STAND. COM. REP. NO. 1470

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 1072
                                        H.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which
was referred H.B. No. 1072, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO REVERSE MORTGAGES,"

begs leave to report as follows:

     The purpose of this measure is to ensure that elderly
homeowners seeking funds through a reverse mortgage loan receive
the counseling necessary to make an informed and reasoned
decision about reverse mortgage financing.

     The Department of Commerce and Consumer Affairs, American
Association of Retired Persons State Legislative Committee, and
Hawaii Association of Realtors presented testimony in support of
the measure.  The Executive Office on Aging and the Hawaii
Bankers Association, though not present, submitted testimony in
support of the measure.  

     Your Committee finds that reverse mortgage financing is
becoming an increasingly popular form of financing for seniors on
a fixed income with equity in their homes.  A reverse mortgage is
a loan against home equity that provides a cash advance to
homeowners and requires no payment until a future time, usually
when the borrower dies or sells the home.

     Your Committee further finds that reverse mortgage financing
is not appropriate for everyone, and consumers considering this
form of financing should be fully informed about the lending
process and the advantages and disadvantages of reverse mortgage

 
a                                                     HB1072 HD1
                                                      
                                   STAND. COM. REP. NO. 1470
                                   Page 2


financing given factors such as the borrower's age and current
and future needs.  This measure would require that lenders refer
applicants for reverse mortgage financing to counseling from a
housing counseling agency approved by HUD and obtain
certification that counseling has been provided prior to
accepting the application.  

     The level of counseling required by this measure is
consistent with that required for a federally-insured reverse
mortgage.  Since most financial institutions are already familiar
with the counseling requirements for federally-insured loans,
your Committee finds that the requirements imposed by this
measure should not create undue administrative hardships.

     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 1072, H.D. 1, and recommends that it pass
Second Reading and be placed on the calendar for Third Reading.

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



                                   ______________________________
                                   BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
a                                                     HB1072 HD1