Bill Text: HI SB332 | 2025 | Regular Session | Introduced
Bill Title: Relating To Foreclosures.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2025-01-15 - Introduced and passed First Reading. [SB332 Detail]
Download: Hawaii-2025-SB332-Introduced.html
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THE SENATE |
S.B. NO. |
332 |
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THIRTY-THIRD LEGISLATURE, 2025 |
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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:
SECTION 1. The legislature finds that natural disasters and other economic crises can often lead homeowners to default on their mortgage payments, resulting in a wave of foreclosures. Previous foreclosure crises have resulted in the replacement of owner-occupied homes with investor-owned rentals, prolonged vacancies, and unmaintained residential properties. As climate related crises become more intense and frequent, and as housing cost burdens increase for low- to moderate-income homeowners, the legislature believes it is necessary to ensure that foreclosed homes are not lost to second homebuyers or residential investors.
Accordingly, the purpose of this Act is to:
(1) Prohibit sellers of foreclosed homes in a nonjudicial foreclosure from bundling properties at a public sale for sale to a single buyer and require each foreclosed home to be sold separately; and
(2) Allow tenants, families, city and state government, affordable housing nonprofits and community land trusts forty-five days to match or beat the best public sale bid to buy the property.
SECTION 2. Chapter 667, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:
"§667-A Bundled
properties; prohibition. Notwithstanding any other law to the
contrary, for the public sale of mortgaged property under the power of sale foreclosure
or alternate power of sale foreclosure process under this chapter, no mortgagee
shall bundle mortgaged properties for the purpose of public sale and each mortgaged
property shall be bid on separately, unless the deed or mortgage otherwise
requires.
§667-B Eligible bidder; subsequent bid. (a)
Notwithstanding any other law to the contrary, the public sale of mortgaged
property under a power of sale foreclosure or alternate power of sale process under
this chapter shall not be deemed final until the earliest of the following:
(1) Fifteen days
after the public sale, unless at least one or more eligible bidders submits a:
(A) Subsequent
bid that is equal to or exceeds the amount of the latest and highest bid of the
successful bidder under section 667-29 or 667-98; or
(B) Nonbinding
written notice of intent to place a subsequent bid.
The bid or written notice of
intent to place a subsequent bid shall be sent to the mortgagee by certified
mail, overnight delivery, or another method that allows for confirmation of the
delivery date and shall be received by the mortgagee no later than fifteen days
after the public sale; or
(2) Forty-five days
after the public sale; provided that during the forty-five-day period, an
eligible bidder may submit a subsequent bid in an amount that is equal to or
exceeds the last and highest bid by the successful bidder under section 667-29
or 667-98.
(b)
If an eligible bidder submits a subsequent bid that is equal to or
exceeds the amount of the last and highest bid by the successful bidder under
section 667-29 or 667-98, the eligible bidder shall be the final successful
bidder and make the nonrefundable downpayment required under
section 667-29 or 667-98.
(c) For purposes of this section:
"Eligible bidder"
means:
(1) An eligible
tenant buyer;
(2) A prospective
owner-occupant;
(3) A nonprofit
corporation whose primary activity is the development and preservation of
affordable housing;
(4) A community
land trust; or
(5) A State or
county government department or agency.
"Eligible tenant buyer"
means a natural person who at the time of a public sale is:
(1) Occupying the mortgaged
property as their primary residence;
(2) Occupying the mortgaged
property under a rental or lease agreement; and
(3) Not the
mortgagor or the child, spouse, or parent of the mortgagor.
"Prospective
owner-occupant" means a natural person who presents to the mortgagee an
affidavit stating that they:
(1) Will occupy the
mortgaged property as their primary residence within sixty days of the deed
being recorded;
(2) Will maintain
their occupancy in the mortgaged property for at least one year;
(3) Are not the
mortgagor or the child, spouse, or parent of the mortgagor; and
(4) Are not acting
as the agent of any other person or entity in purchasing the mortgaged
property."
SECTION 3. Section 667-29, Hawaii Revised Statutes, is amended to read as follows:
"§667-29 Authorized bidder; successful
bidder. Any person, including the
foreclosing mortgagee, [shall be authorized to] may bid for the
mortgaged property at the public sale and to purchase the mortgaged
property. 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 mortgaged property is declared by the
foreclosing mortgagee 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 foreclosing mortgagee of [not] no less than
ten per cent of the highest successful bid price[.]; provided that if
the successful bidder loses the bid to an eligible bidder pursuant to section
667-B, the downpayment shall be refunded.
If the successful bidder is the foreclosing mortgagee or any other
mortgagee having a recorded lien on the mortgaged property before the
recordation of the notice of default and intention to foreclose under section
667-23, the downpayment requirement may be satisfied by offset and a credit bid
up to the amount of the mortgage debt."
SECTION 4. Section 667-98, Hawaii Revised Statutes, is amended to read as follows:
"[[]§667-98[]] Authorized bidder; successful bidder. Any person, including the association, [shall
be authorized to] may 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] no less than ten per cent
of the highest successful bid price[.]; provided that if the
successful bidder loses the bid to an eligible bidder pursuant to section
667-B, the downpayment shall be refunded.
If the successful bidder is the association, the downpayment requirement
may be satisfied by offset and a credit bid up to the amount of the lien debt."
SECTION 5. In codifying the new sections added by section 2 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 6. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.
SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 8. This Act shall take effect upon its approval.
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INTRODUCED BY: |
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Report Title:
Foreclosure; Nonjudicial Foreclosure; Bundled Properties; Public Sale; Prohibition; Eligible Bidders; Subsequent Bids
Description:
Prohibit sellers of foreclosed homes from bundling properties at a public sale and requires each foreclosed home to be sold separately. Specifies that the sale of a foreclosed property is not final until either fifteen days after the public sale or forty-five days if an eligible bidder submits a subsequent bid or written notice of intent to submit a subsequent bid.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
