STAND. COM. REP. NO. 673

Honolulu, Hawaii

, 2005

RE: S.B. No. 1140

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred S.B. No. 1140 entitled:

"A BILL FOR AN ACT RELATING TO FINANCIAL SERVICE LOAN COMPANIES,"

begs leave to report as follows:

The purpose of this measure is to authorize additional loan fees that may be charged by financial services loan companies.

The Hawaii Financial Services Association testified in support of this measure. The Department of Commerce and Consumer Affairs and Hawaii Bankers Association submitted comments on the measure.

Currently, financial services loan companies are limited in the fees they may charge in connection with a loan transaction to those specifically authorized by statute or rule. This measure proposes to remove this restriction, and additionally, to specifically authorize the imposition of fees for a dishonored check received for payment on a loan, real property tax services, wire transfers, and administrative costs related to the processing of non-real estate and open-end consumer loans.

Your Committee has amended this measure:

(1) To retain the current law's prohibition on a financial services loan company charging a fee other than one specifically authorized by statute or rule:

(2) To allow a financial services loan company to charge a returned check fee, up to $20, for all loan transactions, not just consumer loans, subject to certain requirements and restrictions;

(3) By deleting language authorizing the imposition of a $75 administrative fee for the processing of non-real estate consumer loans and open-end consumer loans, and otherwise amending section 412:9-305(b), Hawaii Revised Statutes, relating to permissible charges on an open-end consumer loan;

(4) By repealing language requiring consumer loan fees to be bona fide and reasonable and not unfair or deceptive, but establishing a limit on the total fees that may be charged on a consumer mortgage loan of one per cent of the principal amount of the loan;

(5) To prohibit a third party or affiliate or subsidiary of a financial service loan company that receives loan fees from the company for rendering loan-related services from rebating or refunding money to the financial services loan company;

(6) To expand the category of permissible consumer loan-related fees to include fees for real property tax services and wire transfers;

(7) By adding a savings clause provision;

(8) By changing the effective date to July 1, 2005; and

(9) By making technical, stylistic amendments.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1140, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1140, S.D. 1, and be placed on the calendar for Third Reading.

 

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Housing,

____________________________

RON MENOR, Chair