Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred H.B. No. 785, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to expressly authorize the foreclosure of a time share interest under a power of sale.

Marriott International, Inc., Cendant Timeshare Resort Group, Inc., Fairfield Resorts, Inc., American Resort Development Association-Hawaii Chapter, and Pahio Resorts, Inc. testified in support of this measure. The Department of Commerce and Consumer Affairs presented comments.

Your Committee finds that the use of nonjudicial foreclosure proceedings under chapter 667, Hawaii Revised Statutes (chapter 667), has enabled time share owner associations to efficiently and economically remove a seriously delinquent time share owner. This measure clarifies the mortgage foreclosures law by establishing express authorization in chapter 667 for the foreclosure of time share interests under a power of sale.

Under this measure, a mortgagee may provide notice of foreclosure and sale to a mortgagor by publication and posting. Your Committee further finds that since most time share owners do not live in the county in which the time share property is located, notice by publication and posting may not provide adequate notice to and protection for owners. Accordingly, your Committee has amended this measure to also require a mortgagee to give notice:

Additionally, this measure has been amended by inserting an effective date of January 1, 2006, and by making technical amendments for clarification and to reflect preferred drafting style.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 785, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 785, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.