Hawaiian Homes Commission

Authorizes the Department of Hawaiian Home Lands to adjust the
interest rate on loans made from the Hawaiian home loan fund.
(HB2501 HD1)

HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  Section 215 of the Hawaiian Homes Commission
 2 Act, 1920, as amended, is amended to read as follows:
 3      "215.  Conditions of loans.  Except as otherwise provided
 4 in section 213(c), each contract of loan with the lessee or any
 5 successor or successors to the lessee's interest in the tract or
 6 with any agricultural, mercantile, or aquacultural cooperative
 7 association composed entirely of lessees shall be held subject to
 8 the following conditions whether or not stipulated in the
 9 contract loan:
10      (1)  At any time, the outstanding amount of loans made to
11           any lessee, or successor or successors in interest, for
12           the repair, maintenance, purchase, and erection of a
13           dwelling and related permanent improvements shall not
14           exceed fifty per cent of the maximum single residence
15           loan amount allowed in Hawaii by the United States
16           Department of Housing and Urban Development's Federal
17           Housing Administration (FHA), for the development and
18           operation of a farm, ranch, or aquaculture operation
19           shall not exceed $50,000, except that when loans are

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                                     H.B. NO.           H.D. 1

 1           made to an agricultural or aquacultural cooperative
 2           association for the purposes stated in section
 3           214(a)(4), the loan limit shall be determined by the
 4           department on the basis of the proposed operations and
 5           the available security of the association, and for the 
 6           development and operation of a mercantile establishment
 7           shall not exceed the loan limit determined by the
 8           department on the basis of the proposed operations and
 9           the available security of the lessee or of the
10           organization formed and controlled by lessees; provided
11           that upon the death of a lessee leaving no relative
12           qualified to be a lessee of Hawaiian home lands, or the
13           cancellation of a lease by the department, or the
14           surrender of a lease by the lessee, the department
15           shall make the payment provided for by section 209(a),
16           the amount of any such payment shall be considered as
17           part or all, as the case may be, of any such loan to
18           the successor or successors, without limitation as to
19           the above maximum amounts; provided further that in
20           case of the death of a lessee, or cancellation of a
21           lease by the department, or the surrender of a lease by
22           the lessee, the successor or successors to the tract
23           shall assume any outstanding loan or loans thereon, if

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                                     H.B. NO.           H.D. 1

 1           any, without limitation as to the above maximum amounts
 2           but subject to paragraph (3).
 3      (2)  The loans shall be repaid in periodic installments,
 4           such installments to be monthly, quarterly, semiannual,
 5           or annual as may be determined by the department in
 6           each case.  The term of any loan shall not exceed
 7           thirty years.  Payments of any sum in addition to the
 8           required installments, or payment of the entire amount
 9           of the loan, may be made at any time within the term of
10           the loan.  All unpaid balances of principal shall bear
11           interest at the rate of [two and one-half per cent a
12           year for loans made directly from the Hawaiian home
13           loan fund, or at the rate of two and one-half] zero
14           per cent or higher as established by [law for other
15           loans,] rule adopted by the department, payable
16           periodically or upon demand by the department, as the
17           department may determine.  The payment of any
18           installment due shall be postponed in whole or in part
19           by the department for such reasons as it deems good and
20           sufficient and until such later date as it deems
21           advisable.  Such postponed payments shall continue to
22           bear interest on the unpaid principal at the rate
23           established for the loan.
24      (3)  In the case of the death of a lessee the department

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                                     H.B. NO.           H.D. 1

 1           shall, in any case, permit the successor or successors
 2           to the tract to assume the contract of loan subject to
 3           paragraph (1).  In case of the cancellation of a lease
 4           by the department or the surrender of a lease by the
 5           lessee, the department may, at its option declare all
 6           installments upon the loan immediately due and payable,
 7           or permit the successor or successors to the tract to
 8           assume the contract of loan subject to paragraph (1).
 9           The department may, in such cases where the successor
10           or successors to the tract assume the contract of loan,
11           waive the payment, wholly or in part, of interest
12           already due and delinquent upon the loan, or postpone
13           the payment of any installment thereon, wholly or in
14           part, until such later dates as it deems advisable.
15           Such postponed payments shall, however, continue to
16           bear interest on the unpaid principal at the rate
17           established for the loan.  Further, the department may,
18           if it deems it advisable and for the best interests of
19           the lessees, write off and cancel, wholly or in part,
20           the contract of loan of the deceased lessee, or
21           previous lessee, as the case may be, where such loans
22           are delinquent and deemed uncollectible.  Such write
23           off and cancellation shall be made only after an

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                                     H.B. NO.           H.D. 1

 1           appraisal of all improvements and growing crops or
 2           improvements and aquaculture stock, as the case may be,
 3           on the tract involved, such appraisal to be made in the
 4           manner and as provided for by section 209(a).  In every
 5           case, the amount of such appraisal, or any part
 6           thereof, shall be considered as part or all, as the
 7           case may be, of any loan to such successor or
 8           successors, subject to paragraph (1).
 9      (4)  No part of the moneys loaned shall be devoted to any
10           purpose other than those for which the loan is made.
11      (5)  The borrower or the successor to the borrower's
12           interest shall comply with such other conditions, not
13           in conflict with any provision of this Act, as the
14           department may stipulate in the contract of loan.
15      (6)  The borrower or the successor to the borrower's
16           interest shall comply with the conditions enumerated in
17           section 208, and with section 209 of this Act in
18           respect to the lease of any tract.
19      (7)  Whenever the department shall determine that a borrower
20           is delinquent in the payment of any indebtedness to the
21           department, it may require such borrower to execute an
22           assignment to it, not to exceed, however, the amount of
23           the total indebtedness of such borrower, including the

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                                     H.B. NO.           H.D. 1

 1           indebtedness to others the payment of which has been
 2           assured by the department of all moneys due or to
 3           become due to such borrower by reason of any agreement
 4           or contract, collective or otherwise, to which the
 5           borrower is a party.  Failure to execute such an
 6           assignment when requested by the department shall be
 7           sufficient ground for cancellation of the borrower's
 8           lease or interest therein."
 9      SECTION 2.  Statutory material to be repealed is bracketed.
10 New statutory material is underscored.
11      SECTION 3.  This Act shall take effect upon its approval by
12 the governor of the State of Hawaii with the consent of the
13 United States.