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Representative Shimizu warns bill that shifts condo lien priority could unsettle mortgage market
Summary
Representative Shimizu urged colleagues to reject a bill that she said would remove longstanding lien protections for banks and place condo associations ahead of mortgage holders, citing opposition from mortgage trade groups and warning of potential instability in the secondary mortgage market.
Representative Sharon Shimizu spoke on the House floor in opposition to a measure the transcript links to Standing Committee Report 1822 (SB 2169 SD1 HD1), saying the bill “strikes the existing HRS statute regarding the excess rental income formula entirely and establishes a new priority order putting the condo associations ahead of bank mortgage obligations.”
Shimizu said the most significant change would eliminate lien-holder protections banks have relied on, arguing the shift could “create instability in the secondary mortgage market and make it more difficult for Hawaii residents to secure affordable home loans.” She noted opposing testimony from the Mortgage Bankers Association of Hawaii and the Hawaii Bankers Association and added that the Attorney General did not provide testimony on the measure, which she said raised additional concern about unanticipated legal and cost-of-living consequences.
The clerk’s floor record shows multiple members registered ‘no’ votes on related entries for the standing committee reports tied to the Senate bills; the transcript lists Representatives Amato, Yamamoto, Peruso and Poepoe in one recorded exception and a further set of recorded “no” votes including Representatives Alcos, Garcia, Gideon, Matsumoto, Moriwaki, Shimizu and Reyes Oda in a second passage of the reading. Despite the recorded objections, the measures taken up on the consent/third-reading calendar were declared to pass third reading on the floor.
The bill’s change to the order of priority for excess rental income and lien treatment — as described on the floor — was the focal point of Shimizu’s remarks. She urged colleagues to consider the potential for litigation and higher housing costs that could follow if mortgage-holder protections are removed. The House proceeded with routine business after the discussion; no formal Attorney General response or additional floor rebuttal to the specific legal concerns is recorded in the transcript.
What happens next: The House recorded passage of the associated Senate bills on third reading in the session’s consent actions. Any further procedural steps (conference, governor’s action) are not addressed in the transcript.
