1072
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO REVERSE MORTGAGES. 



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

 1      SECTION 1.  Chapter 506, Hawaii Revised Statutes, is amended
 
 2 by adding a new section to be appropriately designated and to
 
 3 read as follows:
 
 4      "506-    Reverse mortgage loan.  (a)  Prior to accepting an
 
 5 application for a reverse mortgage loan, a lender shall refer
 
 6 every borrower to counseling as defined in this subsection from
 
 7 an organization that is a housing counseling agency approved by
 
 8 the United States Department of Housing and Urban Development,
 
 9 and shall receive certification from the counselor that the
 
10 borrower has received counseling.  The certificate must be signed
 
11 by the borrower and the counselor and include the date of
 
12 counseling, the name, address, and telephone number of both the
 
13 borrower and the organization providing counseling, and shall be
 
14 maintained by the holder of the reverse mortgage throughout the
 
15 term of the reverse mortgage loan.  For purposes of this section,
 
16 "counseling" means that the following services were provided to
 
17 the borrower:  (1)  a review of the advantages and disadvantages
 
18 of reverse mortgage loan programs; (2)  an explanation of how the
 
19 reverse mortgage loan affects the borrower's estate and public
 

 
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 1 benefits; (3)  an explanation of the lending process; (4)  a
 
 2 discussion of the borrower's supplemental income needs; and (5)
 
 3 an opportunity to ask questions of the counselor.
 
 4      (b)  A failure by the lender to comply with the requirements
 
 5 of subsection (a) shall render the reverse mortgage and its
 
 6 underlying loan unenforceable by the lender or the lender's
 
 7 assignees or purchasers as to all interest, origination fees,
 
 8 service fees, and insurance premiums incurred on the reverse
 
 9 mortgage loan.
 
10      (c)  "Reverse mortgage loan" means a loan made to a borrower
 
11 wherein the committed principal amount is secured by a mortgage
 
12 on residential property owned by the borrower and which is due
 
13 when the committed principal amounts have been fully paid to the
 
14 borrower, or upon sale of the property securing the loan, or upon
 
15 the death of the last surviving borrower, or upon the borrower
 
16 terminating use of the real property as the principal residence,
 
17 or upon the borrower's default."
 
18      SECTION 2.  New statutory material is underscored.
 
19      SECTION 3.  This Act shall take effect upon its approval. 
 
20 
 
21                           INTRODUCED BY:  _______________________
 

 
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