STAND. COM. REP. NO. 912

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 1267
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committees on Consumer Protection and Commerce and
Judiciary and Hawaiian Affairs, to which was referred H.B. No.
1267 entitled: 

     "A BILL FOR AN ACT RELATING TO FORECLOSURES,"

beg leave to report as follows:

     The purpose of this bill is to make some general amendments
to the alternate power of sale foreclosure process in Part II,
Chapter 667, Hawaii Revised Statutes, in order to streamline the
foreclosure process.  Among other things, this bill:

     (1)  Makes the open house requirement optional;

     (2)  Deletes the requirement that the mortgagor sign the
          conveyance document transferring title after the
          foreclosure auction;

     (3)  Clarifies that public notices be "mailed or delivered"
          rather than "sent"; and

     (4)  Deletes the public information requirement for lenders.

     The Office of Consumer Protection (OCP) of the Department of
Commerce and Consumer Affairs objected to those portions of the
bill that make the open house requirement an option for the
mortgagee and that delete the public information requirement. One
individual also objected to these parts of the bill.


 
 
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                                 Page 2

 
     Hawaii Financial Services Association (HFSA) strongly
supported the bill, but suggested amendments to the public
information requirement, following the Senate's amendments to the
companion bill.  The Hawaii Council of Associations of Apartment
Owners (HCAAO) supported passage of the bill with the HFSA
proposed amendments.  

     AARP testified in opposition to this bill and in favor of
Senate amendments to the companion bill, which included retaining
the open house requirement and providing OCP-approved public
information materials with the first notice of default.  OCP
testified that it cannot be the validating agency and should not
be required to approve the public information materials, but that
OCP would be available to consult with lenders in developing such
materials.

     The Community Associations Institute testified in support of
the bill, but requested an amendment to allow the law to become
effective for loans executed immediately after passage of the
bill into law, rather than be applicable only to loans executed
after July 1, 1999.  HCAAO and HFSA also expressed a preference
that the application of the law become effective immediately upon
approval.

     Title Guaranty of Hawaii, Security Title Corporation, Hawaii
Credit Union League, First American Long & Melone Title Company,
Ltd., one law firm, and three attorneys involved with foreclosure
actions testified generally in support of the bill.

     Your Committees find that streamlining and clarifying the
alternate power of sale procedures will benefit all parties
affected by the foreclosure process, including condominium
associations and non-delinquent owners.  

     Upon further consideration of all the concerns and suggested
amendments, your Committees have amended the bill by:

     (1)  Restoring the open house requirements;

     (2)  Restoring the public information requirement in section
          667-41, Hawaii Revised Statutes, but amended with
          language requiring that a foreclosing mortgagee using
          the power of sale foreclosure procedure shall prepare
          public information materials, and further describing
          what should be included in the materials;

     (3)  Providing that a foreclosing mortgagee shall include a
          copy of the public information material with the first
          notice of default;

 
                                 STAND. COM. REP. NO. 912
                                 Page 3

 

     (4)  Deleting the section setting forth the power of sale
          language to be included in the mortgage instrument;

     (5)  Repealing section 667-42, Hawaii Revised Statutes, so
          that the law will apply to existing loans documented
          with power of sale foreclosure provisions, rather than
          only to loans executed after July 1, 1999;

     (6)  Leaving blank the effective date of this Act, to assure
          further discussions as the bill progresses; and
     
     (7)  Making technical, nonsubstantive amendments for
          purposes of clarity, consistency and style.

     As affirmed by the records of votes of the members of your
Committees on Consumer Protection and Commerce and Judiciary and
Hawaiian Affairs that are attached to this report, your
Committees are in accord with the intent and purpose of H.B. No.
1267, as amended herein, and recommend that it pass Second
Reading in the form attached hereto as H.B. No. 1267, H.D. 1, and
be placed on the calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Consumer
                                   Protection and Commerce and
                                   Judiciary and Hawaiian
                                   Affairs,

                                   
                                   
                                   
                                   
______________________________     ______________________________
PAUL T. OSHIRO, Chair              RON MENOR, Chair