THE SENATE	S.B. NO.	1178
TWENTY-SIXTH LEGISLATURE, 2011		S.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO MORTGAGE LENDERS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Section 454M-3, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§454M-3[]]  Exemptions.  This chapter shall not apply to the following:

     (1)  Any persons chartered or authorized under the laws of any state or federal law to engage in the activity of an insured depository institution as defined in Title 12 United States Code [section] Section 1813(c)(2), including banks or savings associations, and operating subsidiaries of an insured depository institution;

     (2)  Trust companies, credit unions, insurance companies, and financial service loan companies licensed by the State;

     (3)  The Federal Deposit Insurance Corporation, in connection with assets acquired, assigned, sold, or transferred pursuant to section 13(c) of the Federal Deposit Insurance Act or as receiver or conservator of an insured depository institution;

     (4)  The Federal National Mortgage Association; the Federal Home Loan Mortgage Corporation; the Federal Deposit Insurance Corporation; the United States Department of Housing and Urban Development, and the Government National Mortgage Association and the Federal Housing Administration, and cases in which a mortgage insured under the National Housing Act, 12 United States Code [section] Section 1701 et seq., is assigned to the United States Department of Housing and Urban Development; the National Credit Union Administration; the Farmers Home Administration or its successor agency under Public Law 103-354; and the Department of Veterans Affairs, in any case in which the assignment, sale, or transfer of the servicing of the mortgage loan is preceded by termination of the contract for servicing the loan for cause, commencement of proceedings for bankruptcy of the servicer, or commencement of proceedings by the Federal Deposit Insurance Corporation for conservatorship or receivership of the mortgage servicer or an entity by which the mortgage servicer is owned or controlled; [and]

     (5)  Any person making or acquiring contemporaneously no more than five residential mortgage loans with that person's own funds for that person's own investment[.]; and

(6) A mortgage loan originator company licensed pursuant to chapter 454F."

     SECTION 2.  Section 454M-4, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§454M-4[]]  License; fees; renewals[.]; voluntary surrender of license.  (a)  An applicant for licensure shall file an application on a form prescribed by the commissioner and shall pay an application fee of $500.  Each license shall expire on June 30 of each calendar year.  A license may be renewed by filing a renewal statement on a form prescribed by the commissioner and paying a renewal fee of $250, on or before July 1 for licensure for the following year.

     (b)  The applicant shall submit any other information that the commissioner may require, including:

     (1)  The applicant's form and place of organization;

     (2)  The applicant's tax identification number; and

     (3)  The applicant's proposed method of doing business.

     The applicant shall disclose whether the applicant or any of its officers, directors, employees, managers, agents, partners, or members [has] have ever been issued or been the subject of an injunction or administrative order pertaining to any aspect of the lending business, [has] have ever been convicted of a misdemeanor involving the lending industry or any aspect of the lending business, or [has] have ever been convicted of any felony.

(c)  A mortgage servicer licensed under this chapter may voluntarily cease business and surrender its license by giving written notice to the commissioner of its intent to surrender its mortgage servicer license.  Written notice required by this subsection shall be given to the commissioner no fewer than thirty days before the surrender of the license and shall include:

(1) The name, address, telephone number, facsimile number, and electronic address of a contact individual with the knowledge and authority required to communicate with the commissioner regarding all matters relating to the licensee during the period that it was licensed pursuant to this chapter;

(2) A statement of the reason or reasons for surrender;

(3) The original license issued to the mortgage servicer pursuant to this chapter; and

(4) If applicable, a copy of all notices to affected borrowers required by the Real Estate Settlement Procedures Act, Title 12 United States Code Section 2601 et seq., or by regulations adopted pursuant to the Real Estate Settlement Procedures Act, of the assignment, sale, or transfer of the servicing of all relevant loans that the licensee is currently servicing under the license being surrendered.

Voluntary surrender of a license shall be effective upon receipt by the commissioner of the written notice required by this subsection; provided that if a mortgage servicer is required to assign, sell, or transfer the servicing of any loans, the voluntary surrender of the mortgage servicer's license shall be effective upon the effective date of the assignment, sale, or transfer of the servicing of all loans."

     SECTION 3.  Section 454M-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  A mortgage servicer licensed or acting under this chapter, in addition to duties imposed by law, shall:

     (1)  Safeguard and account for any money handled for the borrower;

     (2)  Act with reasonable skill, care, timeliness, promptness, and diligence;

     (3)  Disclose to the commissioner in the application and yearly renewal a complete, current schedule of the ranges of costs and fees it charges borrowers for its servicing-related activities; and

     (4)  File with the commissioner upon request a report in a form and format acceptable to the [director] commissioner detailing the mortgage servicer's activities in this State, including:

         (A)  The number of mortgage loans the mortgage servicer is servicing;

         (B)  The type and characteristics of [such] loans serviced in this State;

         (C)  The number of serviced loans in default, along with a breakdown of thirty-, sixty-, and ninety-day delinquencies;

         (D)  Information on loss mitigation activities, including details on workout arrangements undertaken;

         (E)  Information on foreclosures commenced in this State; and

         (F)  Any other information that the commissioner may require."

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

     SECTION 5.  This Act shall take effect upon its approval.

Report Title:

Mortgage Servicers; Commissioner of Financial Institutions

Description:

Exempts mortgage services licensed as mortgage loan originators pursuant to chapter 454F from additional licensure under chapter 454M; provides for voluntary surrender of a license through notice to the commissioner and compliance with applicable federal law; corrects an internal reference.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.