Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs, to which was referred H.B. No. 2642, H.D. 1, entitled:

beg leave to report as follows:

The purpose of this bill is to establish the Hawaii Home Loan Protection Act (HHLPA), to protect the homes and equity of individual borrowers from predatory lending practices.

Specifically, this bill:

The Department of Commerce and Consumer Affairs, AARP, Hawaii State AFL-CIO, ILWU Local 142, Kokua Council, Legal Aid Society of Hawaii, Hawaii Government Employees Association, and an individual submitted testimony in support of the measure. The Hawaii Credit Union League submitted testimony in support of the intent of this bill. The Hawaii Association of Mortgage Brokers, Hawaii Bankers Association, Hawaii Financial Services Association, Paradise America Mortgage, and the Mortgage Bankers Association of Hawaii submitted testimony in opposition to this bill.

Your Committees find that the home is central to the American dream, and is the most important financial asset of families in Hawaii. It can represent the lifetime work of one or more generations. Accumulating equity in the home is the primary way most families pay for their children's education, pay for emergency essential goods and services, and pass on capital to future generations.

Predatory mortgage lenders operate through deception and rely on the exigent circumstances of their victims to swindle away what has taken a lifetime to achieve. They seek out the most vulnerable among us. The elderly, women, minorities, and low income families are favorite targets of predatory lenders.

A large number of potential victims for unscrupulous lenders and brokers have been created by the recent tragic events of September 11, 2001. Fifty thousand people have lost their jobs, been furloughed, or had their employment hours cut substantially, and there has been a dramatic rise in the number of foreclosures in the State.

To address fraud, deception, and unfairness in lending practices, Congress in 1994, established the Home Ownership and Equity Protection Act (HOEPA). Unfortunately, HOEPA contains many loopholes which are continually being exploited, and thereby provides only minimal protection for homeowners. Your Committees find that enacting HHLPA will provide the people of Hawaii with essential safeguards and venues for action against predatory mortgage lenders.

Upon further consideration, your Committees have amended this bill by changing the effective year to 2050 to facilitate further discussion.

As affirmed by the records of votes of the members of your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2642, H.D. 1, as amended herein, and recommend that it pass Third Reading in the form attached hereto as H.B. No. 2642, H.D. 2.