REPORT TITLE:
Reverse Mortgages


DESCRIPTION:
Clarifies the definition of "reverse mortgage loan".

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           2332
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.(a)  Prior to
 
 4 accepting an application for a reverse mortgage loan, a lender
 
 5 shall refer every borrower to counseling from an organization
 
 6 that is a housing counseling agency approved by the United States
 
 7 Department of Housing and Urban Development, and shall receive
 
 8 certification from the counselor that the borrower has received
 
 9 counseling.  The certificate must be signed by the borrower and
 
10 the counselor and include the date of counseling, the name,
 
11 address, and telephone number of both the borrower and the
 
12 organization providing counseling, and shall be maintained by the
 
13 holder of the reverse mortgage throughout the term of the reverse
 
14 mortgage loan.
 
15      (b)  A lender that fails to comply with the requirements of
 
16 subsection (a) shall be deemed to have engaged in an unfair
 
17 method of competition or unfair or deceptive act or practice in
 
18 the conduct of any trade or commerce within the meaning of
 
19 section 480-2.
 

 
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 1      (c)  "Reverse mortgage loan" means a non-recourse loan, made
 
 2 to a borrower [wherein] in which the committed principal amount
 
 3 is secured by a mortgage on residential property owned by the
 
 4 borrower and which is due upon the sale of the property securing
 
 5 the loan, [or upon] the death of the last surviving borrower, [or
 
 6 upon the borrower terminating] termination of the use of the real
 
 7 property by the borrower as the borrower's principal residence,
 
 8 or [upon] the borrower's default[.], and that:
 
 9      (1)  Provides cash advances to the borrower based upon the 
 
10           equity or value in the borrower's owner-occupied
 
11           principal residence;
 
12      (2)  Requires no payment of principal or interest until the
 
13           entire loan becomes due and payable; and
 
14      (3)  Is made by a lender licensed or chartered under state
 
15           or federal law.
 
16      (d)  For purposes of this section, "reverse mortgage loan"
 
17 does not include loans:
 
18      (1)  Insured by the United States Department of Housing and
 
19           Urban Development;
 
20      (2)  Intended for sale to the Federal National Mortgage
 
21           Association (also known as "Fannie Mae") or to the
 
22           Federal Home Loan Mortgage Corporation (also known as
 
23           "Freddie Mac"); or
 

 
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                                     S.B. NO.           2332
                                                        
                                                        

 
 1      (3)  For which mortgage counseling is required under other
 
 2           state or federal laws." 
 
 3      SECTION 2.  Statutory material to be repealed is bracketed.
 
 4 New statutory material is underscored.
 
 5      SECTION 3.  This Act, upon its approval, shall take effect
 
 6 retroactive to April 26, 1999.
 
 7 
 
 8                       INTRODUCED BY:  ___________________________