On June 22, 2016, Hawaii Governor David Ige signed into law a bill, Senate Bill 2580 (SB 2850), that revises the Hawaii Secure and Fair Enforcement for Mortgage Licensing Act (“HSAFEMLA”) and the Hawaii Mortgage Servicers Act (“HMSA”). This bill clarifies the applicable scope of each chapter, makes terminology more consistent across both chapters and updates references to federal law. The revised provisions went into effect on July 1, 2016. The changes made by SB 2850 include, but are not limited to, the following:
- Increases the clarity and consistency of the HSAFEMLA and the HMSA by:
- Updating references to federal law.
- Adding new definitions for “C.F.R.,” “Consumer Financial Protection Bureau,” ”Dwelling,” and “Mortgage Servicer.”
- Amending the definitions for “Borrower,” “Federal Banking Agencies,” “Licensee,” “Residential Mortgage Loan,” and “Residential Mortgage Loan Modification.”
- Note that the amended definition of “residential mortgage loan,” under both the HSAFEMLA and the HMSA, will now expressly include reverse mortgages and home equity lines of credit.
- Moving mortgage servicer provisions that currently appear in the HSAFEMLA to the HMSA.
- Applies the same confidentiality requirements to mortgage servicers that currently apply to mortgage loan originators.
- Deletes the mortgage loan servicer loan modification license under the HSAFEMLA.
- Clarifies that the exemption under the HMSA for time share plans applies to a developer of a time share plan, or an affiliated entity of a developer of a time share plan, that services a loan that is made by the developer (or the developer’s affiliated entity) and secured by a lien on a time share interest.
- Revises the presumption of control provision in the HSAFEMLA to read as follows:
- “§ 454F-1.6 Presumption of control. An individual is presumed to control a mortgage loan originator company or a mortgage servicer company if that individual is a director, general partner, managing member, or executive officer who directly or indirectly has the right to vote ten per cent or more of a class of voting securities or has the power to sell or direct the sale of ten per cent or more of a class of voting securities of that mortgage loan originator company or mortgage servicer company licensee or applicant.”
- Requires each mortgage servicer licensee to maintain adequate records of each residential mortgage loan transaction at the office named in the mortgage servicer license for seven years.
The full text of the bill is available at: http://www.capitol.hawaii.gov/session2016/bills/SB2850_CD1_.pdf.