STAND. COM. REP. NO. 787

Honolulu, Hawaii

RE:    S.B. No. 1067

       S.D. 2

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2013

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred S.B. No. 1067, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO ESCROW DEPOSITORIES,"

begs leave to report as follows:

     The purpose and intent of this measure is to update the laws regulating escrow depositories.

     More specifically, this measure:

(1)  Specifies the powers of the Commissioner of Financial Institutions to supervise, regulate, and examine escrow depositories;

(2)  Authorizes the Commissioner to issue permanent and temporary cease and desist orders;

(3)  Increases the amount of administrative fines;

(4)  Adds enhanced civil penalties for violations directed at elders;

(5)  Increases net capital requirements;

(6)  Requires licensees to notify the Commissioner of any change in the designated escrow officer or the branch manager;

(7)  Imposes a fee for the transfer and change in control of a license;

(8)  Increases the amount of the fidelity bond;

(9)  Increases the amount of coverage under an errors and omission insurance policy; and

(10) Increases licensing and related fees.

     Your Committee received written comments in support of this measure from the Department of Commerce and Consumer Affairs.  Your Committee received written comments in opposition to this measure from the Hawaii Escrow Association.

     Your Committee finds that this measure makes overdue changes to the law on escrow depositories.  This measure will enable the Department of Commerce and Consumer Affairs to better regulate escrow depositories and protect consumers in light of the higher stakes posed by the larger and more sophisticated financial transactions handled by today's escrow depositories.

     Your Committee has amended this measure by:

     (1)  Clarifying that impending, as well as alleged violations, must be stated in the notice of charges for a cease and desist order;

     (2)  Requiring the licensee to provide notice of a change in the designated escrow officer or branch manger within fifteen days after the escrow officer's or branch manager's termination, if unexpected circumstances prevent prior notice; and

     (3)  Making technical nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1067, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1067, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

DAVID Y. IGE, Chair