STAND. COM. REP. NO. 1539

Honolulu, Hawaii

, 2005

RE: S.B. No. 1140

S.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Consumer Protection & Commerce, to which was referred S.B. No. 1140, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO FINANCIAL SERVICE LOAN COMPANIES,"

begs leave to report as follows:

The purpose of this bill is to level the playing field between financial service loan companies (FSLCs) and other types of lenders while protecting consumers. Specifically, this bill amends the FSLC law by:

(1) Allowing a returned check fee of up to $20, provided it is not added to the borrower's loan balance or deducted from a loan payment, and failure to pay the fee is not a default on a loan;

(2) Limiting fees on consumer loans secured by real property to one percent of the loan principal;

(3) Expanding permissible consumer loan-related fees to include fees for real property tax services and wire transfers; and

(4) Specifically allowing consumer loan-related fees and charges that are paid to FSLC affiliates and subsidiaries so long as no portion is rebated, refunded, or paid to the FSLC.

Testimony in support of this measure was received from the Commissioner of Financial Institutions of the Department of Commerce and Consumer Affairs, Hawaii Financial Services Association, and the Hawaii Bankers Association.

Your Committee finds that current law limits FSLC fees in connection with a loan transaction to those specifically authorized by statute or rule. This bill would retain this restriction while giving FSLCs authority to charge the same fees that other lenders are authorized to charge, and allow FSLCs to compete on a more even playing field with other lenders in Hawaii's competitive mortgage and non-mortgage loan markets.

As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1140, S.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 Consumer Protection & Commerce,

 

____________________________

KENNETH HIRAKI, Chair