STAND. COM. REP. NO. 99

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 884
                                        




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Government Operations and Housing, to
which was referred S.B. No. 884 entitled: 

     "A BILL FOR AN ACT RELATING TO FINANCING OF AFFORDABLE
     HOUSING,"

begs leave to report as follows:

     The purpose of this measure is to require financial
institutions to provide refinancing of a mortgage loan if the
current market interest rate is at least one and one half per
cent lower than the existing mortgage rate.  

     Testimony in favor was received from the Hawaii Association
of Realtors.  Testimony in favor of the intent of this measure
was received from the Department of Commerce and Consumer
Affairs.  Testimony opposed to this measure was received from the
Hawaii Bankers Association, Hawaii Credit Union League, Hawaii
League of Savings Institutions, and Mortgage Bankers Association
of Hawaii.

     Your Committee finds that in these hard economic times,
foreclosures and short sales have increased because of the
inability of borrowers to afford their monthly mortgage payments.
Additionally, your Committee finds that currently, financial
institutions are refusing to allow mortgagees to refinance their
mortgage if their income is too low, whereby, monthly payments
remain high, and disposable income is lowered even further.  


 
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                                   STAND. COM. REP. NO. 99
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     Your Committee finds that refinancing a mortgage loan will
provide for a decrease in monthly mortgage payments, which in
return will increase the borrowers' ability to pay monthly
mortgage payments and increase monthly disposable income.
Consequently, the State's economic recovery will increase as
well.

     Your Committee recognizes the concerns the banking industry
has with this measure, therefore, your Committee is passing this
measure to the next committee for further discussion and
dialogue.

     As affirmed by the record of votes of the members of your
Committee on Government Operations and Housing that is attached
to this report, your Committee is in accord with the intent and
purpose of S.B. No. 884 and recommends that it pass Second
Reading and be referred to the Committee on Commerce and Consumer
Protection.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Government
                                   Operations and Housing,



                                   ______________________________
                                   ROD TAM, Chair

 
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