SB332 revises Hawaii’s nonjudicial, power-of-sale foreclosure process to give certain occupants and housing-focused entities a chance to buy foreclosed homes before the sale becomes final. The bill prohibits mortgagees from bundling multiple mortgaged properties together for a public foreclosure sale, unless the underlying deed or mortgage requires otherwise, and requires each property to be bid on separately.
The bill also creates a post-sale “subsequent bid” period. A foreclosure sale is not final until the earliest of 15 days after the public sale, if no eligible bidder acts, or 45 days after the sale. During that period, an eligible bidder may submit a higher qualifying bid or a notice of intent to bid. Eligible bidders include tenant buyers living in the home, prospective owner-occupants, affordable-housing nonprofits, community land trusts, and state or county agencies. If an eligible bidder prevails, the original successful bidder’s downpayment is refunded.
Impact
SB332 amends Chapter 667 of the Hawaii Revised Statutes by adding new foreclosure provisions and revising the rules for successful bidders at public foreclosure sales. It changes the timing and finality of foreclosure sales, creates a statutory right for certain eligible bidders to outbid the initial purchaser, and requires separate bidding on each mortgaged property in a public sale. The bill also adjusts the downpayment rules so that a successful bidder who loses to an eligible bidder receives a refund, while mortgagee credit-bid rules remain available for foreclosing lenders and junior lienholders.
Sentiment
The bill appears to have broad support in the Legislature, with unanimous committee votes at each recorded stage and no recorded dissent in the available voting history. The findings and purpose section frame the measure as a response to natural disasters, economic crises, housing instability, and the risk that foreclosed homes will be converted into investor-owned rentals or left vacant. Overall, the discussion reflected a policy preference for preserving owner-occupancy and affordable housing opportunities after foreclosure.
Contention
The main policy tension in SB332 is between protecting homeowners, tenants, and community-based buyers on one hand, and preserving the speed and certainty of foreclosure sales on the other. The bill extends the post-sale process by up to 45 days and allows eligible bidders to replace the initial winning bidder, which may be viewed by lenders and purchasers as adding delay and uncertainty. Another potential point of contention is the restriction on bundling properties at sale, which could limit foreclosure-sale flexibility, though the bill preserves an exception where the deed or mortgage already requires bundling.