STAND. COM. REP. NO. 279

Honolulu, Hawaii

, 2005

RE: H.B. No. 639

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Consumer Protection & Commerce and Judiciary, to which was referred H.B. No. 639 entitled:

"A BILL FOR AN ACT RELATING TO ESCROW DEPOSITORIES,"

beg leave to report as follows:

The purpose of this bill is to amend and update chapter 449, Hawaii Revised Statutes (HRS), the law that governs the licensing and regulation of escrow depositories. Major amendments made by this bill include:

(1) Permitting limited liability companies (LLC's) to be licensed as escrow depositors, and permitting conversion from corporate to LLC form, or vice versa;

(2) Strengthening the confidentiality provisions of the statute;

(3) Enabling the Division of Financial Institutions (DFI) to more closely scrutinize the financial responsibility of proposed directors and officers of an applicant for a license;

(4) Increasing the current escrow depository bond requirement of $100,000, by an additional amount of $5,000 per branch;

(5) Requiring escrow depositories that are eligible to deposit escrow funds in sweep accounts to disclose that such accounts are not federally insured;

(6) Addressing a significant gap in the statute by establishing procedures for the appointment of a receiver for an escrow depository and describing the powers of the receiver; and

(7) Replacing and simplifying the current application process for voluntary escrow depository terminations.

Testimony in support of this bill was received from the Commissioner of Financial Institutions of the Department of Commerce and Consumer Affairs. The Hawaii Association of Realtors testified in opposition to the bill and suggested amendments.

Your Committees find that a comprehensive update of this statute has not been made since the law was enacted in 1967. Your Committees further find that amendments must be made to recognize changes in the industry in recent years, reduce regulatory burden, and provide more flexibility in supervising the industry while continuing to ensure adequate protection for consumers.

Your Committees have amended this bill by providing an effective date of July 1, 2099, in the interest of promoting additional dialogue on concerns raised during the public hearing. Technical, nonsubstantive amendments have also been made for purposes of clarity, consistency, and style.

As affirmed by the records of votes of the members of your Committees on Consumer Protection & Commerce and Judiciary that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 639, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 639, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committees on Consumer Protection & Commerce and Judiciary,

 

____________________________

SYLVIA LUKE, Chair

____________________________

KENNETH HIRAKI, Chair