REPORT TITLE:
Capital investments


DESCRIPTION:
Encourages and facilitates investments of capital and funds fram
sources outside of Hawaii by removing the registration
requirement to obtain the existing exemptions from certain state
licensing, registration and tax laws.

 
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THE SENATE                              S.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO LENDER EXEMPTIONS.



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

 1      SECTION 1.  The purpose of this Act is to encourage and
 
 2 facilitate lending from sources outside of the State of Hawaii by
 
 3 making existing exemptions from certain state laws available to
 
 4 such lenders without a registration requirement.
 
 5      SECTION 2.  Section 454-2, Hawaii Revised Statutes, is
 
 6 amended to read as follows:
 
 7      "454-2 Exemptions.  This chapter does not apply to the
 
 8 following:
 
 9      (1)  Banks, trust companies, building and loan associations,
 
10           pension trusts, credit unions, insurance companies,
 
11           financial services loan companies, or federally
 
12           licensed small business investment companies,
 
13           authorized under any law of this State or of the United
 
14           States to do business in the State;
 
15      (2)  A person making or acquiring a mortgage loan with one's
 
16           own funds for one's own investment without intent to
 
17           resell the mortgage loan;
 
18      (3)  A person licensed to practice law in the State, not
 
19           actively and principally engaged in the business of
 

 
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 1           negotiating loans secured by real property, when the
 
 2           person renders services in the course of the person's
 
 3           practice as an attorney;
 
 4      (4)  A person licensed as a real estate broker or
 
 5           salesperson in the State, not actively engaged in the
 
 6           business of negotiating loans secured by real property,
 
 7           when the person renders services in the course of the
 
 8           person's practice as a real estate broker or
 
 9           salesperson; [and]
 
10      (5)  An institutional investor negotiating, entering into,
 
11           or performing under a loan purchase agreement for its
 
12           portfolio, for subsequent resale to other institutional
 
13           investors, or for placement of the mortgages into pools
 
14           or packaging them into mortgage-backed securities.  As
 
15           used in this paragraph "loan purchase agreement" means
 
16           an agreement or arrangement under which a bank, savings
 
17           and loan, credit union, financial services loan
 
18           company, or other financial institution registered to
 
19           do business in the State of Hawaii agrees to sell
 
20           mortgage loans or obtain funding therefor, with or
 
21           without the transfer of servicing rights, to an
 
22           institutional investor[.]; and
 
23      (6)  Foreign lender as defined in section 207-11."
 

 
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 1      SECTION 3.  Section 454D-2, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "454D-2 Exemptions.  This chapter shall not apply to the
 
 4 following persons:
 
 5      (1)  Real estate brokers and salespersons licensed under
 
 6           chapter 467 and residing in the State who provide
 
 7           collection and mortgage services where the services are
 
 8           limited to those incident to a particular real estate
 
 9           transaction, or where the broker, or the salesperson's
 
10           broker, has an errors and omissions insurance policy in
 
11           effect which has, as part of the insurance policy,
 
12           coverage for activities relating to collection and
 
13           mortgage services and where a copy of the insurance
 
14           policy is filed annually with the department of
 
15           commerce and consumer affairs;
 
16      (2)  Banks, collection agencies, credit unions, escrow
 
17           depositories, financial services loan companies,
 
18           savings and loan associations, and trust companies
 
19           authorized to do business in the State;
 
20      (3)  Any financial institution which is an approved lender
 
21           for programs administered by the United States
 
22           Department of Housing and Urban Development; provided
 
23           that the financial institution files annually with the
 

 
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 1           department of commerce and consumer affairs
 
 2           satisfactory proof of that status;
 
 3      (4)  Persons performing the services normally rendered by
 
 4           servicing agents under order of any court; and
 
 5      (5)  Persons performing the services normally rendered by
 
 6           servicing agents, but with respect to fewer than five
 
 7           agreements at any one time that would otherwise come
 
 8           within the purview of this chapter[.]; and
 
 9      (6)  Foreign lenders as defined in section 207-11."
 
10      SECTION 4.  Section 207-14, Hawaii Revised Statutes, is
 
11 repealed.
 
12      ["207-14  Filing and effect of statement.(a)  Before
 
13 engaging in this State in any of the activities specified in
 
14 section 207-13, a foreign lender shall execute and file with the
 
15 commissioner of financial institutions a statement.  The
 
16 statement shall list its name, state of incorporation or
 
17 organization, and principal place of business, shall certify that
 
18 its principal activities are conducted outside this State, and
 
19 shall appoint irrevocably the commissioner and the commissioner's
 
20 successors its agents upon whom may be served process against it
 
21 on any proceeding or cause of action arising out of its engaging
 
22 in this State in any of the activities referred to in section
 
23 207-13.  Until the statement is filed the immunities provided by
 

 
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 1 this part do not become operative.  Upon the filing of the
 
 2 statement and after a determination by the commissioner that the
 
 3 foreign lender qualifies for exemption under this part, the
 
 4 immunities provided by this part shall continue operative until
 
 5 the statement is withdrawn by the foreign lender or canceled by
 
 6 the commissioner pursuant to section 207-15, but no such
 
 7 withdrawal or cancellation shall retroactively affect or impair
 
 8 any of the immunities provided by this part.
 
 9      (b)  The statement filed pursuant to this section shall be
 
10 accompanied by a registration fee of $30.  The registration fee
 
11 shall be nonrefundable even in the event of a denial.  In
 
12 addition, foreign lenders who are currently registered pursuant
 
13 to this chapter shall pay an annual renewal fee of $30 in order
 
14 to maintain the immunities and privileges granted in this
 
15 section.  The annual renewal fee shall be due on or before
 
16 June 30, of each calendar year.  The failure to submit the annual
 
17 renewal fee as required shall result in the automatic
 
18 cancellation of any statements filed pursuant to this section but
 
19 shall not retroactively affect or impair any of the immunities
 
20 provided by this part.  In the commissioner's discretion, the
 
21 time period for filing of a renewal fee may be extended for an
 
22 additional thirty days beyond June 30 of each calendar year if
 
23 good cause exists for such an extension.  The registration fee,
 

 
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 1 annual renewal fee, and any other charge or fee assessed under
 
 2 this part shall be deposited into the financial institution
 
 3 examiners' revolving fund established under section 412:2-109."]
 
 4      SECTION 5.  Section 207-15, Hawaii Revised Statutes, is
 
 5 repealed.
 
 6      ["207-15  Cancellation of statement.(a)  If after notice
 
 7 and hearing as hereinafter provided, the commissioner of
 
 8 financial institutions shall determine that any foreign lender
 
 9 having on file a statement as provided in section 207-14, (1)
 
10 maintains an office in this State, (2) conducts its principal
 
11 activities in this State, or (3) is or was formed or availed of
 
12 by or for the account or benefit, directly or indirectly, of one
 
13 or more residents of, corporations organized under the laws of,
 
14 or employee benefit plans organized or having their principal
 
15 offices in, this State with a view to avoiding the imposition of
 
16 any taxes imposed by this State, the commissioner shall by order
 
17 cancel the foreign lender's statement. 
 
18      (b)  In giving notice of and conducting hearings, and in
 
19 making and entering orders, pursuant to subsection (a), the
 
20 commissioner shall comply with the provisions set forth in
 
21 chapter 91."]
 
22      SECTION 6.  Statutory material to be repealed is bracketed.
 
23 New statutory material is underscored.
 

 
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 1      SECTION 7.  This Act shall take effect upon its approval.
 
 2 
 
 3                              INTRODUCED BY:______________________
 

 
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