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WBK Industry News - State Regulatory Developments

Hawaii Amends Change in Control Requirements

The Hawaii legislature recently enacted a bill amending Hawaii law to require licensed mortgage servicers to obtain approval for a change in control and clarifying which persons are presumed to exercise control and are subject to interviews, examination, and disclosure requirements.  The amendments take effect September 1, 2017.

Licensees must submit an application to the commissioner of financial institutions requesting approval of any proposed changes in control, and must pay a $500 nonrefundable application fee.  The commissioner must approve an application upon determination that: (1) the persons who will obtain control will be in compliance with Hawaii’s SAFE Act and have the competence, experience, character, and general fitness to control the licensee or person in control of the licensee; and (2) the public interest will not be jeopardized.

The new provisions also provide that an individual is presumed to control an entity if that individual is: (1) an executive officer of the entity; or (2) a director, general partner, or managing member who directly or indirectly has the right to vote, or sell or direct the sale of, 10% or more of a class of an entity’s voting securities.

Additionally, the new provisions change the persons about whom an applicant must provide certain information, including whether such persons have: (1) been issued, or subject to, an injunction or administrative order; (2) been convicted of a misdemeanor relating to the lending business or a felony; or (3) become subject to a criminal indictment or filed for bankruptcy.  These individuals are now the executive officers, directors, general partners, or managing members (and shareholders owning 10 percent or more of the outstanding stock of the licensee with respect to persons described in item 3 above).

The new provisions also change the persons whom the commissioner is permitted to interview.  These individuals are now the executive officers, directors, managing members, general partners, principals, mortgage servicer’s employees, independent contractors, agents, and customers of the licensee or person subject to the applicable chapter.

A copy of the amendments can be viewed here: http://www.capitol.hawaii.gov/session2017/bills/SB950_CD1_.pdf.