REPORT TITLE: 
Reverse Mortgages



DESCRIPTION: Mandates mortgage counseling similar to federal
guidelines, prior to acceptance of a reverse mortgage loan
application, if loan is not otherwise subject to counseling
requirements under other state or federal laws.  Violation is
deemed unfair method of competition or unfair or deceptive act or
practice. (HB1072 HD1)

 
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                                                        1072
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
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 from an organization that is a
 
 7 housing counseling agency approved by the United States
 
 8 Department of Housing and Urban Development, and shall receive
 
 9 certification from the counselor that the borrower has received
 
10 counseling.  The certificate must be signed by the borrower and
 
11 the counselor and include the date of counseling, the name,
 
12 address, and telephone number of both the borrower and the
 
13 organization providing counseling, and shall be maintained by the
 
14 holder of the reverse mortgage throughout the term of the reverse
 
15 mortgage loan.
 
16      (b)  A lender that fails to comply with the requirements of
 
17 subsection (a) shall be deemed to have engaged in an unfair
 
18 method of competition or unfair or deceptive act or practice in
 
19 the conduct of any trade or commerce within the meaning of
 
20 section 480-2.
 

 
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Page 2                                                     1072
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (c)  "Reverse mortgage loan" means a loan made to a borrower
 
 2 wherein the committed principal amount is secured by a mortgage
 
 3 on residential property owned by the borrower and which is due
 
 4 upon sale of the property securing the loan, or upon the death of
 
 5 the last surviving borrower, or upon the borrower terminating use
 
 6 of the real property as the principal residence, or upon the
 
 7 borrower's default.  For purposes of this section, "reverse
 
 8 mortgage loan" does not include loans:
 
 9      (1)  Insured by the United States Department of Housing and
 
10           Urban Development;
 
11      (2)  Intended for sale to the Federal National Mortgage
 
12           Association (also known as "Fannie Mae") or to the
 
13           Federal Home Loan Mortgage Corporation (also known as
 
14           "Freddie Mac"); or
 
15      (3)  For which mortgage counseling is required under other
 
16           state or federal laws."
 
17      SECTION 2.  New statutory material is underscored.
 
18      SECTION 3.  This Act shall take effect upon its approval. 
 

 
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