STAND. COM. REP. NO. 1694

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 777
                                     S.D. 2
                                     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 S.B. No.
777, S.D. 2, 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 (HRS), to clarify this
process.  Among other things, this bill:

     (1)  Omits the term "guarantor" in the notice of default
          provision, since it is already included in the
          definition of "borrower";

     (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";

     (4)  Requires that the public information material used by a
          foreclosing mortgagee be approved by the Office of
          Consumer Protection; and


 
 
 
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     (5)  Requires that, with the first notice of default, the
          foreclosing mortgagee provide the mortgagor with public
          information material approved by the Office of Consumer
          Protection, or, pending preparation of and approval of
          the public information material, provide a copy of
          Chapter 667, Part II, HRS.

     The Office of Consumer Protection (OCP) of the Department of
Commerce and Consumer Affairs recommended several amendments,
including incorporating the public information language set forth
in H.B. No. 1267, H.D 1.  The Hawaii Financial Services
Association (HFSA), Security Title Corporation, and the Hawaii
Land Title Association supported passage of this bill, but urged
that its contents be replaced with text from H.B. No. 1267, H.D.
1 or from H.B. No. 1267, H.D. 1, S.D.1.  The Hawaii Credit Union
League supported the measure and generally agreed with certain
comments of HFSA.

     The Mortgage Bankers Association of Hawaii, the Community
Associations Institute, the Hawaii Council of Associations of
Apartment Owners, and the Hawaii Bankers Association supported
the bill, but recommended that it be amended to incorporate the
revisions made in H.B. No. 1267, H.D. 1, S.D. 1. 

     The Hawaii Association of Realtors supported the intent of
this measure, and urged that your Committee not adopt the
shortened time periods reflected in H.B. No. 1267, H.D. 1, S.D.
1.  Testimony supporting the bill was received from an individual
and numerous attorneys, who also provided comments and
recommendations for amendments.                

     Your Committees have amended the bill to replace its
contents with that of the House companion, H.B. No. 1267, H.D. 1,
which was passed out of your Committees earlier this session.
The contents of H.B. No. 1267, H.D. 1 (the House bill) differs
substantively from the bill as received, with respect to the
following:

     (1)  The House bill contains no requirement that the Office
          of Consumer Protection approve the public information
          material used by a foreclosing mortgagee;

     (2)  In amending section 667-41, HRS, which requires that
          the foreclosing mortgagee prepare public information
          material, the House bill more specifically describes
          what information, at a minimum, should be included in
          that material;


 
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     (3)  Like the Senate bill, the House bill provides that a
          foreclosing mortgagee shall include a copy of the
          public information material with the first notice of
          default, but unlike the Senate bill, the House bill
          does not provide the alternative of using a copy of
          Part II, Chapter 667, HRS, pending preparation and OCP
          approval of the material; and

     (4)  The House bill repeals section 667-42, HRS, so that the
          law will apply to existing loans documented with power
          of sale foreclosure provisions, rather than apply only
          to loans executed after July, 1999.

     Your Committees have further amended the bill by leaving the
effective date blank.

     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 S.B. No.
777, S.D. 2, as amended herein, and recommend that it pass Second
Reading in the form attached hereto as S.B. No. 777, S.D. 2, 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