Committees pass HB 1715 with amendments clarifying resale restrictions and foreclosure exception

Senate joint committees voted on March 19 to pass HB 1715 HD1 with amendments intended to clarify buyer-eligibility, buyback restrictions and what happens to permanently affordable restrictions after foreclosure.

The committees took several changes suggested by the Hawaii Housing Finance and Development Corporation (HHFDC) and the attorney general. Amendments include allowing ownership of other real property for one year after purchasing a permanently affordable unit and restoring the general ban on owning another home outside that one-year window. The changes also limit the program’s resale and occupancy restrictions to certain projects developed before a specified date.

The committees adopted suggested language clarifying that restrictions on permanently affordable units “shall be automatically extinguished and shall not attach in subsequent transfers of title when a mortgage holder or other party becomes the owner of any permanently affordable unit pursuant to a mortgage foreclosure, foreclosure under power of sale, or a conveyance in lieu of foreclosure after foreclosure action is commenced.” The committee report will note mortgage-banker concerns and HHFDC’s statement that its 10-year buyback and shared-appreciation restrictions are secured by restrictive covenants and have not historically clouded title.

Following discussion, the chair recommended passing HB 1715 with amendments; the recommendation was adopted. Committees recorded affirmative votes and closed the session. The committee did not set implementation dates in the hearing record beyond the statutory language changes adopted in the amendments.