Hawaii Amends Lending and Foreclosure Regulations
by: Nicole Legere
Changes to Foreclosure Law
Hawaii amended Chapter 667 by adding a provision intended to govern the postponement or cancellation of a public sale subsequent to foreclosure proceedings. Under this new provision, the notice of cancellation or postponement must be announced by the court appointed commissioner at the date, time, and place of the last scheduled public sale. Also, notice must be given to the mortgagor, borrower, foreclosing mortgagee, and any prior or junior creditors who have a recorded lien on the mortgaged property. Notice must also be given to any party named in the foreclosure action, and any prospective bidder who requested notice of the public sale.
When a public sale is postponed the court appointed commissioner shall have a new public notice of sale published. The new notice must state that it is a notice of postponed sale. The public sale shall not take place until at least 14 days after the publication of the new notice. Notice of the new sale must be given to the mortgagor, borrower, the foreclosing mortgagee, and any other person entitled to receive notice.
These changes are effective immediately.
Foreclosure Actions by Junior Lienholders
A change in section 667-37 of the Hawaii Revised Statutes now allows junior lienholders, who were previously prohibited, to commence or continue with a non-judicial foreclosure. A specific exception was added for condo associations, which are facing various issues related to foreclosures including being unable to collect maintenance fees and properties falling into disrepair.
Under this exception, an association is permitted to initiate or continue a non-judicial foreclosure until a court issued judgment, a recording of affidavit after public sale, or the filing of an agreement under the mortgage foreclosure dispute resolution provisions.
The state intends to preserve the right of owner occupants to participate in Hawaii’s dispute resolution process with the foreclosing mortgagee. If unit has been the mortgagor’s primary residence for a continuous period of not less than 200 days prior to the date on which the foreclosure notice is served, and the mortgagee subsequently foreclosure its lien on the same property, the mortgagor is deemed an owner-occupant. As such, they retain the right to require the mortgagee to participate in the dispute resolution process notwithstanding the association’s foreclosure.
These changes were effective July 1, 2013.
Escrow Accounts
An amendment to section 449-7.5 (subsection C) addresses changes of the escrow officer in charge of escrow depositories. At least fifteen days prior to a change in the designated escrow officer the commissioner must be informed in writing of the change. If unable to provide fifteen days of notice than the notice must be given within five days after the change. When a new escrow officer is appointed the commissioner must be informed in writing. The writing should contain the experience, integrity, and competency of the new officer.
Additionally, a statutory fee of 5,000 dollars has been established for the transfer and change of control of an escrow depository license.
This amendment is effective immediately.
Licensing Fees
Licensing application and renewal fees have been raised for individuals and companies that conduct mortgage loan origination activities. The individual initial application fee which was previously $500.00 dollars has now been raised to $600.00 dollars. The renewal fees have also been raised from $300.00 dollars to $350.00 dollars.
In the case of a sole proprietor mortgage loan originator the following fees have been established:
- An initial application fee of $35.00 dollars
- An annual renewal fee of $35.00 dollars
- A reinstatement fee of $100.00 dollars
- A late fee of $25.00 dollars per day
- A criminal background check fee of $35.00 dollars, or of an amount determined by the commissioner
Mortgage servicing companies shall pay an initial application fee of $600.00 dollars, as well as an annual renewal fee of the same amount, in order to maintain a valid mortgage loan originator license. These companies are also subject to the following fees:
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A reinstatement fee of $100.00 dollars
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A late fee of $25.00 dollars per day
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A criminal background check fee of $35.00 dollars, or of an amount determined by the commissioner
These updates are effective immediately.
About the Author:
Nicole Legere, Esq., is Assistant Vice President and Senior Counsel at Bankers Advisory, Inc. She is a graduate of the University of Massachusetts at Amherst and earned her Juris Doctor at Roger Williams School of Law. Nicole is admitted to the Bar in Massachusetts and New York. She can be reached at nicole@bankersadvisory.com
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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