SB1401

SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

MORTGAGE BROKERS

§ -1 Definitions. In this chapter, unless the context or subject matter otherwise requires:

"Applicant" means a person applying for a license under this chapter.

"Commissioner" means the commissioner of financial institutions of this State.

"Employee" means a natural person engaged in the service of a licensed mortgage broker for compensation or gain. An employee is subject to withholding, the Federal Income Contributions Act, and other lawful deductions by the licensed mortgage broker as a condition of employment and is subject to the right of the licensed mortgage broker to direct and control the actions of the employee.

"Institutional investor" means:

(1) Banks, savings and loan institutions, savings banks, trust companies, insurance companies, investment companies as defined in the Investment Company Act of 1940, pension or profit sharing trusts, any of the classes of persons permitted to qualify as foreign lenders under section 207-11, or other financial institutions or institutional buyers, whether acting for themselves or as fiduciaries; and

(2) The United States or any foreign government, or any agency or corporate or other instrumentality of the United States, a foreign government, or political subdivision thereof.

"License" means a license issued under this chapter.

"Licensee" means a person licensed under this chapter.

"Mortgage broker" means a person not exempt under section ‑2 who for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly makes, negotiates, acquires, or offers to make, negotiate, or acquire a residential mortgage loan.

"Mortgage solicitor" means an individual employee of a licensed mortgage broker who, subject to the licensed mortgage broker's direction and control of the actions of the employee, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly negotiates, acquires, or offers to negotiate or acquire a residential mortgage loan.

"Person" means a natural person, partnership, corporation, association, or other organization.

"Residential mortgage loan" means a first mortgage loan, home equity loan, reverse mortgage loan, installment sales contract, land contract, agreement for sale, or a temporary financing loan such as a construction loan, which is secured by a first or subordinate lien on residential real property, including a refinancing of any secured loan on residential real property, upon which:

(1) There is or will be constructed a structure or structures designed principally for occupancy of from one to four families (including individual units of condominiums and cooperatives and including any related interests, such as a share in the cooperative or right to occupancy of the unit); or

(2) A manufactured home is located or will be placed on the real property, using proceeds of the loan.

A loan for business purposes shall not be considered a residential mortgage loan.

§ -2 Exemptions. This chapter shall not apply to the following:

(1) Banks, trust companies, savings and loan institutions, savings banks, pension trusts, credit unions, credit union service organizations, insurance companies, financial services loan companies, or federally licensed small business investment companies, authorized under any law of this State or of the United States to do business in this State;

(2) A person making or acquiring a residential mortgage loan with one's own funds for one's own investment without intent to resell the residential mortgage loan;

(3) A person licensed to practice law in this State, not actively and principally engaged in the business of negotiating residential mortgage loans, when the person renders services in the course of the person's practice as an attorney;

(4) A person licensed as a real estate broker or salesperson in this State, not actively and principally engaged in the business of negotiating residential mortgage loans, when the person renders services in the course of the person's practice as a real estate broker or salesperson;

(5) An institutional investor negotiating, entering into, or performing under a residential mortgage loan purchase agreement for its portfolio, for subsequent resale to other institutional investors, or for placement of the residential mortgage loans into pools or packaging them into mortgage-backed securities. As used in this paragraph, "loan purchase agreement" means an agreement or arrangement under which a bank, savings and loan institution, credit union, financial services loan company, or other financial institution authorized to do business in this State agrees to sell residential mortgage loans or obtain funding therefor, with or without the transfer of servicing rights, to an institutional investor;

(6) A foreign lender conducting business in accordance with part II of chapter 207; and

(7) A person licensed under chapter 467 as a real estate broker or salesperson selling time share interests on behalf of a time share plan developer that is licensed as a mortgage broker under this chapter; provided that:

(A) The acts or conduct of a developer's authorized representative shall be deemed to be the acts or conduct of the developer for the purpose of section -16; and

(B) If the person engages in acts or conduct prohibited under this chapter, the acts or conduct shall constitute grounds for disciplinary action under section 467-14.

§ -3 Prohibited acts. (a) No person required to be licensed under this chapter shall act, attempt to act, or hold oneself out as a mortgage broker or mortgage solicitor without a license as required in this chapter. No person required to be licensed under this chapter who acts, attempts to act, or holds oneself out as a mortgage broker or mortgage solicitor without a license shall charge or receive any commission, fee, bonus, salary, hourly wage, remuneration, compensation, or gain in connection with arranging for, negotiating, or selling a residential mortgage loan.

(b) It shall also be unlawful for any person required to be licensed under this chapter to:

(1) Provide or offer to provide any service requiring a license pursuant to this chapter unless the person has been issued the appropriate license or is exempt from licensing;

(2) Disburse the residential mortgage loan proceeds to a closing agent in any form other than, as applicable, direct deposit to a customer's account, wire, bank or certified check, attorney's check drawn on a trust account, or such other form as specifically authorized by applicable law;

(3) Fail to disburse funds in accordance with a residential mortgage loan commitment to make a residential mortgage loan that has been accepted by the borrower;

(4) Accept any fees at closing that were not disclosed as required by law;

(5) Retain third party fees at closing in excess of the actual cost of third party services;

(6) Require the borrower to be represented by a third party service provider except under the terms permitted by applicable federal law;

(7) Use any agreement or instrument in which blanks are left to be filled in after execution;

(8) Participate in any exclusive dealing or exclusive agency agreement with any borrower;

(9) Engage in unfair, deceptive, or fraudulent residential mortgage loan practices;

(10) Make any untrue statement of a material fact in any document filed with the commissioner under this chapter or rules adopted thereunder, or omit any material fact that is required to be stated in any document.

§ -4 Licensing requirements; scope of license. (a) If the applicant for a mortgage broker license is not a natural person, no application for a mortgage broker license shall be granted unless the applicant first registers to do business in this State with the business registration division of the department of commerce and consumer affairs.

(b) If the applicant for a mortgage broker license is a natural person, the mortgage broker license shall entitle any employees of the licensed mortgage broker to engage in the mortgage broker business, provided that they are licensed under this chapter as mortgage brokers or mortgage solicitors. The applicant shall be designated as the principal mortgage broker, who shall manage and supervise all of the applicant's employees licensed under this section, unless the applicant shall designate, in writing, another licensed mortgage broker in the applicant's employ to be the principal mortgage broker.

(c) If the applicant is not a natural person, the mortgage broker license issued to it entitles all employees, partners, and members of the licensed corporation, partnership, association, or other organization to engage in the business of mortgage brokering, provided that they are licensed under this chapter as mortgage brokers or mortgage solicitors, and provided further that one officer, director, employee, partner, or member, then holding a mortgage broker license, shall manage and supervise any licensed employees, partners, and members of the applicant, and shall be designated by the applicant, in writing, as its principal mortgage broker.

(d) A mortgage broker licensed under this chapter shall notify the commissioner, in writing, within five business days of any change in the designation of the principal mortgage broker, or of any change in the licensed mortgage broker in charge of a branch office.

(e) If the applicant for a mortgage solicitor license is a natural person, the mortgage solicitor license shall only allow the licensed mortgage solicitor to act as a mortgage solicitor provided the applicant is an employee of a licensed mortgage broker.

§ -5 Mortgage broker license application; renewal. (a) Each application for and renewal of a mortgage broker license shall be made in writing on the forms and in the manner prescribed by the commissioner. To obtain and renew a license, the applicant for a mortgage broker's license shall satisfy the following requirements:

(1) The applicant shall have paid the fees as required by rule;

(2) The applicant shall have complied with section -7;

(3) The applicant, or in the case of an applicant that is not a natural person, any of its officers, directors, employees, partners, or members, shall not have had a license issued under this chapter or any similar law in another state suspended or revoked within five years of the filing of the present application;

(4) The applicant, or in the case of an applicant that is not a natural person, any of its officers, directors, employees, partners, or members shall not have been convicted of a misdemeanor involving dishonesty or financial misconduct or a felony within seven years of the filing of the present application as determined in a criminal background investigation which the commissioner may request in accordance with section 846-2.7;

(5) The applicant, in the case of an applicant that is a natural person, shall have at least two years of experience in financial transactions involving primary or subordinate residential mortgage loan financing as:

(A) A mortgage broker;

(B) A mortgage banker or responsible individual of a mortgage banking business;

(D) A branch manager of a lender with responsibility primarily for loans secured by a lien on real estate; or

(E) A mortgage broker in possession of a mortgage broker or similar license from another state with licensing standards substantially similar to those in this State, as determined by the commissioner;

(6) As part of the application for a mortgage broker license, but not for the renewal thereof, the applicant, or in the case of an applicant that is not a natural person, its principal mortgage broker, shall submit evidence satisfactory to the commissioner of having taken and passed a written examination, the content of which shall be established by the commissioner; and

(7) As part of the application for renewal of a mortgage broker license, the applicant, or in the case of an applicant that is not a natural person, its principal mortgage broker, shall have complied with section -10.

(b) If the commissioner finds that any one of these conditions has not been met, the commissioner shall not issue or renew the license. In the event the commissioner orders denial of issuance or of renewal of a license, an appeal may be made in accordance with chapter 91.

(c) Each license shall be renewed biennially and the renewal application shall be made on a form and in the manner prescribed by the commissioner.

§ -6 Mortgage solicitor license application; renewal. (a) Each application for and renewal of a mortgage solicitor license shall be made in writing on the forms and in the manner prescribed by the commissioner. To obtain and renew a license, the applicant for a mortgage solicitor's license shall satisfy the following requirements:

(1) The applicant shall have paid the fees as required by rule;

(2) The applicant shall not have had a license issued under this chapter or any similar law in another state suspended or revoked within five years of the filing of the present application;

(3) The applicant shall not have been convicted of a misdemeanor involving dishonesty or financial misconduct or a felony within seven years of the filing of the present application as determined in a criminal background investigation which the commissioner may request in accordance with section 846-2.7;

(4) As part of the application for a mortgage solicitor license, but not for the renewal thereof, the applicant shall submit evidence satisfactory to the commissioner of having taken and passed a written examination, the content of which shall be established by the commissioner; and

(5) As part of the application for renewal of a mortgage solicitor license, the applicant shall have complied with section -10.

(c) Each license shall be renewed biennially and the renewal application shall be made on a form and in the manner prescribed by the commissioner.

§ -7 Principal place of business; branch office; change of address. (a) Every licensed mortgage broker shall have and maintain a principal place of business in this State for the transaction of business. In the event the licensed mortgage broker maintains a branch office, the commissioner, upon application and payment by the licensee of any application fee established by rule, shall issue a license for each branch office. The principal mortgage broker of the licensee shall designate, in writing, an individual licensed as a mortgage broker to be in charge of each branch office.

(b) In the event that the location of the principal place of business or any branch office is changed, or in the event that a branch office is to be closed, the licensee shall notify the commissioner, in writing, at least ten business days prior to the relocation or closing.

§ -8 Bond requirement; claims against bond. (a) Every person licensed as a mortgage broker shall deposit with the commissioner, prior to doing business, a bond in an amount of $50,000, executed by the licensed mortgage broker as principal and a surety company. The bond shall be conditioned upon the faithful compliance of the licensed mortgage broker with this chapter and the rules adopted under this chapter. The bond shall run to the State for the benefit of any person injured by any violation of this chapter or the rules adopted under this chapter by the licensed mortgage broker or any officer, director, employee, partner, or member; provided that the aggregate liability of the surety shall not exceed the sum of the bond. A license shall not be in effect at any time when the licensed mortgage broker's bond is not in full force and effect.

(b) The commissioner or any person injured by a violation of this chapter or rules adopted under this chapter, may bring an action against the surety bond of the licensed mortgage broker who committed the violation.

(c) The remedies provided under this section are cumulative and nonexclusive and do not affect any other remedy available at law.

§ -9 Fees; failure to pay fees. (a) All fees and other charges under this chapter shall be established and adopted by the commissioner in accordance with chapter 91 and shall be deposited into the compliance resolution fund established pursuant to section 26-9(o).

(b) Failure of any licensed mortgage broker or licensed mortgage solicitor to pay the renewal fee on or before the due date shall constitute an automatic forfeiture of the license. The forfeited license may be restored; provided that application for restoration is made within six months of the forfeiture and a penalty fee, as may be prescribed by rule, is paid, in addition to the delinquent license fee. A licensed mortgage broker or mortgage solicitor who fails to restore a forfeited license as provided in this subsection shall apply as a new applicant.

§ -10 Continuing education requirement. (a) Prior to biennial license renewal under this chapter, each licensed mortgage broker that is a natural person and each licensed mortgage solicitor shall satisfactorily complete twelve hours of approved continuing education courses during the two-year period preceding the application for renewal. Each licensed mortgage broker that is a natural person and each licensed mortgage solicitor shall file a certificate of satisfactory completion of approved continuing education courses by that licensed mortgage broker or licensed mortgage solicitor no later than one month prior to the license expiration date. Failure to satisfy the continuing education requirement prior to one month before the license expiration date shall constitute an automatic forfeiture of the license. The forfeited license may be restored; provided that the continuing education requirement of this section is satisfied and application for restoration is made within six months of the forfeiture, and a penalty fee as may be prescribed by rule is paid in addition to the delinquent license fee. A licensed mortgage broker or licensed mortgage solicitor who fails to restore a forfeited license as provided in this subsection shall apply as a new applicant.

(b) To receive approval of a continuing education course, the course provider shall file an application with the commissioner, which shall include:

(1) The title and a description of the proposed course;

(2) A description of the proposed course provider's experience in offering this type of course; and

(3) A complete listing of all instructors for the proposed course, including their qualifications and experience teaching courses similar to this course.

(c) The commissioner shall review the applications filed and determine whether to approve or deny the proposed course. If the commissioner approves the proposed course, the commissioner shall issue a certificate of approval that will be effective for two years from the date of its issuance.

(d) The commissioner shall keep a list of approved courses that will be provided to the public upon request.

§ -11 Record keeping requirements. Each licensed mortgage broker shall maintain at its designated principal place of business in this State all books, accounts, records, and documents necessary to determine the licensed mortgage broker's compliance with this chapter. All such books, accounts, records, and documents shall be kept available for review and examination by the commissioner for a period of six years.

§ -12 Examinations; confidentiality. (a) The commissioner may conduct examinations of licensed mortgage brokers under this chapter.

(b) The commissioner shall have full access to the vaults, books, accounts, records, and documents of the licensed mortgage broker and may make any inquiries as may be necessary to review the operations and ascertain the condition of the licensed mortgage broker. All officers, directors, employees, partners, and members of the licensed mortgage broker being examined shall cooperate fully with the commissioner and the commissioner's staff, and shall answer all inquiries and furnish all information pertaining to the same, to the best of their knowledge and ability.

(c) The commissioner may charge an examination fee based upon the cost per hour per examiner for all licensed mortgage brokers examined by the commissioner or the commissioner's staff. The hourly fee shall be $40 or such amount as the commissioner shall establish by rule pursuant to chapter 91. In addition to the examination fee, the commissioner may charge any licensed mortgage broker examined or investigated by the commissioner or the commissioner's staff additional amounts for travel, per diem, mileage, and other reasonable expenses incurred in connection with the examination or investigation.

(d) Notwithstanding chapter 92F, the examination process and related information and documents, including the reports of examination, are confidential and are not subject to discovery in civil and criminal lawsuits or disclosure under federal or state law.

§ -13 Written agreements. (a) For any transaction between a licensed mortgage broker or licensed mortgage solicitor employed by that broker and a borrower seeking a residential mortgage loan, the following requirements shall apply:

(1) Any written commitment letter to make a residential mortgage loan with specified terms, including loan amount, interest rate, points, and payment terms, which is issued by a licensed mortgage broker or licensed mortgage solicitor employed by that broker and accepted by a borrower, shall be honored by the licensed mortgage broker if the borrower has completely satisfied all of the conditions of the commitment in a timely manner and prior to the specified expiration date of the commitment; and

(2) The mortgage broker or licensed mortgage solicitor employed by that broker shall provide the borrower with the following notice of the borrower's rights and obligations, not longer than one page in length and in twelve-point font, regarding the terms of the residential mortgage loan not later than within three business days of a borrower signing a completed residential mortgage loan application and before the borrower gives the licensed mortgage broker or licensed mortgage solicitor employed by that broker any consideration:

"CONSUMER CAUTION AND HOME OWNERSHIP COUNSELING NOTICE

If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan. Mortgage loan rates and closing costs and fees vary based on many factors, including your particular credit and financial circumstances, your earnings history, the loan-to-value requested, and the type of property that will secure your loan. The loan rate and fees could also vary based on which lender or mortgage broker you select.

If you are uncertain about your rights and obligations under this agreement, you should consider consulting a qualified independent credit counselor or other experienced financial adviser regarding the rate, fees, and provisions of this mortgage loan before you proceed. For information on contacting a qualified credit counselor, call the United States Department of Housing and Urban Development for a list of counselors.

You are not required to complete any loan agreement merely because you have received these disclosures or have signed a loan application. If you proceed with this mortgage loan, you should also remember that you may face serious financial risks if you use this loan to pay off debts and then later incur significant new debts.

Property taxes and homeowner's insurance are your responsibility. Not all lenders provide escrow services for these payments. You should ask your lender about these services. Your payments on existing debts contribute to your credit ratings. You should not accept any advice to ignore your regular payments to your existing creditors."

(b) The licensed mortgage broker or licensed mortgage solicitor employed by that broker shall secure a signed acknowledgment of receipt by the borrower of a copy of the notice.

§ -14 Disclosure of loan terms. (a) Prior to accepting any consideration from the borrower, a licensed mortgage broker or licensed mortgage solicitor employed by that broker shall disclose in writing to any applicant for a residential mortgage loan the following information:

(1) That the licensed mortgage broker or licensed mortgage solicitor employed by that broker cannot guarantee acceptance into any particular residential mortgage loan program or promise any specific residential mortgage loan terms or conditions;

(2) A good faith estimate of the fees to be collected, when required by the federal Real Estate Settlement Procedures Act, including a credit report fee, property appraisal fee, or any other third-party fee; and

(3) The terms and conditions for obtaining a refund of fees or arranging for the transfer of third-party service work products to another residential mortgage loan lender or mortgage broker, if any.

(b) The mortgage broker may issue a residential mortgage loan commitment and may furnish a lock-in of the interest rate and program on behalf of the residential mortgage loan lender when the licensed mortgage broker has obtained a written or electronically transmitted residential mortgage loan commitment or lock-in for the residential mortgage loan from the residential mortgage loan lender on behalf of the borrower for the residential mortgage loan. The residential mortgage loan commitment issued by the licensed mortgage broker to the borrower on behalf of the residential mortgage loan lender shall be in the same form and substance as issued by the residential mortgage loan lender and shall identify the residential mortgage loan lender by name.

§ -15 Establishment of trust account for borrower funds to pay third-party providers. Each licensed mortgage broker shall hold in trust all funds received from borrowers seeking a residential mortgage loan for payment to third-party providers. The funds may not be used for the benefit of the licensed mortgage broker or any person not entitled to any benefit, except as may be expressly permitted by law. Each licensed mortgage broker shall deposit those funds in a trust account maintained by the licensed mortgage broker with a bank or other financial institution located and authorized to accept deposits or engage in the business of a trust company in this State. Each licensed mortgage broker is responsible for depositing, holding, disbursing, accounting for, and otherwise dealing with the funds.

§ -16 Submission of security breach information. A notice of any security breach, as defined by section 487N-1, following discovery or notification of the breach in the security of personal information of individuals whose personal information was, or is reasonably believed to have been, acquired by an unauthorized person, shall be submitted to the commissioner. The notice shall be made without unreasonable delay consistent with any measures necessary to determine the scope of the breach and to restore the reasonable integrity, security, and confidentiality of the data system.

§ -17 License sanctions. (a) In addition to any other actions authorized by law, the commissioner may suspend, revoke, deny, condition in any manner, or refuse to renew, reinstate, or restore, any license issued under this chapter, or fine any person holding a license issued under this chapter, for any violation of this chapter.

(b) Any order of the commissioner may be appealed in accordance with chapter 91.

§ -18 Cease and desist orders; grounds for issuance. (a) Whenever it appears to the commissioner that any person has engaged or is about to engage in any act or practice constituting a violation of:

(1) This chapter; or

(2) A rule adopted or order issued under this chapter;

the commissioner may, in the commissioner's discretion, issue a cease and desist order to enforce compliance with this chapter, or with any rule adopted or order issued under this chapter. The commissioner shall have the discretion to include in the order an assessment of an administrative fine against any person who violates this chapter.

§ -19 Cease and desist orders; procedure; hearing; enforcement. (a) The notice of charges and proposed cease and desist order shall be in writing and shall be served upon the mortgage broker at its principal office in this State and upon any other affected party wherever that person can be located and served by the commissioner. The notice of charges shall state the alleged violations or wrongful practices and a summary of the facts in support of the allegations. The notice shall be accompanied by a proposed order that states the commissioner's intent to require discontinuance of the violation or practice and the immediate compliance with all requirements of any applicable agreement, conditions of approval, order, rule or law. The proposed order may also direct affirmative action as may be necessary to correct the alleged violation or wrongful practice. The notice of charges shall set forth a time and place for a hearing to determine whether the proposed order shall be issued.

(b) Within twenty days after service of a notice of charges, unless an earlier date or later date is set by the commissioner upon request of the affected party, the commissioner or the commissioner’s delegate shall hold a hearing in accordance with chapter 91. If no appearance is made at the scheduled hearing by the party or its duly authorized representative, the party shall be deemed to have consented to the issuance of the cease and desist order and the commissioner may issue the order. Any cease and desist order issued after a hearing held in accordance with this subsection shall become effective after service upon the affected party and shall remain effective until modified or terminated by the commissioner. Any appeal of a cease and desist order shall be made to the circuit court in accordance with chapter 91.

(c) On or after the effective date of any cease and desist order, the commissioner may apply for enforcement of the order to the circuit court. The application may also contain a petition for such other relief or remedies as may be appropriate in the circumstances.

§ -20 Consent cease and desist orders. Any affected party may waive its rights to a hearing on any notice of charges by stipulating and consenting to the issuance of a cease and desist order. Any cease and desist order issued by consent shall be effective as of the date specified therein and shall remain effective until modified or terminated by the commissioner.

§ -21 Powers of commissioner. In addition to any other acts or conditions provided by law, the commissioner may:

(1) Adopt, amend, or repeal rules, issue declaratory rulings or informal nonbinding interpretations, and conduct contested case proceedings pursuant to chapter 91;

(2) Grant, deny, forfeit, renew, reinstate, or restore the license of any mortgage broker;

(3) Revoke, suspend, or otherwise limit the license of any mortgage broker or mortgage solicitor for any violation of the provisions in this chapter, or any rule or order of, or agreement with the commissioner;

(4) Develop requirements for licensure through rules;

(5) Investigate and conduct hearings regarding any violation of this chapter, and any rule or order of or agreement with the commissioner;

(6) Prepare, administer, and grade examinations; provided that the commissioner may contract with a testing agency to provide those services, and the commissioner may also reserve the right to modify, amend, or change the examination;

(7) Create fact-finding committees that may make recommendations to the commissioner for the commissioner’s deliberations;

(8) Request a criminal history record check of the applicant and any of its officers, directors, employees, partners, and members in accordance with section 846-2.7;

(9) Contract with qualified persons, including investigators who may be exempt from chapter 76 and who shall assist the commissioner in exercising the commissioner's powers and duties; and

(10) Subpoena witnesses and documents, administer oaths, and receive affidavits and oral testimony, including telephonic communications, and do any and all things necessary or incidental to the exercise of the commissioner's power and duties, including the authority to conduct contested case proceedings under chapter 91.

§ -22 Summary license suspension. (a) Notwithstanding any law to the contrary, the commissioner or delegate may cause the immediate suspension or restriction of a license, subject to subsequent notice and hearing or other adequate procedures, upon a specific determination that the failure to take such an action may result in:

(1) An immediate and unreasonable threat to personal safety; or

(2) Fraud or misrepresentation upon consumers, and that, for the protection of the public from the possible consequences of practices, the license should be immediately suspended or restricted.

(b) The commissioner or delegate may order the summary suspension of the license for a period not to exceed twenty days. The order of suspension shall be served upon the licensee at the same time as the notice of hearing for disciplinary action, and the hearing shall be scheduled prior to the expiration of the order of suspension. The period of suspension prior to the hearing shall not be extended beyond twenty days except upon request of the licensee for a reasonable continuance to adequately prepare the licensee's defense. Any attempt by the licensee to continue the licensed activity while the license has been summarily suspended shall of itself be sufficient to warrant a permanent revocation of the license and shall subject the licensee to all penalties prescribed by this chapter, or any rule or order of the commissioner.

§ -23 Fees, commissions, and charges. The commissioner may also adopt rules concerning maximum brokerage fees, commissions, and charges on brokered residential mortgage loan transactions, including but not limited to rules requiring the full disclosure of brokerage fees, commissions, and charges.

§ -24 Private right of action. Nothing in this chapter shall be construed to preclude any individual or entity that suffers loss as a result of a violation of this chapter from maintaining a civil action to recover damages and, as provided by statute, attorney fees.

§ -25 Penalty. Any person who violates a provision of this chapter shall be subject to an administrative fine of not more than $5,000 for each violation. All fines collected by the commissioner shall be deposited into the compliance resolution fund established pursuant to section 26-9(o)."

SECTION 2. Section 846-2.7, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Criminal history record checks may be conducted by:

(1) The department of health on operators of adult foster homes or developmental disabilities domiciliary homes and their employees, as provided by section 333F-22;

(2) The department of health on prospective employees, persons seeking to serve as providers, or subcontractors in positions that place them in direct contact with clients when providing non-witnessed direct mental health services as provided by section 321-171.5;

(3) The department of health on all applicants for licensure for, operators for, and prospective employees, and volunteers at one or more of the following: skilled nursing facility, intermediate care facility, adult residential care home, expanded adult residential care homes, assisted living facility, home health agency, hospice, adult day health center, special treatment facility, therapeutic living program, intermediate care facility for the mentally retarded, hospital, rural health center and rehabilitation agency, and, in the case of any of the above-related facilities operating in a private residence, on any adult living in the facility other than the client as provided by section 321-15.2;

(4) The department of education on employees, prospective employees, and teacher trainees in any public school in positions that necessitate close proximity to children as provided by section 302A-601.5;

(5) The counties on employees and prospective employees who may be in positions that place them in close proximity to children in recreation or child care programs and services;

(6) The county liquor commissions on applicants for liquor licenses as provided by section 281-53.5;

(7) The department of human services on operators and employees of child caring institutions, child placing organizations, and foster boarding homes as provided by section 346-17;

(8) The department of human services on prospective adoptive parents as established under section 346-19.7;

(9) The department of human services on applicants to operate child care facilities, prospective employees of the applicant, and new employees of the provider after registration or licensure as provided by section 346-154;

(10) The department of human services on persons exempt pursuant to section 346-152 to be eligible to provide child care and receive child care subsidies as provided by section 346-152.5;

(11) The department of human services on operators and employees of home and community-based case management agencies and operators and other adults, except for adults in care, residing in foster family homes as provided by section 346-335;

(12) The department of human services on staff members of the Hawaii youth correctional facility as provided by section 352-5.5;

(13) The department of human services on employees, prospective employees, and volunteers of contracted providers and subcontractors in positions that place them in close proximity to youth when providing services on behalf of the office or the Hawaii youth correctional facility as provided by section 352D-4.3;

(14) The judiciary on employees and applicants at detention and shelter facilities as provided by section 571-34;

(15) The department of public safety on employees and prospective employees who are directly involved with the treatment and care of persons committed to a correctional facility or who possess police powers including the power of arrest as provided by section 353C-5;

(16) The department of commerce and consumer affairs on applicants for private detective or private guard licensure as provided by section 463-9;

(17) Private schools and designated organizations on employees and prospective employees who may be in positions that necessitate close proximity to children; provided that private schools and designated organizations receive only indications of the states from which the national criminal history record information was provided as provided by section 302C-1;

(18) The public library system on employees and prospective employees whose positions place them in close proximity to children as provided by section 302A-601.5;

(19) The State or any of its branches, political subdivisions, or agencies on applicants and employees holding a position that has the same type of contact with children, dependent adults, or persons committed to a correctional facility as other public employees who hold positions that are authorized by law to require criminal history record checks as a condition of employment as provided by section 78-2.7;

(20) The department of human services on licensed adult day care center operators, employees, new employees, subcontracted service providers and their employees, and adult volunteers as provided by section 346-97;

(21) The department of human services on purchase of service contracted and subcontracted service providers and their employees serving clients of the adult and community care services branch, as provided by section 346-97;

(22) The department of human services on foster grandparent program, senior companion program, and respite companion program participants as provided by section 346-97;

(23) The department of human services on contracted and subcontracted service providers and their current and prospective employees that provide home and community-based services under Section 1915(c) of the Social Security Act (42 U.S.C. §1396n(c)), as provided by section 346-97; [~~and~~]

(24) The department of commerce and consumer affairs on applicants for a mortgage broker license, or in the case where the applicant is not a natural person, on any of its officers, directors, employees, partners, or members as provided by section -5;

(25) The department of commerce and consumer affairs on applicants for a mortgage solicitor's license as provided by section -6; and

[~~(24)~~] (26) Any other organization, entity, or the State, its branches, political subdivisions, or agencies as may be authorized by state law."

SECTION 3. Chapter 454, Hawaii Revised Statutes, is repealed.

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2008.

INTRODUCED BY:

_____________________________

BY REQUEST

THE SENATE	S.B. NO.	1401
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII