Hawaiian Homes Commission

Authorizes the department of hawaiian home lands to establish, by
administrative rule, the interest rate on loans from the hawaiian
home loan fund and other loan sources.  Lowers the interest rate
on such loans from two and one-half percent to zero percent.

HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 2
TWENTIETH LEGISLATURE, 2000                                S.D. 1
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
20           made to an agricultural or aquacultural cooperative

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

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                                     H.B. NO.           H.D. 2
                                                        S.D. 1

 1           or annual as may be determined by the department in
 2           each case.  The term of any loan shall not exceed
 3           thirty years.  Payments of any sum in addition to the
 4           required installments, or payment of the entire amount
 5           of the loan, may be made at any time within the term of
 6           the loan.  All unpaid balances of principal shall bear
 7           interest at the rate of [two and one-half per cent a
 8           year for loans made directly from the Hawaiian home
 9           loan fund, or at the rate of] two and one-half per cent
10           or higher as established by [law for other loans,] rule
11           adopted by the department, payable periodically or upon
12           demand by the department, as the department may
13           determine.  The payment of any installment due shall be
14           postponed in whole or in part by the department for
15           such reasons as it deems good and sufficient and until
16           such later date as it deems advisable.  Such postponed
17           payments shall continue to bear interest on the unpaid
18           principal at the rate established for the loan.
19      (3)  In the case of the death of a lessee the department
20           shall, in any case, permit the successor or successors
21           to the tract to assume the contract of loan subject to
22           paragraph (1).  In case of the cancellation of a lease
23           by the department or the surrender of a lease by the

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                                     H.B. NO.           H.D. 2
                                                        S.D. 1

 1           lessee, the department may, at its option declare all
 2           installments upon the loan immediately due and payable,
 3           or permit the successor or successors to the tract to
 4           assume the contract of loan subject to paragraph (1).
 5           The department may, in such cases where the successor
 6           or successors to the tract assume the contract of loan,
 7           waive the payment, wholly or in part, of interest
 8           already due and delinquent upon the loan, or postpone
 9           the payment of any installment thereon, wholly or in
10           part, until such later dates as it deems advisable.
11           Such postponed payments shall, however, continue to
12           bear interest on the unpaid principal at the rate
13           established for the loan.  Further, the department may,
14           if it deems it advisable and for the best interests of
15           the lessees, write off and cancel, wholly or in part,
16           the contract of loan of the deceased lessee, or
17           previous lessee, as the case may be, where such loans
18           are delinquent and deemed uncollectible.  Such write
19           off and cancellation shall be made only after an
20           appraisal of all improvements and growing crops or
21           improvements and aquaculture stock, as the case may be,
22           on the tract involved, such appraisal to be made in the
23           manner and as provided for by section 209(a).  In every

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                                     H.B. NO.           H.D. 2
                                                        S.D. 1

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

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                                     H.B. NO.           H.D. 2
                                                        S.D. 1

 1           borrower is a party.  Failure to execute such an
 2           assignment when requested by the department shall be
 3           sufficient ground for cancellation of the borrower's
 4           lease or interest therein."
 5      SECTION 2.  Statutory material to be repealed is bracketed.
 6 New statutory material is underscored.
 7      SECTION 3.  This Act shall take effect upon its approval by
 8 the governor of the State of Hawaii with the consent of the
 9 United States.