Honolulu, Hawaii



RE:    S.B. No. 862

       S.D. 1




Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii




     Your Committee on Education and Housing, to which was referred S.B. No. 862 entitled:




begs leave to report as follows:


     The purpose of this measure is to facilitate the collection of the shared appreciation equity lien, deferred sales price lien, and excess proceeds in lieu of any buyback, imposed by the State on the sale of affordable housing properties that received assistance from the Hawaii Housing Finance and Development Corporation ("Corporation"), which are undergoing foreclosure.


     Testimony in support of this measure was submitted by one state and one county agency.  Copies of written testimony are available for review on the Legislature's website.


     Your Committee finds that the sale of affordable housing properties sponsored or assisted by the Hawaii Housing Finance and Development Corporation is subject to a buyback restriction and a shared appreciation equity lien.  The Corporation has also provided deferred sales price liens to assist low or moderate income homebuyers in purchasing a first home, and upon the sale or transfer of a Corporation-assisted home, the shared appreciation equity is collected and deposited into the dwelling unit revolving fund, and can be used to support the development of additional affordable housing projects.


     Your Committee further finds that recently, the Corporation has not been receiving sufficient prior notice of foreclosure proceedings, and the lack of sufficient advance notice makes it difficult to prepare to bid at foreclosure sales.  This measure would require notice of intent to foreclose forty-five days before commencement of the foreclosure and allow the Corporation sufficient time to conduct due diligence and, when appropriate, prepare to bid at the foreclosure sale.


     In addition, passage of this bill will protect the Corporation's lien rights in the event of foreclosure, and enable recovery of funds to support the development of additional housing.


     Your Committee has amended this measure by making technical amendments for the purpose of clarity and to conform to the preferred drafting style.


     As affirmed by the record of votes of the members of your Committee on Education and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 862, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 862, S.D. 1, and be referred to the Committee on Ways and Means.


Respectfully submitted on behalf of the members of the Committee on Education and Housing,