STAND. COM. REP. NO. 508-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2005
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 2005 entitled: 

     "A BILL FOR AN ACT RELATING TO REVERSE MORTGAGES,"

begs leave to report as follows:

     The purpose of this bill is to amend the definition of
"reverse mortgage loan" contained in the reverse mortgage law
enacted as Act 50, Session Laws of Hawaii 1999 (Act 50), to more
clearly define and distinguish the loan from other mortgages by
adding the requirements that:

     (1)  The loan be a nonrecourse loan;

     (2)  Cash advances under the loan are provided to the
          borrower based upon the equity or value in the
          borrower's principal residence;

     (3)  The loan requires no repayments until the entire loan
          is due and payable; and

     (4)  The loan is made by a lender licensed or chartered
          under state or federal law.

     Your Committee received testimony in support of this bill
from the Hawaii Bankers Association, Mortgage Bankers Association
of Hawaii, and Hawaii Financial Services Association.  An
attorney in private practice supported the intent of the bill and

 
 
 
                                 STAND. COM. REP. NO. 508-00
                                 Page 2

 
suggested amendments.  The Department of Commerce and Consumer
Affairs (DCCA) offered comments on the measure.

     Your Committee finds that this bill is necessary to address
concerns that the definition of "reverse mortgage" in Act 50 is
overbroad and does not clearly distinguish between the reverse
mortgages regulated under the Act, and other types of mortgages.
Your Committee has amended the bill to include language agreed
upon by DCCA and the Mortgage Bankers Association of Hawaii, that
provides that no person other than a lender licensed or chartered
by the state or federal government shall offer reverse mortgage
loans.

     Technical, nonsubstantive amendments have also been made for
purposes of clarity and style.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 2005, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B. No.
2005, H.D. 1, and be placed on the calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,



                                   ______________________________
                                   RON MENOR, Chair