Bill Text: HI HB2278 | 2010 | Regular Session | Introduced
Bill Title: Mortgage Loan Origination
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2010-01-22 - (H) Referred to CPC/JUD, FIN, referral sheet 4 [HB2278 Detail]
Download: Hawaii-2010-HB2278-Introduced.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
2278 |
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TWENTY-FIFTH LEGISLATURE, 2010 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to mortgage loan origination.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Chapter 412, Hawaii Revised Statutes, is amended by adding to part I of article 9 a new section to be appropriately designated and to read as follows:
"§412:9- Registration with Nationwide Mortgage Licensing System and Registry. (a) A nondepository financial services loan company licensed under this chapter is not a mortgage loan originator company as defined in chapter 454F.
(b) A nondepository financial services loan company must register with the Nationwide Mortgage Licensing System and Registry if any employee of the nondepository financial services loan company acts as a mortgage loan originator as defined by chapter 454F or if the nondepository financial services loan company uses the services of an exclusive independent contractor mortgage loan originator, underwriter or loan processor, as defined in chapter 454F.
(c) This section does not exempt an employee of a nondepository financial services loan company who originates, processes or underwrites mortgage loans, or an independent contractor providing mortgage loan originating, processing, or underwriting services to a nondepository financial services loan company, from licensure under chapter 454F."
SECTION 2. Section 454F-1, Hawaii Revised Statutes, is amended by adding new definitions to be appropriately inserted and to read as follows:
""Borrower" means a person who has applied for or obtained a residential mortgage loan from or through a licensed mortgage loan originator or mortgage loan originator company, or from or through a person required to be licensed as a mortgage loan originator or mortgage loan originator company under this chapter.
"Branch office" means any location, separate from the principal place of business of the mortgage loan originator company, that is identified by any means to the public or customers as a location at which the licensee holds itself out as a mortgage loan originator company.
"Control person" means an individual who directly or indirectly has the right to vote twenty-five per cent or more of a class of voting security of a company or has the power to sell or direct the sale of twenty-five per cent or more of a class of voting securities of a company.
"Division" means the division of financial institutions.
"Dwelling" means a residential structure that contains one to four units whether or not that structure is attached to real property. "Dwelling" includes an individual condominium unit, an individual cooperative unit, a mobile home, and a trailer if used as a residence.
"Employee" means an individual who is hired to provide services for a licensee on a regular basis in exchange for compensation and who does not provide these services as part of an independent business. An employee is subject to tax withholding, the Federal Income Contributions Act, and other lawful deductions by the licensee as a condition of employment and is subject to the right of the licensee to direct and control the actions of the employee.
"Exempt registered mortgage loan originator company" means any person who is required to be licensed by any other state or federal law, but is not required to be licensed under this chapter, and has the obligation to register with the Nationwide Mortgage Licensing System and Registry because one or more of the person's employees engage in the business of a mortgage loan originator.
"Independent contractor" means any person who has a contractual arrangement to perform mortgage loan originating, underwriting, or loan processing services on behalf of a licensee, but is not an employee of that licensee.
"License" means a license issued under this chapter.
"Licensee" means a mortgage loan originator, a mortgage loan originator company, or a person who is required to be licensed under this chapter. Licensee does not include an exempt registered mortgage loan originator or exempt registered mortgage loan originator company as defined by this section.
"Manager" means an individual employed by a mortgage loan originator company who has the duty to directly manage and supervise a licensed mortgage loan originator company and its licensed mortgage loan originators.
"Mortgage loan originator company" means:
(1) An individual, not exempt under section 454F-2, who engages in the business of a mortgage loan originator as a sole proprietorship; or
(2) A person, not exempt under section 454F-2, who employs or utilizes the exclusive services of one or more mortgage loan originators licensed or required to be licensed under this chapter.
"Taking a residential mortgage loan application" means the receipt by a mortgage loan originator of a residential mortgage loan application for the purpose of deciding whether or not to extend the requested offer of a loan to the borrower, whether the application is received directly or indirectly from the borrower."
SECTION 3. Chapter 454F, Hawaii Revised Statutes, is amended by adding twenty-four new sections to be appropriately designated and to read as follows:
"§454F-A Automatic secondary review of license application. The commissioner shall establish, by rule pursuant to chapter 91, a procedure for the secondary review of an application that was determined on initial review not to meet the criteria for licensure.
§454F-B Continuing education requirements for license renewal. The license of a licensee meeting the requirements of section 454F-8(a)(1) and (3) shall expire if the licensee fails to meet the minimum requirements for continuing education. Reinstatement of the expired license may be allowed as provided for by this chapter.
§454F-C Successive years for continuing education courses. A licensee is prohibited from taking the same approved continuing education course in the same or successive years to meet the annual continuing education requirements. For purposes of this section, the term "successive years" means the two years following the year in which a mortgage loan originator takes an approved course.
§454F-D Authorized places of business; designation of managers. (a) Every mortgage loan originator company licensed under this chapter shall have and maintain a principal place of business in the State for the transaction of business and shall designate a manager.
(b) In the event that a mortgage loan originator company desires to maintain one or more branch offices in the State in addition to its principal place of business in the State, the commissioner, upon application and payment of a nonrefundable application fee as required by this chapter shall approve a branch office license. The mortgage loan originator company shall designate a manager located in each branch office to be in charge of that branch office.
(c) No mortgage loan originator company may relocate any office in this State without first obtaining prior written approval from the commissioner. The application shall set forth the reasons for the relocation, the street address of the proposed relocated office, and other information that may be required by the commissioner, and shall be submitted with a nonrefundable application fee.
(d) A mortgage loan originator company shall give the commissioner notice of its intent to close any branch office at least thirty days prior to the closing. The notice shall:
(1) State the intended date of closing; and
(2) Specify the reasons for the closing.
§454F-E Reinstatement of expired license. (a) A license issued under this chapter that expires for failure to satisfy the minimum standards for renewal may be reinstated if the licensee meets the following requirements:
(1) The license must be reinstated between January 1 and February 28 of the year immediately following the year the license expired;
(2) All continuing education courses and any other minimum requirements for license renewal for the year in which the license expired must be taken on or after January 1 and before March 1 of the year immediately following the year the license expired, and before the reinstatement becomes effective. Continuing education taken on or after January 1 and before March 1 as credits for the previous year cannot also be credited as part of the current calendar year's requisite hours of continuing education; and
(3) The licensee must pay the applicable application fee, reinstatement fee, and late fee.
(b) If a licensee whose license has expired fails to meet the requirements for reinstatement specified in this section, the licensee may apply for a new license and shall meet the requirements for licensure in effect at that time.
§454F-F Registration with Nationwide Mortgage Licensing System and Registry; additional requirements. (a) All mortgage loan originators, mortgage loan originator companies, and any other person in this State that originates a residential mortgage loan, unless exempt under section 454F-2, are required to be registered with the Nationwide Mortgage Licensing System and Registry.
(b) All persons, defined in this chapter as "exempt registered mortgage loan originators" and "exempt registered mortgage loan originator companies" are required to register and maintain a unique identifier through the Nationwide Mortgage Licensing System and Registry, but are not required to be licensed under this chapter.
§454F-G Mortgage loan recovery fund; use of fund; fees. (a) The commissioner shall establish and maintain a trust fund which shall be known as the mortgage loan recovery fund from which any person aggrieved by an act, representation, transaction, or conduct of a duly licensed mortgage loan originator or mortgage loan originator company, upon the grounds of fraud, misrepresentation, or deceit, may recover by order of the circuit court or district court of the county where the violation occurred, an amount of not more than $25,000 per transaction for damages sustained by the fraud, misrepresentation, or deceit, including court costs and fees as set by law, and reasonable attorney fees as determined by the court.
(b) Upon licensure, a licensee shall pay directly to the division, in addition to the person's original application fee, and fees required by the Nationwide Mortgage Licensing System and Registry, a mortgage loan recovery fund fee as follows, for deposit in the mortgage loan recovery fund:
(1) The sum of $300 for the principal office location of the mortgage loan originator company licensed under this chapter;
(2) The sum of $250 for each branch office location of a mortgage loan originator company licensed under this chapter; and
(3) The sum of $200 for each mortgage loan originator licensed under this chapter.
(c) Upon renewal, a licensee shall pay directly to the division, for deposit in the mortgage loan recovery fund:
(1) The sum of $200 for the principal office location of the mortgage loan originator company licensed under this chapter;
(2) The sum of $150 for each branch office location of a mortgage loan originator company licensed under this chapter; and
(3) The sum of $100 for each mortgage loan originator licensed under this chapter.
(d) When the mortgage loan recovery fund attains a funding level of $750,000, the commissioner may adjust the fees generated by renewals, or may determine that payments made by renewing licensees shall cease. If the funding level falls below $250,000 after the first five years, the commissioner may adjust the fees to a reasonable level, for the purpose of attaining a funding level of $750,000.
(e) The commissioner, or the commissioner's delegate, as the manager of the mortgage loan recovery fund, shall be authorized to expend the funds to:
(1) Retain private legal counsel to represent the commissioner or the division in any action involving or which may result in payment from the mortgage loan recovery fund;
(2) Retain a certified public accountant for accounting and auditing of the mortgage loan recovery fund;
(3) Employ necessary personnel, not subject to chapter 76, to assist the commissioner in exercising its powers and duties with respect to the mortgage loan recovery fund; and
(4) Retain a consultant to recover and collect any payments from the mortgage loan recovery fund plus interest from the judgment debtor.
§454F-H Statute of limitation; recovery from fund. (a) No action for a judgment that subsequently results in an order for collection from the mortgage loan recovery fund shall be started later than six years from the accrual of the cause of action thereon. When any aggrieved person commences action for a judgment that may result in collection from the mortgage loan recovery fund, the aggrieved person shall notify the commissioner in writing to this effect at the time of the commencement of the action and shall submit prescribed documents. The commissioner may intervene in and defend any such action.
(b) When any aggrieved person recovers a valid judgment in any circuit or district court where the violation occurred against any licensee under this chapter, upon the grounds of fraud, misrepresentation, or deceit, which occurred before the effective date of this chapter, the aggrieved person must proceed against the existing bond covering the license which was in force prior to the establishment of the mortgage loan recovery fund.
(c) The court shall proceed upon the application in a summary manner and, upon the hearing thereof, the aggrieved person shall be required to show:
(1) The person is not a spouse of the judgment debtor, or the personal representative of such spouse;
(2) The person has complied with all the requirements of this section;
(3) The person has obtained a judgment as set out in subsection (b), stating the amount thereof and the amount owing thereon at the date of the application;
(4) The person has made all reasonable searches and inquiries to ascertain whether the judgment debtor is possessed of real or personal property or other assets, liable to be sold or applied in satisfaction of the judgment;
(5) That by such search the person has discovered no personal or real property or other assets liable to be sold or applied, or that the person has discovered certain of them, describing them, owned by the judgment debtor and liable to be so applied, and that the person has taken all necessary action and proceedings for the realization thereof, and that the amount thereby realized was insufficient to satisfy the judgment, stating the amount so realized and the balance remaining due on the judgment after application of the amount realized; and
(6) That where the licensee is a judgment debtor in a bankruptcy proceeding, the aggrieved person has obtained an order from the bankruptcy court declaring the judgment against the licensee to be non-dischargeable.
(d) The court shall make an order directed to the commissioner requiring payment from the mortgage loan recovery fund of whatever sum it finds to be payable upon the claim, pursuant to and in accordance with the limitations contained in this section, if the court is satisfied, upon the hearing, of the truth of all matters required to be shown by the aggrieved person by subsection (c) and that the aggrieved person has fully pursued and exhausted all remedies available to the person for recovering the amount awarded by the judgment of the court.
§454F-I Management of fund. (a) The sums received by the division for deposit in the mortgage loan recovery fund shall be held by the commissioner, or the commissioner's delegate, for carrying out the purpose of the mortgage loan recovery fund. The commissioner, or the commissioner's delegate, as the manager of the recovery fund, shall be authorized to expend the funds to retain private legal counsel to represent the commissioner in any action involving the mortgage loan recovery fund. These funds may be invested and reinvested in the same manner as funds of the state employees' retirement system.
§454F-J Standing in court. When the division receives notice, as provided in section 454F-H, the commissioner may enter an appearance, file an answer, appear at the court hearing, defend the action, or take whatever other action it deems appropriate, and take recourse through any appropriate method of review. The commissioner or its legal representative shall be served with all pleadings in an action which may result in a recovery from the mortgage loan recovery fund.
§454F-K Subrogation of rights. When, upon the order of the court, the commissioner has paid from the mortgage loan recovery fund any sum to the judgment creditor, the commissioner shall be subrogated to all of the rights of the judgment creditor and the judgment creditor shall assign all the creditor's right, title, and interest in the judgment to the commissioner and any amount and interest so recovered by the commissioner on the judgment shall be deposited to the fund.
§454F-L Waiver of rights. The failure of an aggrieved person to comply with this chapter relating to the mortgage loan recovery fund shall constitute a waiver of any rights hereunder.
§454F-M Maximum liability. Notwithstanding any other provision, the liability of the mortgage loan recovery fund shall not exceed the sum of $100,000 against any one licensee.
§454F-N Disciplinary action against licensee. Nothing contained herein shall limit the authority of the commissioner to take disciplinary action against any licensee for a violation of this chapter, or the rules and orders of the commissioner; nor shall the repayment in full of all obligations to the mortgage loan recovery fund by any licensee nullify or modify the effect of any other disciplinary proceeding brought pursuant to this chapter.
§454F-O Change in control of a licensee; fees. (a) A licensee shall submit to the commissioner an application requesting approval of a proposed change of control of the licensee, accompanied by a nonrefundable application fee of $500, payable to the division.
(b) The commissioner shall approve a request for change of control under subsection (a) if, after investigation, the commissioner determines that the person or group of persons requesting approval has the competence, experience, character, and general fitness to control the licensee or person in control of the licensee in a lawful and proper manner, and that the interests of the public will not be jeopardized by the change of control.
§454F-P Mortgage loan originator fees, commissions, and charges. The commissioner may adopt rules concerning maximum fees, commissions, and charges on mortgage loan transactions. The maximum fees, commissions, and charges shall be related to the actual amount of money made available to the borrower, over and above the indebtedness of prior mortgages. The commissioner may also adopt rules concerning the full disclosure of the fees, commissions, and charges.
§454F-Q Elders. (a) Any person who, in the course of engaging in conduct that requires a license under this chapter, commits a violation of this chapter or the rules adopted pursuant to this chapter, which violation includes conduct that is directed towards, targets, or is committed against an elder, may be fined an amount not to exceed $10,000 for each violation in addition to any other fine or penalty assessed against that person.
(b) As used in this section, "elder" means an individual who is sixty-two years of age or older.
§454F-R Payment of fees. All fees, except those fees designated to be placed in the mortgage loan recovery fund, together with any administrative fine or other charge assessed under this chapter shall be deposited into the compliance resolution fund established pursuant to section 26-9(o) and shall be payable through the Nationwide Mortgage Licensing System and Registry, to the extent allowed by the Nationwide Mortgage Licensing System and Registry. Otherwise, fees shall be payable to the division.
§454F-S Mortgage loan originator fees. A mortgage loan originator shall pay the following fees to maintain a valid mortgage loan originator license. These fees are non-refundable. These fees are in addition to any fees established and charged by the Nationwide Mortgage Licensing System and Registry, any approved educational course provider, any approved educational testing provider, any law enforcement agency for finger prints and background checks, or any credit reporting agency used by the Nationwide Mortgage Licensing System and Registry:
(1) Application fee: $600;
(2) Annual renewal fee: $375;
(3) Reinstatement fee: $100;
(4) Late fee: $25 per day;
(5) Criminal background check fee of $35 or an amount to be determined by the commissioner.
§454F-T Mortgage loan originator company fees. (a) A mortgage loan originator company shall pay the following fees to maintain a valid mortgage loan originator company or branch license. These fees are non-refundable and are in addition to any fees established and charged by the Nationwide Mortgage Licensing System and Registry.
(b) Principal office:
(1) Application fee: $990;
(2) Annual renewal fee: $650;
(3) Reinstatement fee: $100;
(4) Late fees: $25 per day;
(5) Criminal background check fees of $35 for each control person, executive officer, director, general partner, and manager, or an amount to be determined by the commissioner.
(c) Branch office:
(1) Application fee: $250
(2) Annual renewal fee: $125;
(3) Reinstatement fee: $100;
(4) Late fee: $25 per day.
§454F-U Fees to amend licensing information. (a) In addition to fees charged by the Nationwide Mortgage Licensing System and Registry, a fee of $50 shall be charged by the division for each of the following amendments by licensees amending information provided to the Nationwide Mortgage Licensing System and Registry or the division, which requires the review of the commissioner.
(1) Change of physical location, including branch or company main office address change;
(2) Addition or deletion of a "d/b/a" designation;
(3) Change in manager;
(4) Change in legal name.
(b) Amendment fees are charged per license.
(c) Upon a showing of good cause, the commissioner may waive any fees set forth in this section that are assessed by the division.
§454F-V Complaints against mortgage loan originators. The division may investigate and act upon complaints against licensees licensed under this chapter. Complaints shall be filed in writing with the division.
§454F-W False or misleading information on application form. It shall be a violation of this chapter for any applicant, or in the case of the applicant that is not an individual, any of the applicant's control persons, executive officers, directors, general partners, or managers, to provide false or misleading information, or make any misrepresentations to the commissioner or to the Nationwide Mortgage Licensing System and Registry. Providing false or misleading information or making a misrepresentation on an application is grounds for denial of the application.
§454F-X Voluntary cessation of operation; surrender of license. (a) Subject to the approval of the commissioner, a licensee may voluntarily cease activity for which a license to operate has been issued under this chapter by delivering to the commissioner a written notice of surrender, which shall include, but not be limited to, a plan of cessation of business, provisions for the transfer or assumption of assets and liabilities, provisions for pending applications or transactions, and provisions for payment or assumption of the licensee's other liabilities, provisions for the disposition of individual mortgage loan originator licenses, and for transfer or assumption of all trust, agency, and other fiduciary relationships and accounts.
(b) The commissioner shall approve the surrender if:
(1) The commissioner is satisfied with the plan as set forth by the licensee; and
(2) No other reason exists to deny the request for surrender;
provided that the commissioner may impose any restrictions and conditions as the commissioner deems appropriate.
(c) The surrender shall not affect rights and duties that have matured, penalties that were incurred, and proceedings that were begun before the effective date of the surrender of the license under this section."
SECTION 4. Section 28-8.3, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) No department of the State other than the attorney general may employ or retain any attorney, by contract or otherwise, for the purpose of representing the State or the department in any litigation, rendering legal counsel to the department, or drafting legal documents for the department; provided that the foregoing provision shall not apply to the employment or retention of attorneys:
(1) By the public utilities commission, the labor and industrial relations appeals board, and the Hawaii labor relations board;
(2) By any court or judicial or legislative office of the State; provided that if the attorney general is requested to provide representation to a court or judicial office by the chief justice or the chief justice's designee, or to a legislative office by the speaker of the house of representatives and the president of the senate jointly, and the attorney general declines to provide such representation on the grounds of conflict of interest, the attorney general shall retain an attorney for the court, judicial, or legislative office, subject to approval by the court, judicial, or legislative office;
(3) By the legislative reference bureau;
(4) By any compilation commission that may be constituted from time to time;
(5) By the real estate commission for any action involving the real estate recovery fund;
(6) By the contractors license board for any action involving the contractors recovery fund;
(7) By the trustees for any action involving the travel agency recovery fund;
(8) By the office of Hawaiian affairs;
(9) By the department of commerce and consumer affairs for the enforcement of violations of chapters 480 and 485A;
(10) As grand jury counsel;
(11) By the Hawaiian home lands trust individual claims review panel;
(12) By the Hawaii health systems corporation, or its regional system boards, or any of their facilities;
(13) By the auditor;
(14) By the office of ombudsman;
(15) By the insurance division;
(16) By the University of Hawaii;
(17) By the Kahoolawe island reserve commission;
(18) By the division of consumer advocacy;
(19) By the office of elections;
(20) By the campaign spending commission;
(21) By the Hawaii tourism authority,
as provided in section 201B-2.5; [or]
(22) By the division of financial institutions for any action involving the mortgage loan recovery fund; or
[(22)] (23) By a department, in the event the attorney general, for reasons deemed by the attorney general good and sufficient, declines to employ or retain an attorney for a department; provided that the governor thereupon waives the provision of this section."
SECTION 5. Section 237-24.8, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b) As used in this section:
"Activities relating to the general servicing of fiduciary/custodial accounts" means those activities performed by trust companies which are directly or indirectly performed within the fiduciary/custodial relationship between the trust company or trust department of a financial institution and its client and which are not offered to any person outside of the fiduciary/custodial relationship.
"Annual percentage rate" and "finance charge" have the same meaning as defined in the federal Truth in Lending Act (15 U.S.C. sections 1605(a) to (c) and 1606).
"Deposit" means:
(1) Money or its equivalent received or held by a financial institution in the usual course of business and for which it has given or is obligated to give credit to:
(A) A commercial (including public deposits), checking, savings, time, or thrift account;
(B) A check or draft drawn against a deposit account and certified by the financial institution;
(C) A letter of credit; or
(D) A traveler's check, on which the financial institution is primarily liable;
(2) Trust funds received or held by a financial institution, whether held in the trust department or held or deposited in any other department of the financial institution;
(3) Money received or held by a financial institution, or the credit given for money or its equivalent received or held by a financial institution in the usual course of business for a special or specific purpose, regardless of the legal relationship thereby established, including, without being limited to, escrow funds, funds held as security for an obligation due the financial institution or others (including funds held as dealers' reserves) or for securities loaned by the financial institution, funds deposited by a debtor to meet maturing obligations, funds deposited as advance payment on subscriptions to United States government securities, funds held for distribution or purchase of securities, funds held to meet the financial institution's acceptances or letters of credit, and withheld taxes;
(4) Outstanding drafts, cashier's checks, money orders, or other officer's checks issued in the usual course of business for any purpose; or
(5) Money or its equivalent held as a credit balance by a financial institution on behalf of its customer if the financial institution is engaged in soliciting and holding the balances in the regular course of its business.
"Financial institution" means banks, building and loan associations,
development companies, financial corporations, financial services loan
companies, small business investment companies, financial holding companies,
mortgage loan originator companies, and trust companies [all as
defined in chapter 241].
"Leasing of personal property" occurs if:
(1) The lease is to serve as the functional equivalent of an extension of credit to the lessee of the property;
(2) The property to be leased is acquired specifically for the leasing transaction under consideration, or was acquired specifically for an earlier leasing transaction;
(3) The lease is on a nonoperating basis, i.e., the financial institution may not, directly or indirectly:
(A) Provide for the maintenance, repair, replacement, or servicing of the leased property during the lease term;
(B) Purchase parts and accessories in bulk or for an individual property after the lessee has taken delivery of the property; or
(C) Purchase insurance for the lessee;
(4) At the inception of the lease the effect of the transaction will yield a return that will compensate the lessor financial institution for not less than the lessor's full investment in the property plus the estimated total cost of financing the property over the term of the lease, from:
(A) Rentals;
(B) Estimated tax benefits (capital goods excise tax credit, net economic gain from tax deferral from accelerated depreciation, and other tax benefits with a substantially similar effect); and
(C) The estimated residual value of the property at the expiration of the initial term of the lease;
(5) The maximum lease term during which the lessor financial institution must recover the lessor's full investment in the property, plus the estimated total cost of financing the property, shall be forty years; and
(6) At the expiration of the lease (including any renewals or extensions with the same lessee), all interest in the property shall be either liquidated or leased again on a nonoperating basis as soon as practicable (in no event later than two years from the expiration of the lease), but in no case shall the lessor retain any interest in the property beyond fifty years after the lessor's acquisition of the property."
SECTION 6. Section 241-1, Hawaii Revised Statutes, is amended by amending the definition of "mortgage loan company" to read as follows:
""Mortgage loan originator company"
means any company licensed under chapter [454.] 454F."
SECTION 7. Section 412:3-502, Hawaii Revised Statutes, is amended to read as follows:
"§412:3-502 Foreign financial institution. No foreign
financial institution shall receive deposits, lend money, or pay checks,
negotiate orders of withdrawal or share drafts from any principal office,
branch, agency, automatic teller machine, or other location in this State,
unless expressly authorized by this chapter, other laws of this State, or
federal law; provided that nothing in this section shall prohibit any foreign
financial institution from participating in the disbursement of cash through an
automatic teller machine network or from operating from any location in this
State as a [mortgage broker licensed under chapter 454, loan originator
licensed] licensee under chapter 454F[, or as a real estate
collection servicing agent]."
SECTION 8. Section 454F-1, Hawaii Revised Statutes, is amended by amending the definitions of "advertisement" or "advertising", "applicant”, "insured depository institution", "loan processor or underwriter", "mortgage loan originator", "Nationwide Mortgage Licensing System", "registered mortgage loan originator", "residential mortgage loan", and "unique identifier" to read as follows:
""Advertisement" or "advertising" means:
(1) Issuing any card, sign, or device to any person;
(2) Causing, permitting, or allowing the placement of any sign or marking on or in any building, vehicle, or structure;
(3) Placing an advertisement in any newspaper, magazine, or on the Internet;
(4) Listing or advertising in any directory under a classification or heading that includes the words "mortgage loan originator", "mortgage loan originator company", or the like;
(5) Broadcasting commercials by airwave or internet transmission; or
(6) Transmitting any written communication, including:
(A) A letter or a postcard that encourages a person to borrow from or through
a mortgage loan originator[;] or mortgage loan originator company;
or
(B) A written communication that encourages a person to refinance the person's existing residential mortgage loan and mentions that a new residential mortgage loan will reduce the monthly payment the borrower will pay on the new residential mortgage loan or reduce the interest rate on the borrower's existing residential mortgage loan.
"Applicant"
means [an individual] a person applying for the issuance of a
license or a renewal of a license under this chapter.
"Insured depository institution" means the
same as in 12 United States Code [Section] section 1813(c)(2);
provided that it also includes any credit union [whose deposits are insured
by the National Credit Union Association].
"Loan processor or underwriter" means an
individual who performs clerical or support duties as an employee at the
direction of and subject to the supervision and instruction of a [mortgage
loan originator or a] person [who is] licensed or exempt from
licensing [as a mortgage loan originator] under this chapter.
"Mortgage loan originator" means an individual who for compensation or gain or in the expectation of compensation or gain:
(1) Takes a residential mortgage loan application; or
(2) Offers or negotiates terms of a residential mortgage loan.
A mortgage loan originator includes a loan processor or underwriter working as an independent contractor as provided in section 454F-3.
"Nationwide Mortgage Licensing System["]
and Registry" means a mortgage licensing system and registry
developed and maintained by the Conference of State Bank Supervisors and the
American Association of Residential Mortgage Regulators for the licensing and
registration of [licensed] mortgage loan originators[.] and
mortgage loan originator companies.
["Registered] "Exempt registered
mortgage loan originator" means any individual who:
(1) Meets the definition of mortgage loan originator and is an employee of:
(A) An insured depository institution;
(B) A subsidiary that is:
(i) Owned and controlled by an insured depository institution; and
(ii) Regulated by a federal banking agency; or
(C) An institution regulated by the Farm Credit Administration; and
(2) Is
registered with, and maintains a unique identifier through, the Nationwide
Mortgage Licensing System and Registry[.], but is not required to be
licensed under this chapter.
"Residential
mortgage loan" means any loan primarily for personal, family, or household
use that is secured by a mortgage, deed of trust, or other equivalent
consensual security interest on a dwelling as defined in [Section] section
103(v) of the Truth in Lending Act, 15 United States Code [Section] section
1601 et seq., or residential real estate.
"Unique identifier" means a number or other
identifier assigned by protocols established by the Nationwide Mortgage
Licensing System[.] and Registry."
SECTION 9. Section 454F-2, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-2[]]
Exemptions. This chapter shall
not apply to the following:
(1) [A]
An exempt registered mortgage loan originator, when acting for an insured
depository institution, a subsidiary of an insured depository institution
regulated by a federal banking agency, or an institution regulated by the Farm
Credit Administration;
(2) Any individual who offers or negotiates terms of a residential mortgage loan with, or on behalf of, an immediate family member of the individual;
(3) Any individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individual's residence;
(4) A
licensed attorney who negotiates the terms of a residential mortgage loan on
behalf of a client as an ancillary matter to the attorney's representation of
the client unless the attorney is compensated by a lender, a mortgage [broker,]
loan originator company, or other mortgage loan originator, or by
an agent of a lender, mortgage [broker,] loan originator company,
or other mortgage loan originator;
[(5) An
individual engaging solely in loan processor or underwriter activities;
provided that an individual, including an independent contractor, who performs
the services of a loan processor or underwriter shall not represent to the
public, through advertising or other means of communicating or providing
information, including the use of business cards, stationery, brochures, signs,
rate lists, or other promotional items, that the individual can or will perform
any of the activities of a mortgage loan originator, and any loan processor or
underwriter, including an independent contractor, who advertises that the individual
can or will perform any of the activities of a mortgage loan originator or
engages in the activities of a mortgage loan originator shall not be exempt
under this chapter and shall obtain and maintain a license under this chapter
and a valid unique identifier issued by the Nationwide Mortgage Licensing
System;]
[(6)] (5)
A person or entity that only performs real estate brokerage activities and is
licensed or registered by the State unless the person or entity is compensated
by a lender, a mortgage [broker,] loan originator company, or
other mortgage loan originator, or by an agent of the lender, mortgage [broker,]
loan originator company, or other mortgage loan originator; or
[(7)] (6)
A person or entity solely involved in extensions of credit relating to
timeshare plans, as the term is defined in [Section] section
101(53D) of Title 11, United States Code[.];
(7) An exempt registered mortgage loan originator company, as defined by this chapter; and
(8) A nondepository financial services loan company licensed under article 9 of chapter 412."
SECTION 10. Section 454F-3, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-3[]]
Requirement of licensure. (a)
Effective [August 1, 2010,] January 1, 2011, or such later date
approved by the United States Department of Housing and Urban Development
pursuant to the authority granted under Public Law 110-289, [Section] section
1508(e), [an individual,] a person, unless specifically exempted
from this chapter, shall not engage in the business of a mortgage loan
originator or mortgage loan originator company with respect to any
dwelling located in this State without first obtaining and maintaining
annually, a license under this chapter. Each licensed mortgage loan
originator and mortgage loan originator company shall register with and
maintain a valid unique identifier issued by the Nationwide Mortgage Licensing
System[,] and Registry, and shall submit to the Nationwide
Mortgage Licensing System and Registry any reports that shall be in a
form and contain information as the Nationwide Mortgage Licensing System and
Registry may require.
(b) An individual who acts as an independent contractor may not engage in the activities of a mortgage loan originator, loan processor, or underwriter unless that individual mortgage loan originator, loan processor or underwriter obtains and maintains a license under section 454F-4. Each independent contractor engaging in the activities of a mortgage loan originator, loan processor, or underwriter that is licensed as a mortgage loan originator shall have and maintain a valid unique identifier issued by the Nationwide Mortgage Licensing System and Registry. An individual who acts as an independent contractor as described herein, may be an exclusive agent of a mortgage loan originator company. If an independent contractor is not an exclusive agent of a mortgage loan originator company, that independent contractor, in addition to obtaining a license as a mortgage loan originator, shall obtain a license as a mortgage loan originator company."
SECTION 11. Section 454F-4, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-4[]]
License and registration; application; issuance. (a) Applicants for a license shall apply in a
form as prescribed by the Nationwide Mortgage Licensing System and Registry
or the commissioner.
(b) To fulfill the purposes of this chapter, the commissioner shall establish relationships or contracts with the Nationwide Mortgage Licensing System and Registry or other entities designated by the Nationwide Mortgage Licensing System and Registry to collect and maintain records and process transaction fees or other fees related to licensees or other persons subject to this chapter.
(c) For the purpose and the extent necessary to participate in the
Nationwide Mortgage Licensing System[,] and Registry, the commissioner
may waive or modify, in whole or in part, by rule or order, any or all of the
requirements of this chapter and to establish new requirements as reasonably necessary
to participate in the Nationwide Mortgage Licensing System[.] and
Registry.
(d) In connection with an application for licensing as a mortgage loan originator, the applicant, at a minimum, shall furnish to the Nationwide Mortgage Licensing System and Registry information concerning the applicant's identity, including:
(1) Fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive the fingerprints for a state, national, and international criminal history background check; and
(2) Personal history and experience in a form prescribed by the Nationwide Mortgage Licensing System and Registry including the submission of authorization for the Nationwide Mortgage Licensing System and Registry and the commissioner to obtain:
(A) An independent credit report obtained from a consumer reporting
agency described in [Section] section 603(p) of the Fair Credit
Reporting Act, 15 United States Code 1681 et seq.; and
(B) Information related to any administrative, civil, or criminal findings by any governmental jurisdiction.
(e) In connection with an application for licensing as a mortgage loan originator company, the applicant, at a minimum, shall furnish, directly to the commissioner unless the commissioner directs otherwise, information concerning the applicant's identity, including:
(1) Fingerprints of the applicant's control persons, executive officers, directors, general partners, and managers, for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive the fingerprints for a state, national, and international criminal history background check; and
(2) Personal history and experience of the applicant’s control persons, executive officers, directors, general partners, and managers, in a form prescribed by the Nationwide Mortgage Licensing System and Registry or the commissioner including the submission of authorization for the Nationwide Mortgage Licensing and Registry and the commissioner to obtain for each covered individual:
(A) An independent credit report obtained from a consumer reporting agency described in section 603(p) of the Fair Credit Reporting Act, 15 United States Code 1681 et seq.; and
(B) Information related to any administrative, civil, or criminal findings by any governmental jurisdiction.
[(e)] (f) The commissioner may use the Nationwide Mortgage
Licensing System and Registry as an agent for requesting information
from and distributing information to the Department of Justice or any
governmental agency.
[(f)] (g) The commissioner may use the Nationwide Mortgage
Licensing System and Registry as an agent for requesting and
distributing information to and from any source directed by the commissioner.
(h) An applicant for a mortgage loan originator company license that is a person other than an individual must be registered to do business in this State with the business registration division of the department of commerce and consumer affairs before a license shall be granted.
(i) An applicant for a mortgage loan originator company license shall designate one licensed mortgage loan originator to be the applicant's manager for each principal office and for each branch office."
SECTION 12. Section 454F-5, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-5[]]
Issuance of license. (a) The commissioner shall not issue a [mortgage loan
originator] license under this chapter unless the commissioner makes
at a minimum the following findings:
(1) The applicant, or in the case of an applicant that is not an individual, each of the applicant's control persons, executive officers, directors, general partners, and managers, has never had a mortgage loan originator or mortgage loan originator company license revoked in any jurisdiction; provided that a subsequent formal vacation of a revocation shall not be deemed a revocation;
(2) The applicant, or in the case of an applicant that is not an individual, each of the applicant's control persons, executive officers, directors, general partners, and managers, has not been convicted of, or pled guilty or nolo contendere, or been granted a deferred acceptance of a guilty plea under chapter 853 to a felony in a domestic, foreign, or military court:
(A) During the seven-year period preceding the date of the application for licensing and registration; or
(B) At any time preceding the date of application, if the felony involved an act of fraud, dishonesty, breach of trust, or money laundering;
provided that any pardon of a conviction shall not be deemed a conviction for purposes of this section;
(3) The
applicant, or in the case of an applicant that is not an individual, each of
the applicant’s control persons, executive officers, directors, general
partners, and managers, has demonstrated financial responsibility,
character, and general fitness to command the confidence of the community and
to warrant a determination that the [mortgage loan originator] applicant
shall operate honestly, fairly, and efficiently pursuant to this chapter.
For purposes of this [paragraph,] section, a person is not
financially responsible when the person has shown a disregard in the management
of the person's financial condition. A determination that [an
individual] a person has not shown financial responsibility may be
based on:
(A) Current outstanding judgments, except judgments solely as a result of medical expenses;
(B) Current outstanding tax liens or other government liens and filings;
(C) Foreclosures within the past three years; and
(D) A pattern of seriously delinquent accounts within the past three years;
(4) The applicant, or in the case of an applicant that is not an individual, each of the applicant's control persons, executive officers, directors, general partners, and managers, has not been convicted of any misdemeanor involving an act of fraud, dishonesty, breach of trust, or money laundering;
[(4)] (5)
The applicant has completed the pre-licensing education requirement described
in section 454F-6;
[(5)] (6)
The applicant has passed a written test that meets the test requirements in
section 454F-7; and
[(6)] (7) The applicant has [met the
surety bond requirement] paid the fees required by the mortgage
loan recovery fund as required in section [454F-13.] 454F-G.
(b) The applicant, or in the case of an applicant that is not an individual, each of the applicant's control persons, executive officers, directors, general partners, and managers, shall submit to the commissioner authorization for the commissioner to conduct background checks in each state that the person has conducted mortgage loan origination activities. Authorization shall include consent to provide additional fingerprints for other states."
SECTION 13. Section 454F-6, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-6[]]
Pre-licensing and re-licensing; education of mortgage loan originators. (a) [A person] An applicant for
licensure as a mortgage loan originator shall complete at least twenty
hours of pre-licensing education approved in accordance with subsection (b)
that includes:
(1) Three hours of federal law and regulations;
(2) Three hours of ethics, that shall include instruction on fraud, consumer protection, and fair lending issues; and
(3) Two hours of training related to lending standards for the nontraditional mortgage product marketplace.
(b) Pre-licensing education courses shall be reviewed and approved by the Nationwide Mortgage Licensing System and Registry based upon reasonable standards. Review and approval of a pre-licensing education course shall include review and approval of the course provider.
(c) Nothing in this section shall prohibit the use of any pre-licensing education course approved by the Nationwide Mortgage Licensing System and Registry that is provided by the employer of the applicant, an entity that is affiliated with the applicant by an agency contract, or any subsidiary or affiliate of the employer or entity.
(d) Pre-licensing education may be offered either in a classroom, online,
or by any other means approved by the Nationwide Mortgage Licensing System[.]
and Registry.
(e) The pre-licensing education requirements approved by the Nationwide
Mortgage Licensing System [in subsection (a)] and Registry for
any state shall be accepted as credit towards completion of pre-licensing
education requirements in this State.
(f) A person previously licensed under this chapter and applying to be licensed under this chapter shall prove to the satisfaction of the commissioner that the person has completed all of the continuing education requirements for the year in which the license was last held."
SECTION 14. Section 454F-7, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-7[]]
Testing of mortgage loan originators.
(a) In order to meet the [passing of the] written test requirement
in section 454F-5, an applicant for licensure as a mortgage loan originator
shall pass, in accordance with the standards established under this section, a
qualified written test developed by the Nationwide Mortgage Licensing System and
Registry and administered by a test provider approved by the Nationwide
Mortgage Licensing System and Registry based upon reasonable standards.
(b) A written test shall not be treated as a qualified written test for purposes of subsection (a) unless the test adequately measures the applicant's knowledge and comprehension in appropriate subject areas, including:
(1) Ethics;
(2) Federal law and regulations pertaining to mortgage origination;
(3) State law and rules pertaining to mortgage origination; and
(4) Federal and state law, rules, and regulations, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues.
(c) Nothing in this section shall prohibit a test provider approved by the Nationwide Mortgage Licensing System and Registry from providing a test at the location of the employer of the applicant, the location of any subsidiary or affiliate of the employer of the applicant, or the location of any entity with which the applicant holds an exclusive arrangement to conduct the business of a mortgage loan originator.
(d) An individual shall have passed a qualified written test if the
individual achieves a test score of seventy-five per cent of the correct
answers to questions or better. An individual may retake a test three
consecutive times with each consecutive taking occurring at least thirty days
after the preceding test. After failing three consecutive tests, an
individual shall wait at least six months before taking the test again. A
licensed mortgage loan originator who fails to maintain a valid license for a
period of five years or longer, not taking into account any time during
which the individual is [a] an exempt registered mortgage loan
originator, shall retake the test."
SECTION 15. Section 454F-8, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-8[]]
Standards for license renewal.
(a) The minimum standards for license renewal for mortgage loan
originators shall include the following:
(1) The mortgage loan originator continues to meet the minimum standards for licensure under section 454F-5;
(2) The mortgage loan originator has satisfied the annual continuing education requirements in section 454F-9; and
(3) The mortgage loan originator has paid all required fees for renewal of the license.
(b) The minimum standards for license renewal for mortgage loan originator companies shall include the following:
(1) The mortgage loan originator company continues to meet the minimum standards for licensure under section 454F-5;
(2) The mortgage loan originator company's manager has satisfied the minimum standards for license renewal; and
(3) The mortgage loan originator company has paid all required fees for renewal of the license.
[(b)] (c) The license of a
mortgage loan originator [who] and mortgage loan originator company that
fails to satisfy the minimum standards for license renewal shall expire.
The commissioner may adopt procedures for the reinstatement of expired licenses
consistent with the standards established by the Nationwide Mortgage Licensing
System[.] and Registry."
SECTION 16. Section 454F-9, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-9[]]
Continuing education; mortgage loan originators. (a) Each year, a licensed mortgage loan originator
shall complete at least eight hours of education approved in accordance with
subsection (b) that shall include at least:
(1) Three hours of federal law and regulations;
(2) Two hours of ethics that shall include instruction on fraud, consumer protection, and fair lending issues; and
(3) Two hours of training related to lending standards for the nontraditional mortgage product marketplace.
(b) For purposes of subsection (a), continuing education courses shall be reviewed and approved by the Nationwide Mortgage Licensing System and Registry based upon reasonable standards. Review and approval of a continuing education course shall include review and approval of the course provider.
(c) Nothing in this section shall prohibit the use of any education course that is approved by the Nationwide Mortgage Licensing System and Registry and provided by the employer of the mortgage loan originator, an entity that is affiliated with the mortgage loan originator by an agency contract, or any subsidiary or affiliate of the employer or entity.
(d) Continuing education may be offered either in a classroom, online, or by any other means approved by the Nationwide Mortgage Licensing System and Registry.
(e) A licensed mortgage loan originator:
(1) May only receive credit for a continuing education course in the year in which the course is taken, except for continuing education credits received pursuant to this chapter; and
(2) May not take the same approved course in the same or successive years to meet the annual requirements for continuing education.
(f) A licensed mortgage loan originator who is an approved instructor of an approved continuing education course may receive continuing education credit for the course taught at the rate of two hours credit for every one hour taught.
(g) Continuing education courses as described in subsection (a) and approved by the Nationwide Mortgage Licensing System and Registry for any state, that are successfully completed by a licensed mortgage originator, shall be accepted as credit towards completion of continuing education requirements in this State.
(h) A licensed mortgage loan originator who subsequently becomes unlicensed shall complete the continuing education requirements for the last year in which the license was held prior to issuance of a new or renewed license.
(i) A person meeting the requirements of section 454F‑8(a)(1) and (3) may make up any deficiency in continuing education as established by rule adopted by the commissioner."
SECTION 17. Section 454F-10, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-10[]]
Authority to require license. In
addition to any other duties imposed upon the commissioner, the commissioner
shall require mortgage loan originators and mortgage loan originator
companies to be licensed and registered through the Nationwide Mortgage
Licensing System[.] and Registry. The commissioner is
authorized to participate in the Nationwide Mortgage Licensing System[.]
and Registry. The commissioner may establish by rule pursuant to chapter
91, requirements for mortgage loan originators[,] and mortgage loan
originator companies, including:
(1) Background checks of:
(A) Criminal history through fingerprint or other databases;
(B) Civil or administrative records;
(C) Credit history; and
(D) Any other source deemed necessary by the Nationwide Mortgage Licensing System and Registry;
(2) Fees to
apply for or renew licenses through the Nationwide Mortgage Licensing System[;]
and Registry;
(3) The setting or resetting as necessary of license renewal and reporting dates;
(4) Requirements for amending or surrendering a license; and
(5)
Any other activity the
commissioner deems necessary to participate in the Nationwide Mortgage
Licensing System[.] and Registry."
SECTION 18. Section 454F-11, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-11[]]
Nationwide Mortgage Licensing System[; registry] and Registry
information; challenge process.
The commissioner shall establish a process by rule pursuant to chapter 91
whereby mortgage loan originators and mortgage loan originator companies
may challenge information entered into the Nationwide Mortgage Licensing System
and Registry by the commissioner."
SECTION 19. Section 454F-12, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-12[]]
Enforcement authorities; violations; penalties. (a) In order to ensure the effective supervision
and enforcement of this chapter, the commissioner may, pursuant to chapter 91:
(1) Deny, suspend, revoke, condition, or decline to renew a license because of a violation of this chapter, rules, an order, or a directive entered under this chapter;
(2) Deny,
suspend, revoke, condition, or decline to renew a license if an applicant or [licensed
mortgage loan originator] licensee fails at any time to meet the
requirements of section 454F-6 or section 454F-8, or withholds information or makes
a material misstatement in an application for a license or renewal of a
license;
(3) Order restitution against persons subject to this chapter for violations of this chapter;
(4) Impose fines on persons subject to this chapter; and
(5) Issue orders or directives under this chapter as follows:
(A) Order or direct persons subject to this chapter to cease and desist from conducting business, including immediate temporary orders to cease and desist;
(B) Order or direct persons subject to this chapter to cease any harmful activities or violations of this chapter, including immediate temporary orders to cease and desist;
(C) Enter immediate temporary orders to cease doing business under a
license [or interim license] issued pursuant to the authority granted
under this chapter if the commissioner determines that the license was
erroneously granted or the licensee is currently in violation of this chapter;
or
(D) Order or direct any other affirmative action as the commissioner deems necessary.
(b) The commissioner may impose [a civil penalty] an
administrative fine on a [mortgage loan originator] licensee
or person subject to this chapter if the commissioner finds on the record after
notice and opportunity for hearing that the [mortgage loan originator] licensee
or person subject to this chapter has violated or failed to comply with any
requirement of this chapter or any rule prescribed by the commissioner under
this chapter or order issued under the authority of this chapter.
(c) The maximum [penalty] fine for each act or omission
described in subsection (b) shall be $25,000.
(d) Each violation or failure to comply with any directive or order of the commissioner shall be a separate and distinct violation."
SECTION 20. Section 454F-14, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-14[]]
Confidentiality (a)
Except as otherwise provided in Public Law 110-289, Section 1512, the
requirements under any federal or state law regarding the privacy or
confidentiality of any information or material provided to the Nationwide
Mortgage Licensing System[,] and Registry, and any privilege
arising under federal or state law, including the rules of any federal or state
court, with respect to the information or material shall continue to apply to
the information or material after the information or material has been
disclosed to the Nationwide Mortgage Licensing System[.] and Registry.
The information and material may be shared with all state and federal
regulatory officials with mortgage industry oversight authority without the
loss of privilege or the loss of confidentiality protections provided by
federal or state law.
(b) For these purposes, the commissioner is authorized to enter into agreements or sharing arrangements with other governmental agencies, the Conference of State Bank Supervisors, the American Association of Residential Mortgage Regulators, or other associations representing governmental agencies as established by rule or order of the commissioner.
(c) Information or material that is subject to a privilege or confidentiality under subsection (a) shall not be subject to:
(1) Disclosure under any federal or state law governing the disclosure to the public of information held by an officer or an agency of the federal government or a state; or
(2) Subpoena or discovery, or admission into evidence, in any private civil action or administrative process, unless with respect to any privilege held by the Nationwide Mortgage Licensing System and Registry applicable to the information or material; provided that the person to whom the information or material pertains waives, in whole or in part, in the discretion of such person, that privilege.
(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 or disclosure in civil or criminal lawsuits.
(e) Notwithstanding any law to the contrary, the disclosure of confidential supervisory information or any information or material described in subsection (a) that is inconsistent with subsection (a) shall be superseded by the requirements of this section.
(f) This section shall not apply to information or material relating to the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators that are included in the Nationwide Mortgage Licensing System and Registry for access by the public."
SECTION 21. Section 454F-15, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-15[]]
Investigation and examination authority. (a) In addition to any other authority under this chapter,
the commissioner shall have the authority to conduct investigations and
examinations. The commissioner may access, receive, and use any books,
accounts, records, files, documents, information, or evidence, including[:]
but not limited to:
(1) Criminal, civil, and administrative history information, including nonconviction data under chapter 853;
(2)
Personal history and experience information including independent credit
reports obtained from a consumer reporting agency described in [Section]
section 603(p) of the Fair Credit Reporting Act; and
(3) Any other documents, information, or evidence the commissioner deems relevant to the inquiry or investigation, regardless of the location, possession, control, or custody of the documents, information, or evidence.
(b) For the purposes of investigating violations or complaints arising
under this chapter, or for the purposes of examination, the commissioner may
review, investigate, or examine any [licensed mortgage loan originator,
individual,] licensee or person subject to this chapter, as often as
necessary in order to carry out the purposes of this chapter. The
commissioner may direct, subpoena, or order the attendance of, and examine
under oath all persons whose testimony may be required about loans or the business
or subject matter of any examination or investigation, and may direct,
subpoena, or order the person to produce books, accounts, records, files, and
any other documents the commissioner deems relevant to the inquiry.
(c) Each [licensed mortgage loan originator, individual,] licensee
or person subject to this chapter shall provide to the commissioner upon
request, the books and records relating to the operations of the licensee[,
individual,] or person subject to this chapter. The commissioner
shall have access to the books and records and shall be permitted to interview
the officers, principals, mortgage loan originators, employees, independent
contractors, agents, and customers of the [licensed mortgage loan
originator, individual,] licensee or person subject to this chapter
concerning their business.
(d) Each [licensed mortgage loan originator, individual,] licensee
or person subject to this chapter shall make or compile reports or prepare
other information as directed by the commissioner in order to carry out the
purposes of this section, including[:] but not limited to:
(1) Accounting compilations;
(2) Information lists and data concerning loan transactions in a format prescribed by the commissioner; or
(3) Other information deemed necessary to carry out the purposes of this section.
(e) In making any examination or investigation authorized by this
chapter, the commissioner may control access to any documents and records of
the [licensed mortgage loan originator] licensee or person under
examination or investigation. The commissioner may take possession of the
documents and records or place a person in exclusive charge of the documents
and records in the place where they are usually kept. During the period
of control, no [individual or] person shall remove or attempt to remove
any of the documents and records except pursuant to a court order or with the
consent of the commissioner. Unless the commissioner has reasonable
grounds to believe the documents or records of the [licensed mortgage loan
originator] licensee or person under examination or investigation have
been, or are at risk of being altered or destroyed for purposes of concealing a
violation of this chapter, the [licensed mortgage loan originator] licensee
or owner of the documents and records shall have access to the documents or
records as necessary to conduct its ordinary business affairs.
(f) [The] In order to carry out the purposes of this chapter,
the commissioner may:
(1) Retain attorneys, accountants, or other professionals and specialists, who may be exempt from chapter 76, as examiners, auditors, or investigators to conduct or assist in the conduct of examinations or investigations;
(2) Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information, or evidence obtained under this section;
(3) Use,
hire, contract, or employ public or privately available analytical systems,
methods, or software to examine or investigate the [licensed mortgage loan
originator, individual,] licensee or person subject to this chapter;
(4) Accept
and rely on examination or investigation reports made by other government
officials, within or without this State; [and]
(5) Accept
audit reports made by an independent certified public accountant for the [licensed
mortgage loan originator, individual,] licensee or person subject to
this chapter in the course of that part of the examination covering the same
general subject matter as the audit and may incorporate the audit report in the
report of the examination, report of investigation, or other writing of the
commissioner.
(g) The authority of this section shall remain in effect, whether such [licensed
mortgage loan originator, individual,] licensee or person subject to
this chapter acts or claims to act under any licensing or registration law of
this State, or claims to act without such authority.
(h) No [licensed mortgage loan originator, individual,] licensee
or person subject to investigation or examination under this section may
knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books,
records, computer records, or other information.
(i) The commissioner may charge an examination or investigation fee,
payable to the division, based upon the cost per hour per examiner for all [mortgage
loan originators] licensees and persons subject to this chapter examined
or investigated by the commissioner or the commissioner's staff.
The hourly fee shall be $40 or an amount as the commissioner shall establish by
rule pursuant to chapter 91. In addition to the examination or
investigation fee, the commissioner may charge any licensee or person subject
to this chapter that is 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, payable to the division.
(j) Any person having reason to believe that this chapter or the rules adopted pursuant thereto have been violated, or that a license issued under this chapter should be suspended or revoked, may file with the commissioner a written complaint setting forth the details of the alleged violation or grounds for suspension or revocation."
SECTION 22. Section 454F-16, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-16[]]
Mortgage call reports. Each licensed mortgage loan originator, as
may be required by 12 U.S.C. sections 5101 to 5116, and each licensed mortgage
loan originator company shall submit to the Nationwide Mortgage Licensing
System and Registry reports of condition, using the form entitled ["REPORT
OF CONDITION",] "Report of Condition", which shall be
in such form and contain such information as the Nationwide Mortgage Licensing
System and Registry may require."
SECTION 23. Section 454F-17, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-17[]] Prohibited
practices. It shall be a
violation of this chapter for a [mortgage loan originator] licensee
to:
(1) Directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers or lenders or to defraud any person;
(2) Engage in any unfair or deceptive practice toward any person;
(3) Obtain property by fraud or misrepresentation;
(4) Solicit
or enter into any contract with a borrower that provides in substance that the
person [or individual] subject to this chapter may earn a fee or
commission through "best efforts" to obtain a loan even though no
loan is actually obtained for the borrower;
(5) Solicit, advertise, or enter into a contract for specific interest rates, points, or other financing terms unless the terms are actually available at the time of soliciting, advertising, or contracting;
(6) Conduct any business covered by this chapter without holding a valid license as required under this chapter, or assist or aid and abet any person in the conduct of business under this chapter without a valid license as required under this chapter;
(7) Fail to make disclosures as required by this chapter and any other applicable state or federal law including rules or regulations thereunder;
(8) Fail to
comply with this chapter or [rules] any order or rule issued or adopted
under the authority of this chapter, or fail to comply with any other
state or federal law, including the rules and regulations adopted thereunder,
applicable to any business authorized or conducted pursuant to this chapter;
(9) Make, in any manner, any false or deceptive statement or representation, including with regard to the rates, points, or other financing terms or conditions for a residential mortgage loan, or engage in bait and switch advertising;
(10) Negligently make any false statement or knowingly and wilfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the Nationwide Mortgage Licensing System and Registry or in connection with any examination or investigation conducted by the commissioner or another government agency;
(11) Make any payment, threat, or promise, directly or indirectly, to any person for the purposes of influencing the independent judgment of the person in connection with a residential mortgage loan, or make any payment, threat, or promise, directly or indirectly, to any appraiser of a property for the purpose of influencing the independent judgment of the appraiser with respect to the value of a property;
(12) Collect, charge, attempt to collect or charge, or use or propose any agreement purporting to collect or charge any fee prohibited by this chapter;
(13) Cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer;
(14) Fail to truthfully account for moneys belonging to a party to a residential mortgage loan transaction; or
(15) Deliver a misleading or deceptive communication or advertisement, whether written, electronic, or oral, when marketing or soliciting a residential mortgage loan. A communication or advertisement that uses the name or trademark of a financial institution as defined in section 412:1-109 or its affiliates or subsidiaries, or infers that the communication or advertisement is from, endorsed by, is related to, or is the responsibility of the financial institution is a misleading or deceptive communication. Advertising that a specific interest rate, points, or financial terms are available when the rates, points, or financial terms are not actually available is a misleading or deceptive communication."
SECTION 24. Section 454F-18, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-18[]]
Powers of the commissioner. (a) The commissioner may adopt rules pursuant to chapter 91
as the commissioner deems necessary for the administration of this chapter.
(b) In addition to any other powers provided by law, the commissioner shall have the authority to:
(1) Administer and enforce the provisions and requirements of this chapter;
(2) Adopt, amend, or repeal rules and issue declaratory rulings or informal nonbinding interpretations;
(3) Develop requirements for licensure through rules, including establishing the content of the written tests required under section 454F-7;
(4) Investigate and conduct hearings regarding any violation of this chapter or any rule or order of, or agreement with, the commissioner;
(5) Create fact-finding committees that may make recommendations to the commissioner for the commissioner's deliberations;
(6) Require an applicant or any of its control persons, officers, directors, employees, partners, members, managers, and agents to disclose their relevant criminal history and request a criminal history record check in accordance with chapter 846;
(7) Contract with or employ qualified persons, including investigators, examiners, and auditors who may be exempt from chapter 76 and who shall assist the commissioner in exercising the commissioner's powers and duties;
(8) Require that all fees, fines, and charges collected by the commissioner, other than those fees designated to be placed in the mortgage recovery fund, under this chapter be deposited into the compliance resolution fund established pursuant to section 26-9(o);
(9) [Subpoena]
Process and investigate complaints, 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; [and]
(10) Require a [mortgage
loan originator] licensee to comply with any rule, guidance,
guideline, statement, supervisory policy, or any similar proclamation
issued or adopted by the Federal Deposit Insurance Corporation to the same
extent and in the same manner as a bank chartered by the State, or in
the alternative, any policy position of the Conference of State Bank
Supervisors[.]; and
(11) Hire and employ six permanent examiners and one permanent supervisor, all of which positions shall be exempt from chapter 76, and two permanent office assistants, one of which shall be paid out of the mortgage recovery fund, to implement this chapter."
SECTION 25. Section 454F-19, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-19[]]
Unique identifier shown. The
unique identifier of any person originating a residential mortgage loan,
except a person that is exempt from the provisions of this chapter, shall
be clearly shown on all residential mortgage loan application forms,
solicitations, or advertisements, including business cards or websites, and any
other documents as established by rule or order of the commissioner."
SECTION 26. Section 454F-20, Hawaii Revised Statutes, is amended to read as follows:
"[[]§454F-20[]]
Report to Nationwide Mortgage Licensing System[.] and Registry. Notwithstanding any other law to the contrary,
the commissioner is required to regularly report violations of this chapter, as
well as enforcement actions and other relevant information, to the Nationwide
Mortgage Licensing System and Registry subject to the confidentiality
provisions contained in section 454F-14."
SECTION 27. Section 477E-2, Hawaii Revised Statutes, is amended by amending the definition of "creditor" to read as follows:
""Creditor" means any bank; savings and loan association; trust
company; financial services loan company; credit union; [mortgage banker,
broker, or solicitor;] mortgage loan originator; mortgage loan
originator company; pawnbroker; mutual benefit society or fraternal benefit
society; debt adjuster; the issuer of a credit card as defined in section
708-800; any person who initiates, extends, renews, or continues loans of money
or credit; any person who regularly arranges for the initiation, extension,
renewal, or continuation of a loan of money or credit; or any assignee of an
original creditor who participates in the decision to grant, extend, renew, or
to continue [such] a loan of money or credit."
SECTION 28. 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 home, 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, vulnerable 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, retired and senior volunteer 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 (Title 42 United States Code Section 1396n(c)), or under any other applicable section or sections of the Social Security Act for the purposes of providing home and community-based services, as provided by section 346-97;
(24) The department of commerce and consumer affairs on proposed directors and executive officers of a bank, savings bank, savings and loan association, trust company, and depository financial services loan company as provided by section 412:3-201;
(25) The department of commerce and consumer affairs on proposed directors and executive officers of a nondepository financial services loan company as provided by section 412:3-301;
(26) The department of commerce and consumer affairs on the original chartering applicants and proposed executive officers of a credit union as provided by section 412:10-103;
(27) The department of commerce and consumer affairs on:
(A) Each principal of every non-corporate applicant for a money transmitter license; and
(B) The executive officers, key shareholders, and managers in charge of a money transmitter's activities of every corporate applicant for a money transmitter license,
as provided by section 489D-9;
(28) The department of commerce and consumer affairs on applicants for licensure and persons licensed under title 24;
(29) The Hawaii health systems corporation on:
(A) Employees;
(B) Applicants seeking employment;
(C) Current or prospective members of the corporation board or regional system board; or
(D) Current or prospective volunteers, providers, or contractors,
in any of the corporation's health facilities as provided by section 323F-5.5;
[[](30)[]] The
department of commerce and consumer affairs on an applicant for a mortgage loan
originator's license as provided by chapter 454F; [and]
(31) The department of commerce and consumer affairs on the control persons, executive officers, directors, general partners, and managers of an applicant for a mortgage loan originator company's license as provided by chapter 454F; and
[[(31)]] (32) Any other
organization, entity, or the State, its branches, political subdivisions, or
agencies as may be authorized by state law."
SECTION 29. Act 32, Special Session Laws of Hawaii 2009, section 8, is amended to read as follows:
"SECTION 8. Effective [August 1, 2010:] January 1, 2011:
(1) No new license shall be issued and no license renewal shall be effected under chapter 454, Hawaii Revised Statutes; and
(2) An individual who is subject to
this Act shall be required to be licensed under chapter 454F, Hawaii Revised
Statutes, or by such later date approved by the United States Department of
Housing and Urban Development, pursuant to the authority granted under Public
Law 110 289, section 1508(e). [As of the date that an individual is
required to be licensed under chapter , Hawaii Revised Statutes, the
remaining pro rata balance of the fees paid by the individual under chapter
454, Hawaii Revised Statutes, shall be applied to the individual's fees due
under chapter , Hawaii Revised Statutes, until exhausted.]"
SECTION 30. Chapter 454, Hawaii Revised Statutes, is repealed; provided that the repeal does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before the repeal.
SECTION 31. Section 454F-13, Hawaii Revised Statutes, is repealed.
["[§454F-13] Surety bond; required. (a) Each mortgage loan originator shall be
covered by a surety bond in accordance with this section. In the event
that the mortgage loan originator is an employee or exclusive agent of a person
subject to this chapter, the surety bond of the person may be used in lieu of
the mortgage loan originator's surety bond.
(b) The surety bond shall provide coverage for each mortgage loan
originator in an amount prescribed in subsection (c). The surety bond
shall be in a form as prescribed by the commissioner. The commissioner
may adopt rules pursuant to chapter 91 with respect to the requirements for the
surety bonds necessary to accomplish the purposes of this chapter.
(c) The penal sum of the surety bond shall be maintained in an amount
that reflects the dollar amount of loans originated as determined by the
commissioner.
(d) When an action is commenced on a licensee's bond, the commissioner
may require the filing of a new bond.
(e) Immediately upon recovery of any action on the bond, the
commissioner may require the filing of a new bond."]
SECTION 32. Section 454F-21, Hawaii Revised Statutes, is repealed.
["[§454F-21] Fees and costs. (a) Each application for a mortgage loan
originator license shall be accompanied by an application fee of $250, or an
amount as the commissioner shall establish by rule pursuant to chapter 91.
(b) Upon obtaining approval for a license, an initial license fee
shall be paid to the commissioner in the amount of $175 or an amount as the
commissioner shall establish by rule pursuant to chapter 91.
(c) By December 31 of each year, every mortgage broker and loan
originator licensed under this chapter shall pay an annual license renewal fee
of $325, or an amount as the commissioner shall establish by rule pursuant to
chapter 91."]
SECTION 33. There is appropriated out of the compliance resolution fund of the State of Hawaii the sum of $156,000, or so much thereof as may be necessary for fiscal year 2009-2010 and the sum of $921,700, or so much thereof as may be necessary for fiscal year 2010-2011, to carry out the purposes of this Act, including the hiring of one permanent supervisor exempt from chapter 76, Hawaii Revised Statutes, six permanent examiners exempt from chapter 76, Hawaii Revised Statutes, and two permanent office assistants, one of which shall be paid out of the mortgage recovery fund, in the division of financial institutions, to implement this Act. The sum appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act.
SECTION 34. A person licensed under chapter 454F, Hawaii Revised Statutes, shall not be required to be licensed under chapter 454, Hawaii Revised Statutes, and shall not be subject to the provisions of that chapter upon the effective date of the person's licensure under chapter 454F, Hawaii Revised Statutes; provided that this section shall not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before the effective date of the person's licensure under chapter 454F, Hawaii Revised Statutes.
SECTION 35. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 36. This Act shall take effect upon its approval; provided that sections 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 31 and 32 shall take effect on July 1, 2010, and section 30 shall take effect on January 1, 2011.
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INTRODUCED BY: |
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Report Title:
Mortgage Loan Origination
Description:
Allows the commissioner of financial institutions to regulate, license, examine, and enforce laws regulating mortgage loan originators and mortgage loan originator companies. Repeals chapter 454, HRS effective January 1, 2011. Effective date of sections 29, 33, 34, and 35 is upon approval. Effective date of all other provisions is July 1, 2010.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
