STAND. COM. REP. NO. 2855
RE: H.B. No. 2375
Honorable Shan S. Tsutsui
President of the Senate
Twenty-Sixth State Legislature
Regular Session of 2012
State of Hawaii
Your Committees on Commerce and Consumer Protection and Judiciary and Labor, to which was referred H.B. No. 2375 entitled:
"A BILL FOR AN ACT RELATING TO THE MORTGAGE RESCUE FRAUD PREVENTION ACT,"
beg leave to report as follows:
The purpose and intent of this measure is to provide additional protections for Hawaii consumers from persons who prey on homeowners who face property foreclosures, liens, or encumbrances by:
(1) Establishing the mortgage rescue fraud prevention special fund; and
(2) Imposing criminal penalties and a mandatory fine for certain violations of the Mortgage Rescue Fraud Prevention Act.
Your Committees received testimony in support of this measure from the Office of Consumer Protection of the Department of Commerce and Consumer Affairs, Hawaii Financial Services Association, Hawaii Credit Union League, and Hawaii Association of REALTORS. Your Committees received comments on this measure from the Department of Budget and Finance.
Your Committees find that the Mortgage Rescue Fraud Prevention Act was designed to protect Hawaii consumers from persons who prey on homeowners faced with property foreclosures, liens, or encumbrances. Homeowners who are delinquent on their mortgage loans are vulnerable in desperate financial circumstances and may be victimized by unscrupulous persons purporting to be mortgage foreclosure rescuers. Many of the services promised by unscrupulous mortgage foreclosure rescuers are available for free by housing counselors in Hawaii who have been approved by the federal Department of Housing and Urban Development.
Your Committees further find that the criminal penalties and mandatory fine proposed by this measure will enhance the level of protection provided to this category of consumers, and will ensure that persons holding themselves out as mortgage foreclosure rescuers are held accountable for their actions.
Your Committees have heard the concern that the special fund established by this measure may not be self-sustaining. Your Committees conclude it would be more appropriate for fines collected for violations of certain provisions of chapter 480E, Hawaii Revised Statutes, to be deposited into the existing compliance resolution fund.
Your Committees have amended this measure by:
(1) Deleting the section that would have established the mortgage rescue fraud prevention special fund;
(2) Requiring fines for violations of certain provisions of the Mortgage Rescue Fraud Prevention Act to be deposited into the compliance resolution fund, established pursuant to section 26-9(o), Hawaii Revised Statutes;
(3) Requiring the Office of Consumer Protection to educate consumers about fraudulent activities that may be committed against homeowners who face property foreclosures, liens, or encumbrances, as appropriate; and
(4) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.
As affirmed by the records of votes of the members of your Committees on Commerce and Consumer Protection and Judiciary and Labor that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2375, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 2375, S.D. 1, and be referred to the Committee on Ways and Means.
Respectfully submitted on behalf of the members of the Committees on Commerce and Consumer Protection and Judiciary and Labor,
CLAYTON HEE, Chair
ROSALYN H. BAKER, Chair