STAND. COM. REP. NO. 2267

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2104
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Government Operations and Housing, to
which was referred S.B. No. 2104 entitled: 

     "A BILL FOR AN ACT RELATING TO FINANCING OF AFFORDABLE
     HOUSING,"

begs leave to report as follows:

     The purpose of this measure is to provide home mortgage
refinancing for low income households by requiring financial
institutions to refinance mortgage loans if the current market
interest rate falls at least one and one-half percent below the
existing mortgage rate for a mortgagor.

     Oral testimony in support of this measure was received from
an individual.  Testimony in opposition of the measure was
received from the Department of Commerce and Consumer Affairs,
the Mortgage Bankers Association of Hawaii, Aina Mortgage, and
Hawaii Bankers Association.

     Your Committee finds that although automatic refinancing of
home mortgage loans may help more homeowners obtain refinancing,
this measure may lead to problems such as inconsistent results as
it would apply only to state chartered financial institutions and
not federally chartered institutions.  The problem is compounded
as any finanical institution wishing to insure its depositors
accounts by the Federal Deposit Insurance Corporation must be
federally chartered.  Therefore, the majority of banks would not
be subject to this measure.


 
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     Your Committee agrees that consumers must be protected as
extensively as possible when dealing with financial institutions
and has amended this measure to:

     (1)  Remove the automatic refinancing requirement for
          financial institutions;

     (2)  Require all financial institutions to either develop
          and implement a work out plan to allow mortgagors who
          incur financial difficulties to maintain a current
          status for their mortgage loans or implement the work
          out plan developed by the Department of Commerce and
          Consumer Protection (DCCA), the Office of Consumer
          Protection, and the Commissioner of Financial
          Institutions; and

     (3)  Require the Department of Commerce and Consumer
          Protection, the Office of Consumer Protection, and the
          Commissioner of Financial Institutions to collectively
          develop an alternative work out plan for institutions
          that fail to implement one.

     As affirmed by the record of votes of the members of your
Committee on Government Operations and Housing that is attached
to this report, your Committee is in accord with the intent and
purpose of S.B. No. 2104, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B.
No. 2104, S.D. 1, and be referred to the Committee on Commerce
and Consumer Protection.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Government
                                   Operations and Housing,



                                   ______________________________
                                   ROD TAM, Chair

 
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