STAND. COM. REP. NO. 514-04

Honolulu, Hawaii

, 2004

RE: H.B. No. 1737

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred H.B. No. 1737 entitled:

"A BILL FOR AN ACT RELATING TO MORTGAGE BROKERS AND SOLICITORS,"

begs leave to report as follows:

The purpose of this bill is to include licensed exclusive agents within the current exemption from regulation under the mortgage broker and solicitor law for banks, trust companies, credit unions, and similar financial organizations.

Your Committee heard testimony in support of this bill from State Farm Insurance and six of its agents. Testimony in opposition to the bill was received from Paradise American Mortgage. The Professional and Vocational Licensing Division of the Department of Commerce and Consumer Affairs (DCCA) and Hawaii Independent Insurance Agents Association expressed concerns. The Insurance Commissioner of DCCA commented.

This bill addresses a problem faced by State Farm Insurance, whose agents cannot arrange mortgage loans with State Farm Bank. State Farm Bank currently operates in 45 states. In the five remaining states only Hawaii, Maryland, Ohio, and Tennessee have a two- or three-year mortgage financing experience requirement for mortgage brokers and mortgage solicitors. It is the inability to meet the two-year experience requirement which prompted this measure.

Your Committee feels that the experience requirement should not be a bar to State Farm Bank offering mortgages in Hawaii through its network of exclusive State Farm agents. Increasing competition and borrower options will better serve Hawaii’s consumers.

Mindful of its obligation to protect consumers, your Committee has amended this bill to:

(1) Allow two years of experience as an insurance producer to be considered equivalent to mortgage financing experience for purposes of licensing:

(A) An officer or member of an organization to act as a mortgage broker; or

(B) A mortgage solicitor to be in charge of a branch office;

(2) Narrowly limit the application of this bill by requiring that the licensed insurance producer only arrange mortgage loans with an insured depository institution that is a wholly-owned subsidiary of an insurer, or an affiliate of an insurer with which the insurance producer has an exclusive insurance agency relationship; and

(3) Provide that upon termination of the exclusive relationship, the mortgage broker or solicitor license is terminated.

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. 1737, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1737, 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,

 

____________________________

KENNETH T. HIRAKI, Chair