SB2918

SECTION 1. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§302A- Classroom teacher loan program. (a) As used in this section:

"Appraised value" means the value of a subject property as determined by an appraiser licensed or certified pursuant to section 466K-4.

"Classroom teacher loan" means a loan made to a qualified classroom teacher that does not require any payment from the qualified classroom teacher of any downpayment or closing costs as a condition of the loan.

"Department" means the department of education.

"Qualified classroom teacher" means a borrower employed by the department of education as a teacher in a classroom on a full-time basis and licensed pursuant to section 302A-805.

"Subject property" means the property being mortgaged to secure repayment of a classroom teacher loan. The subject property shall be the principal residence of the qualified classroom teacher for as long as the loan is guaranteed by the State.

(b) The department may guarantee up to one hundred per cent of the principal balance of a classroom teacher loan made to a qualified classroom teacher. Loans guaranteed under this section shall be limited to loans offered by any financial institution chartered or licensed under chapter 412, or any mortgage broker licensed under section 454-3 and shall not exceed one hundred per cent of the appraised value of the subject property.

(c) The loan guarantee shall terminate one hundred twenty days after the borrower is no longer a qualified classroom teacher or upon the payment of at least twenty per cent of the principal amount of the loan.

(d) The aggregate amount of the State's liability, contingent or otherwise, on loans guaranteed under this section shall not exceed $10,000,000 at any time based on a reserve level established at twenty-five per cent of the loan guarantee amount.

(e) When the application for a guaranteed loan has been approved by the department, the department shall issue to the lender a guaranty for that percentage of the loan on which it guarantees payment of principal and interest. The lender shall collect all payments from the borrower and otherwise service the loan.

(f) If the lender initiates foreclosure proceedings to collect moneys due from a borrower, the lender shall notify the department. Within thirty days of the notification, the department may elect to request an assignment of the loan on payment in full to the lender of the principal balance and interest due. Foreclosure proceedings shall be held in abeyance in the interim.

(g) The lender may reduce the percentage of the principal balance guaranteed under this section at any time. No loan shall be made and guaranteed if the lender determines or should have determined that the borrower is or was likely to default on the terms or conditions of the loan.

(h) The department shall adopt rules pursuant to chapter 91 to effectuate this section; provided that the rules shall specify:

(1) The amount or percentage of ownership required of a qualified classroom teacher in a subject property;

(2) The conditions under which the State may become a co- guarantor or a subordinate guarantor to a loan guarantee offered by a federal program;

(3) The specific types of loans that may be guaranteed under this program; and

(4) Interest (including the annual percentage rate as that term is defined by the federal Truth in Lending Act) charged on a guaranteed loan made under this section."

SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2008-2009 to establish the teacher loan housing program including the hiring of necessary staff to effectuate the purposes of this section.

The sum appropriated shall be expended by the department of education for the purposes of this Act.

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval; provided that section 2 shall take effect on July 1, 2008.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2918
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII