REPORT TITLE:
Reverse Mortgages


DESCRIPTION:
Amends language and definition of reverse mortgage.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2270
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO REVERSE MORTGAGES. 


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

 1      SECTION 1.  Section 506-10, Hawaii Revised Statutes is
 
 2 amended to read as follows:
 
 3      "§506-10  Reverse mortgage [loan.] transaction.  (a)  Prior
 
 4 to accepting an application for a reverse mortgage [loan,]
 
 5 transaction, a lender shall refer every [borrower] mortgagor to
 
 6 counseling from an organization that is a housing counseling
 
 7 agency approved by the United States Department of Housing and
 
 8 Urban Development, and shall receive certification from the
 
 9 counselor that the [borrower] mortgagor has received counseling.
 
10 The certificate must be signed by the [borrower] mortgagor and
 
11 the counselor and include the date of counseling, the name,
 
12 address, and telephone number of both the [borrower] mortgagor
 
13 and the organization providing counseling, and shall be
 
14 maintained by the holder of the reverse mortgage throughout the
 
15 term of the reverse mortgage [loan.] transaction.
 
16      (b)  A lender that fails to comply with the requirements of
 
17 subsection (a) shall be deemed to have engaged in an unfair
 
18 method of competition or unfair or deceptive act or practice in
 
19 the conduct of any trade or commerce within the meaning of
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 section 480-2.
 
 2      (c)  ["Reverse mortgage loan" means a loan made to a
 
 3 borrower wherein the committed principal amount is secured by a
 
 4 mortgage on residential property owned by the borrower and which
 
 5 is due upon the sale of the property securing the loan, or upon
 
 6 the death of the last surviving borrower, or upon the borrower
 
 7 terminating use of the real property as the principal residence,
 
 8 or upon the borrower's default.  For purposes of this section,
 
 9 "reverse mortgage loan" does not include loans:
 
10      (1)  Insured by the United States Department of Housing and
 
11           Urban Development;
 
12      (2)  Intended for sale to the Federal National Mortgage
 
13           Association (also known as "Fannie Mae") or to the
 
14           Federal Home Loan Mortgage Corporation (also known as
 
15           "Freddie Mac"); or
 
16      (3)  For which mortgage counseling is required under other
 
17           state or federal laws.]
 
18      "Reverse mortgage transaction" means a nonrecourse consumer
 
19 credit obligation where a mortgage, deed of trust, or equivalent
 
20 consensual security interest secures one or more advances on the
 
21 mortgagor's principal dwelling, and any principal, interest, or
 
22 shared appreciation or equity is due and payable (other than in
 
23 the case of default) only after the mortgagor dies, ownership of
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 the principal dwelling is transferred, or the mortgagor ceases
 
 2 use of the dwelling as the principal dwelling.
 
 3 For purposes of this section, "reverse mortgage transaction" does
 
 4 not include:
 
 5      (1)  Mortgages securing loans insured by the United States
 
 6           Department of Housing and Urban Development;
 
 7      (2)  Mortgages securing loans intended for sale to the
 
 8           Federal National Mortgage Association (also known as
 
 9           "Fannie Mae") or to the Federal Home Loan Mortgage
 
10           Corporation (also known as "Freddie Mac");
 
11      (3)  Credit transactions involving extensions of credit
 
12           primarily for business, commercial, or agricultural
 
13           purposes, or extensions of credit to an entity or
 
14           entities other than a consumer or consumers, including
 
15           governments, governmental agencies or
 
16           instrumentalities; or 
 
17      (4)  Mortgages securing loans for which mortgage counseling
 
18           is required under other state or federal laws."
 
19      SECTION 2.  This Act shall apply to any transaction made
 
20 after April 25, 1999.
 
21      SECTION 3.  Statutory material to be repealed is bracketed.
 
22 New statutory material is underscored.
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      SECTION 4.  This Act shall take effect upon approval.
 
 2 
 
 3                           INTRODUCED BY:  _______________________