
16                "1";
 
17           (D)  The default was not cured by the deadline date in
 
18                the notice of default;
 
19           (E)  A public notice of the public sale was initially
 
20                published in the classified section of the
 
21                                    , a daily newspaper of general
 
22                circulation in the county where the mortgaged
 
23                property is located, once each week for three
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1                consecutive weeks on the following dates:
 
 2                               .  A copy of the affidavit of
 
 3                publication for the last public notice of the
 
 4                public sale is attached as Exhibit "2".  The date
 
 5                of the public sale was            (date).  The
 
 6                last publication was not less than fourteen days
 
 7                before the date of the public sale;
 
 8           (F)  The public notice of the public sale was [sent]
 
 9                mailed or delivered to the mortgagor, to the
 
10                borrower, to the state director of taxation, to
 
11                the director of finance of the county where the
 
12                mortgaged property is located, and to the
 
13                following:                      .  The public
 
14                notice was sent on the following dates and in the
 
15                following manner:                      .  Those
 
16                dates were after the deadline date in the notice
 
17                of default, and those dates were at least sixty
 
18                days before the date of the public sale;
 
19           (G)  The public notice of the public sale was posted on
 
20                the mortgaged property or on such other real
 
21                property of which the mortgaged property is a part
 
22                on            (date).  That date was at least
 
23                sixty days before the date of the public sale;
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           (H)  Two public showings (open houses) of the mortgaged
 
 2                property were held (or were not held because the
 
 3                mortgagor did not cooperate);
 
 4           (I)  A public sale of the mortgaged property was held
 
 5                on a business day during business hours on:
 
 6                           (date), at            (time), at the
 
 7                following location:                      .  The
 
 8                highest successful bidder was                     
 
 9                (name) with the highest successful bid price of
 
10                $          ; and
 
11           (J)  At the time the public sale was held, the default
 
12                was not cured and there was no circuit court
 
13                foreclosure action pending in the circuit where
 
14                the mortgaged property is located; and
 
15 [[](5)[]] This affidavit is signed under penalty of perjury."
 
16      SECTION 4.  Section 667-41, Hawaii Revised Statutes, is
 
17 amended to read as follows:
 
18      "[[]667-41[]]  Public information requirement.  All
 
19 financial institutions, mortgagees, lenders, business entities
 
20 and  organizations without limitation, and persons, who intend to
 
21 use the power of sale foreclosure under this part, under the
 
22 conditions required by this part, shall also develop
 
23 informational materials to educate and inform borrowers and
 

 
Page 9                                                     777
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 mortgagors.  [These materials shall be made available to the
 
 2 public, including the borrowers at the time of application for a
 
 3 mortgage or loan, or other contract containing a power of sale
 
 4 foreclosure provision.]  These materials, among other things,
 
 5 shall inform the borrower that the financial institution and
 
 6 other business entities and persons who are authorized under this
 
 7 part to exercise the power of sale foreclosure, in the event of
 
 8 the borrower's default, have the option of pursuing either a
 
 9 judicial or nonjudicial foreclosure as provided by law.  These
 
10 informational materials shall fully and completely explain these
 
11 remedies.  Any public information prepared pursuant to this
 
12 section shall be approved by the office of consumer protection."
 
13      SECTION 5.  Statutory material to be repealed is bracketed.
 
14 New statutory material is underscored.
 
15      SECTION 6.  This Act shall take effect upon its approval.