Bill Text: HI SCR181 | 2019 | Regular Session | Introduced


Bill Title: Requesting The Director Of Commerce And Consumer Affairs To Convene A Mortgage Foreclosure Fraud Task Force To Develop Recommendations To Improve Mortgage Fraud Protections For Consumers.

Spectrum: Partisan Bill (Democrat 9-0)

Status: (Introduced) 2019-03-25 - The committee on CPH deferred the measure. [SCR181 Detail]

Download: Hawaii-2019-SCR181-Introduced.html

THE SENATE

S.C.R. NO.

181

THIRTIETH LEGISLATURE, 2019

 

STATE OF HAWAII

 

 

 

 

 

SENATE CONCURRENT

RESOLUTION

 

 

Requesting the director of commerce and consumer Affairs to convene a MORTGAGE foreclosure fraud task force to develop recommendations to improve mortgage fraud protections for consumers.

 

 


     WHEREAS, the foreclosure crisis and Great Recession of the late 2000s and early 2010s resulted in approximately nine million families losing their homes to foreclosure or short sale between 2006 and 2014; and

 

     WHEREAS, the evidence of the long-lasting effects of the foreclosure crisis are still being felt today, including:

 

     (1)  The labor-force participation rate, which measures the share of working-age adults who are employed or looking for employment, dropped precipitously during the recession and remains at a decades-long low of sixty-two percent;

 

     (2)  The average household income of the bottom twenty percent of Americans fell over $500 between 2006 and 2016;

 

     (3)  In 2016, there were 400,000 fewer homeowners than in 2006 even though the population grew by eight million households over the same time period, which constitutes a drop in homeownership of almost six percent; and

 

     (4)  The median net worth for households remains more than thirty percent below the 2007 level; and

 

     WHEREAS, the United States Department of Justice cited fraud as a significant contributing factor to the foreclosure crisis; and

 

     WHEREAS, before and during the foreclosure crisis, fraud took various forms, including falsifying borrowers' incomes on loan documents to qualify them for larger loans than the borrowers could afford, inflating appraisal values, failure to report second liens, and misrepresentations during sales of securitized mortgages; and

 

     WHEREAS, according to the Federal Bureau of Investigation, eighty percent of mortgage fraud for profit cases involved collusion or collaboration with industry insiders, with individual buyers often the innocent victims; and

 

     WHEREAS, the frauds that contributed to the economic ruin of millions of Americans were illegal when they occurred but, due to lax oversight and enforcement, the behavior went unchecked throughout the housing boom of the early 2000s and ultimately resulted in the foreclosure crisis; and

 

     WHEREAS, the State is again experiencing a housing boom, with Hawaii home prices rising 26.4 percent between 2011 and 2014, and continued the upward trend, hitting historic highs in 2018; and

 

     WHEREAS, the time to examine the strength of the State's foreclosure fraud laws and determine whether or not these laws are being followed is now, when preventative measures can still be taken, and not after the next recession or housing market crash; now, therefore,

 

     BE IT RESOLVED by the Senate of the Thirtieth Legislature of the State of Hawaii, Regular Session of 2019, the House of Representatives concurring, that the Director of Commerce and Consumer Affairs is requested to convene a mortgage foreclosure fraud task force to develop recommendations to improve mortgage fraud protections; and

 

     BE IT FURTHER RESOLVED that the task force is requested to:

 

     (1)  Review existing federal and state laws and practices in place to protect home loan borrowers in Hawaii from fraudulent mortgage practices;

 

     (2)  Assess the state of enforcement of existing laws and regulations;

 

     (3)  Examine areas under existing law that could be strengthened to better protect homeowners' rights, including:

 

          (A)  Dual track foreclosure;

 

          (B)  Implementation of a single point of contact for homeowners during loan servicing, modifications, short sales, or deeds-in-lieu;

 

          (C)  Tenant rights in cases where a home is being foreclosed on;

 

          (D)  Publication of notices of public sales of foreclosed properties;

 

          (E)  Robosigning and other violations of notarial law;

 

          (F)  The adequacy of time periods provided to homeowners to cure any default or alleged default;

 

          (G)  The role of the Bureau of Conveyances in reviewing, processing, handling, and distributing conveyance documents;

 

          (H)  Violations of due process arising from a mortgagee's failure to provide timely and adequate information to homeowners subject to foreclosure;

 

          (I)  The adequacy of tools to prosecute mortgage fraud; and

 

          (J)  How to eliminate deficiency judgements in all foreclosures, short sales, and deeds-in-lieu; and

 

     BE IT FURTHER RESOLVED that the task force is requested to develop recommendations to improve fraud protections through increased statutory protections and adoption of stronger mortgage servicing and foreclosure best practices; and

 

     BE IT FURTHER RESOLVED that the task force is also requested to review other states that have adopted a homeowners bill of rights, such as California, and develop a similar Hawaii Homeowner Bill of Rights; and

 

     BE IT FURTHER RESOLVED that the mortgage foreclosure fraud to task force is requested to consist of the following:

 

     (1)  The Director of Commerce and Consumer Affairs or the Director's designee, who shall serve as chairperson;

 

     (2)  The Attorney General or the Attorney General's designee;

 

     (3)  Registrar of the Bureau of Conveyances or the Registrar's designee;

 

     (4)  A student or faculty member of the University of Hawaii William S. Richardson School of Law;

 

     (5)  A representative of the Hawaii Friends of Restorative Justice;

 

     (6)  A representative of the mortgage services industry, to be selected by the Director of Commerce and Consumer Affairs;

 

     (7)  A real estate broker licensed to practice in Hawaii, to be selected by the Director of Commerce and Consumer Affair;

 

     (8)  An attorney who represents mortgage lenders in foreclosure actions, to be selected by the Director of Commerce and Consumer Affairs;

 

     (9)  An attorney who represents borrowers in foreclosure actions, to be selected by the Director of Commerce and Consumer Affairs; and

 

    (10)  Others, including members of the public, as recommended by the working group; and

 

     BE IT FURTHER RESOLVED that the task force is requested to submit a report of its findings and recommendations, including any proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2020; and

 

     BE IT FURTHER RESOLVED that the task force be dissolved on June 30, 2020; and

 

     BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Director of Commerce and Consumer Affairs, Attorney General, Registrar of the Bureau of Conveyances, Dean of the University of Hawaii William S. Richardson School of Law, and President of Hawaii Friends of Restorative Justice.

 

 

 

 

OFFERED BY:

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Report Title: 

Foreclosure Fraud Task Force

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