STAND. COM. REP. 2992

Honolulu, Hawaii

, 2004

RE: H.B. No. 2788

H.D. 1

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred H.B. No. 2788, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO MORTGAGE BROKERS AND SOLICITORS,"

begs leave to report as follows:

The purpose of this measure is to enhance consumer protection in the area of mortgage financing by strengthening the licensing requirements for mortgage brokers and solicitors and the enforcement powers of the Department of Commerce and Consumer Affairs (DCCA).

Verizon and State Farm Insurance Companies testified in support of this measure. The Hawaii Association of Mortgage Brokers, Hawaii Bankers Association, Hawaii Financial Services Association, and American Financial Services Association supported the measure's intent. Comments were submitted by the Regulated Industries Complaints Office and the Professional and Vocational Licensing Division of DCCA, and Primerica Financial Services Home Mortgages, Inc.

Your Committee finds that buying or refinancing a home is one of the most costly and complex consumer transactions and, therefore, it is important that the State ensure that mortgage originators are appropriately licensed and regulated. This measure strengthens the laws governing the regulation of mortgage brokers and solicitors by, among other things:

(1) Requiring the passage of an examination as a condition of license issuance and the completion of continuing education courses as a condition of license renewal;

(2) Establishing requirements for advertising;

(3) Increasing the bonding requirement from $15,000 to $50,000 and establishing a right of action for recovery on a bond;

(4) Requiring a mortgage broker or solicitor to provide a borrower with a written disclosure of the borrower's rights and obligations;

(5) Authorizing DCCA to fine a licensee and condition the use of a license;

(6) Establishing door-to-door solicitations and loan steering as grounds for taking disciplinary action against a licensee; and

(7) Increasing the fine for violation of the licensing laws.

Your Committee finds that there continue to be unresolved issues regarding the licensing of mortgage brokers and solicitors. Accordingly, this measure's delayed effective date of January 1, 2020 has been retained in order to encourage further discussion and dialogue. Additionally, your Committee has amended this measure by:

(1) Deleting the continuing education requirement for a designated solicitor in charge;

(2) Including within acceptable continuing education courses for license renewal purposes, courses approved by the Mortgage Bankers Association or the mortgage commissioner;

(3) Deleting the definition of "designated solicitor in charge";

(4) Deleting language in the definitions of "mortgage broker" and "mortgage solicitor" that exclude from the scope thereof regular salaried employees or officers who engage in activities other than that of a mortgage broker or solicitor;

(5) Deleting language that would establish loan steering as grounds for license revocation;

(6) Deleting language authorizing the mortgage commissioner to preside over disciplinary proceedings;

(7) Deleting language authorizing the adoption of rules to require the disclosure of licensees' investment, commercial, and marketing strategies; and

(8) Making technical, nonsubstantive amendments for purposes of clarity, consistency, and style.

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 H.B. No. 2788, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2788, H.D. 1, S.D. 1, and be referred to the Committee on Judiciary and Hawaiian Affairs.

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

____________________________

RON MENOR, Chair