REPORT TITLE:
Escrow Depositories


DESCRIPTION:
Recognizes the confidentiality of portions of escrow depository
company applications and records.  Revises procedures to
voluntarily terminate escrow depository operations.  Allows the
Commissioner of Financial Institutions to establish new fees by
rule and to waive fees for good cause.  (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2807
THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO ESCROW DEPOSITORIES.


BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Chapter 449, Hawaii Revised Statutes, is amended
 
 2 by adding a new section to be appropriately designated and to
 
 3 read as follows:
 
 4      "449-    Confidential portion of application or records.
 
 5 No material contained in any application or record shall be made
 
 6 available to the public if it is determined by the commissioner
 
 7 to be confidential.  Information that may be considered
 
 8 confidential includes, but is not limited to the following:
 
 9      (1)  Commercial or financial information, the disclosure of
 
10           which would, or would be likely to, result in
 
11           substantial competitive harm to the applicant or escrow
 
12           depository;
 
13      (2)  Information, the disclosure of which could seriously
 
14           affect the financial condition of the applicant or
 
15           escrow depository; or
 
16      (3)  Personal information, the release of which would, or
 
17           would be likely to, constitute an unwarranted invasion
 
18           of privacy."
 
19      SECTION 2.  Chapter 449, Hawaii Revised Statutes, is amended
 
20 by adding a new section to be appropriately designated and to
 

 
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 1 read as follows:
 
 2      "449-    Termination of escrow depository operations.  (a)
 
 3 A solvent escrow depository whose capital is not impaired and
 
 4 which has not received a notice of charges and proposed
 
 5 suspension or revocation order pursuant to section 449-17 may
 
 6 cease its business and surrender its license in the manner
 
 7 prescribed as follows:
 
 8      (1)  The board of directors shall adopt a resolution
 
 9           approving a plan to cease activity for which a license
 
10           to operate as an escrow depository is required.  If
 
11           applicable, the plan shall include but not be limited
 
12           to provisions for the sale, exchange, or disposition of
 
13           all outstanding escrow accounts or other business for
 
14           which an escrow depository license is required by this
 
15           chapter;
 
16      (2)  The escrow depository shall notify in writing all
 
17           buyers and sellers whose accounts still contain
 
18           outstanding balances of the termination of the escrow
 
19           depository's operations and the specific arrangements
 
20           made to handle the particular transaction.  The escrow
 
21           depository shall also provide information concerning a
 
22           contact person for the purpose of answering questions
 
23           and providing documents on closed accounts.  This
 

 
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 1           individual or successor thereof shall continue to
 
 2           perform this task until the applicable statutes of
 
 3           limitations have lapsed;
 
 4      (3)  The escrow depository shall file an application with
 
 5           the commissioner in the prescribed form for approval to
 
 6           cease activity for which a license to operate as an
 
 7           escrow depository is required.  The application shall
 
 8           be accompanied by:
 
 9           (A)  A copy of the plan to cease activity for which a
 
10                license to operate as an escrow depository is
 
11                required, certified by two executive officers of
 
12                the escrow depository, to have been duly adopted
 
13                by the board;
 
14           (B)  Any application that may be required pursuant to
 
15                section 449-8.6, if applicable;
 
16           (C)  A copy of the notice sent by the escrow depository
 
17                to all buyers and sellers whose accounts still
 
18                contain outstanding balances, and a copy of the
 
19                notice providing information concerning a contact
 
20                person for the purpose of answering questions and
 
21                providing documents on closed accounts; and
 
22           (D)  Any other information that the commissioner may
 
23                require;
 

 
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 1      (4)  The commissioner shall approve the application to cease
 
 2           activity for which a license to operate as an escrow
 
 3           depository is required if:
 
 4           (A)  The commissioner is satisfied with the plan;
 
 5           (B)  The conditions for approval contained in section
 
 6                449-8.6 have been met, if applicable; and
 
 7           (C)  No other reason exists to deny the application;
 
 8                provided that the commissioner may impose any
 
 9                restrictions and conditions as the commissioner
 
10                deems appropriate; and
 
11      (5)  Upon receipt of the commissioner's approval, an escrow
 
12           depository that has filed a plan attesting that the
 
13           company does not retain any outstanding escrow accounts
 
14           or other business for which an escrow depository
 
15           license is required by this chapter, shall forthwith
 
16           surrender to the commissioner all of its escrow
 
17           depository licenses.  An escrow depository that has
 
18           filed a plan that includes provisions for the sale,
 
19           exchange, or disposition of outstanding escrow accounts
 
20           or other business, upon receipt of the commissioner's
 
21           approval, shall proceed with its plan to cease activity
 
22           for which a license to operate as an escrow depository
 
23           is required.  Upon completion of its plan, the escrow
 

 
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 1           depository shall file a written notification with the
 
 2           commissioner, signed by its president and secretary,
 
 3           certifying that there are no outstanding escrow
 
 4           liabilities.  The commissioner may require that an
 
 5           audit report, prepared by a certified public accountant
 
 6           at the expense of the escrow depository, be submitted
 
 7           showing the final accounting of the company's
 
 8           operations, should circumstances warrant such action.
 
 9           The written notification shall be accompanied by the
 
10           surrender of all of its escrow depository licenses.
 
11      (b)  Nothing in this section shall preclude the commissioner
 
12 at any time from seeking any relief or sanction from the courts
 
13 that may otherwise be permitted by law."
 
14      SECTION 3.  Chapter 449, Hawaii Revised Statutes, is amended
 
15 by adding a new section to be appropriately designated and to
 
16 read as follows:
 
17      "449-    Waiver of fees.  Notwithstanding any law to the
 
18 contrary, the commissioner, for good cause, may waive any fee
 
19 imposed pursuant to this chapter.  The waiver of any such fee
 
20 shall be entirely in the discretion of the commissioner."
 
21      SECTION 4.  Section 449-1, Hawaii Revised Statutes, is
 
22 amended by adding a new definition to be appropriately inserted
 
23 and to read as follows:
 

 
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 1      ""Division" means the division of financial institutions of
 
 2 the department of commerce and consumer affairs of this State."
 
 3      SECTION 5.  Section 449-11, Hawaii Revised Statutes, is
 
 4 amended to read as follows:
 
 5      "449-11  Fidelity bonds; deposit.  A licensed escrow
 
 6 depository shall at all times either:
 
 7      (1)  Maintain a fidelity bond executed by a surety insurer
 
 8           authorized to do business in the State in an amount not
 
 9           less than $25,000; provided that[,] any bond which is
 
10           subject to a deductible thereunder, in excess of $5,000
 
11           per occurrence, shall require the prior approval of the
 
12           commissioner, who may take into consideration, among
 
13           other factors, the amount of the proposed bond; or
 
14      (2)  Deposit an equivalent amount of cash or securities
 
15           under such terms and conditions as are acceptable to
 
16           the commissioner,
 
17 upon all of its directors, officers, and employees who have
 
18 access to money or negotiable securities or instruments in its
 
19 possession or under its control.  Notwithstanding the above
 
20 provision, the escrow depository may carry bonds or deposit cash
 
21 or securities above the amounts required by the commissioner."
 
22      SECTION 6.  Section 449-14, Hawaii Revised Statutes, is
 
23 amended to read as follows:
 

 
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 1      "449-14  Fees.  (a)  The following fees shall be paid by
 
 2 licensed escrow depositories to the commissioner and, together
 
 3 with any administrative penalty or other charge assessed under
 
 4 this chapter, shall be deposited into the compliance resolution
 
 5 fund established pursuant to [[]section[]] 26-9(o):
 
 6      (1)  For filing and investigation of an escrow depository's
 
 7           application for license, $2,000[;], or such other
 
 8           amount as the commissioner shall establish by rule
 
 9           adopted pursuant to chapter 91;
 
10      (2)  For an application for approval to establish a branch
 
11           office, a fee in such amount as the commissioner shall
 
12           establish by rule adopted pursuant to chapter 91;
 
13      (3)  For an application for approval to relocate an existing
 
14           office or branch, a fee in such amount as the
 
15           commissioner shall establish by rule adopted pursuant
 
16           to chapter 91;
 
17     [(2)] (4)  For initial issuance and annual renewal of an
 
18           escrow depository's license, $100[;], or such other
 
19           amount as the commissioner shall establish by rule
 
20           adopted pursuant to chapter 91;
 
21     [(3)] (5)  For initial issuance and annual renewal of a
 
22           branch office license, $50[; and], or such other amount
 
23           as the commissioner shall establish by rule adopted
 

 
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 1           pursuant to chapter 91;
 
 2     [(4)] (6)  For reissuance of a license [or endorsement on the
 
 3           license] for the change in the business address of its
 
 4           office, $25[.], or such other amount as the
 
 5           commissioner shall establish by rule adopted pursuant
 
 6           to chapter 91; and
 
 7      (7)  For an application for approval to cease business as an
 
 8           escrow depository, a fee in such amount as the
 
 9           commissioner shall establish by rule adopted pursuant
 
10           to chapter 91.
 
11      (b)  The commissioner may charge an examination fee based
 
12 upon the cost per hour per examiner for all escrow depositories
 
13 examined by the commissioner or the commissioner's staff.  The
 
14 hourly fee shall be $40; however, the commissioner may establish,
 
15 increase, decrease, or repeal the hourly fee when necessary by
 
16 rules adopted pursuant to chapter 91.
 
17      (c)  In addition to the examination fee, the commissioner
 
18 may charge any escrow depository examined or investigated by the
 
19 commissioner or the commissioner's staff, additional amounts for
 
20 travel, per diem, mileage, and other reasonable expenses incurred
 
21 in connection with the examination.
 
22      (d)  The commissioner shall bill the affected escrow
 
23 depository for examination fees and expenses as soon as feasible
 

 
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 1 after the close of the examination or investigation.  The
 
 2 affected escrow depository shall pay the division within thirty
 
 3 days following the billing.  All such payments shall be deposited
 
 4 into the compliance resolution fund established pursuant to
 
 5 section 26-9(o).  Any dispute by the affected escrow depository
 
 6 relating to these billings shall be reviewed by the commissioner
 
 7 who may modify, waive, or suspend any billing.
 
 8      (e)  Notwithstanding any law to the contrary, the fee for a
 
 9 request by any person to search, review, or segregate the records
 
10 of the division shall include the following charges:
 
11      (1)  Actual time expended by examiners or other staff of the
 
12           division to search, review, or segregate the records of
 
13           the division shall be charged at the then-prevailing
 
14           hourly examiner fee as established by statute or rule,
 
15           and shall be billed at such hourly fee prorated in
 
16           increments of fifteen minutes, including any fraction
 
17           thereof; and
 
18      (2)  If applicable, the actual rate of charge, based upon
 
19           time expended, that is charged to the division by a
 
20           person other than the division for services to assist
 
21           the division in the search for, review, or segregation
 
22           of a record.
 
23 Unless otherwise provided by statute, a fee imposed under this
 

 
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 1 subsection shall be required to recover the actual costs incurred
 
 2 by the division in response to a request to search, review, or
 
 3 segregate its records, and shall be deposited into the compliance
 
 4 resolution fund established pursuant to section 26-9(o).  The
 
 5 division may waive any of the fees contemplated by this
 
 6 subsection for any agency of any state, federal, or foreign
 
 7 government entity duly entitled to request access to a record of
 
 8 the division.
 
 9      (f)  An escrow depository that fails to make a payment
 
10 required by this section shall be subject to an administrative
 
11 penalty of not more than $200 per day for each day it is in
 
12 violation of this section."
 
13      SECTION 7.  Statutory material to be repealed is bracketed.
 
14 New statutory material is underscored.
 
15      SECTION 8.  This Act shall take effect upon its approval.