Hawaii SB 1135: RELATING TO FORECLOSURES.

Bill Text

THE SENATE
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII
JAN 17
S.B. NO. (3S
2025
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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
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HIHVHHHINOAAHI

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S.B. NO. (5
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(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:
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(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
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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:
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(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 bo
authorized to]