Bill Text: HI HB2103 | 2012 | Regular Session | Amended
Bill Title: Financial Institutions; State Bank; Hawaii Housing Finance and Development Corporation; Mortgage Foreclosure; Appropriation
Spectrum: Partisan Bill (Democrat 6-0)
Status: (Engrossed - Dead) 2012-03-08 - (S) Referred to EDT/CPN, WAM. [HB2103 Detail]
Download: Hawaii-2012-HB2103-Amended.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
2103 |
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TWENTY-SIXTH LEGISLATURE, 2012 |
H.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO THE BANK OF THE STATE OF HAWAII.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:
"Chapter
BANK OF THE STATE OF HAWAII
§ -1 Bank of the State of Hawaii; established. (a) The bank of the State of Hawaii shall be established.
(b) The purposes of the bank of the State of Hawaii shall be to:
(1) Support economic development by increasing access to capital for businesses and farms within the State in partnership with local financial institutions;
(2) Provide support and stability to the local financial sector, and not in any way to compete with community banks, credit unions, or other financial institutions;
(3) Provide stability to the local housing market and reduce the number of wrongful and fraudulent foreclosures conducted by mortgagees, as defined in chapter 667, that lack adequate legal standing to collect on certain mortgage loans;
(4) Reduce the costs paid by the State for basic banking services; and
(5) Return profits, beyond those necessary to accomplish the mission and for continued sound operation of the bank, to the general fund.
§ -2 Board of the bank; powers and duties. (a) The board of the bank of the State of Hawaii shall operate, manage, and control the bank of the State of Hawaii. The board shall locate and maintain places of business of the bank and adopt and enforce rules, orders, and bylaws for the transaction of the bank's business.
(b) The board of the bank of the State of Hawaii shall consist of the governor; the director of finance; the director of labor and industrial relations; the director of business, economic development, and tourism; and the chairperson of the board of land and natural resources. The powers of the board and the functions of the bank shall be implemented through actions taken and policies and rules adopted by the board.
(c) The governor shall act as chairperson of the board. The board shall adopt rules requiring the holding of regular meetings and specifying the means for providing notice of the meetings.
(d) Three members of the board shall constitute a quorum to transact business and exercise all rights, duties, and powers of the board.
(e) A special meeting of the board may be called at any time upon notice by the governor or by a majority of the members of the board.
(f) The board shall appoint a president of the bank, who shall have extensive experience in banking. The board may appoint and employ any subordinate officers, employees, and agents as the board considers necessary, and shall define the duties, designate the titles, and fix the compensation of all those persons. The board may designate the president or other officers or employees as its agent in respect to the functions of the bank, subject to the supervision, limitation, and control of the board.
(g) The board may remove and discharge any person appointed in the exercise of its powers granted under this chapter.
§ -3 Advisory board of directors; appointment and duties. (a) To enlist the help of private enterprise and to encourage active exercise of the purposes for which the bank of the State of Hawaii was established, the board of the bank of the State of Hawaii shall appoint an advisory board of directors that shall consist of eight members.
(b) The members of the advisory board of directors shall include representatives of the State's financial, business, agricultural, housing, and public labor sectors. At least two members shall be officers of banks or credit unions incorporated in the State.
(c) The board of the bank of the State of Hawaii shall appoint a chairperson, vice-chairperson, and secretary of the advisory board from among the advisory board of directors members. The term of office of members of the advisory board of directors shall be set by the board of the bank of the State of Hawaii, but shall not exceed four years.
(d) The advisory board of directors shall:
(1) Meet regularly with the management officers of the bank to review the bank's operations and finances to determine whether recommendations should be made by the advisory board of directors to the board of the bank of the State of Hawaii relating to improved management performance, better customer service, and overall improvement in internal methods, procedures, and operating policies of the bank;
(2) Make recommendations to the board of the bank of the State of Hawaii relating to the establishment of additional objectives for the operation of the bank;
(3) Make recommendations to the board of the bank of the State of Hawaii concerning the appointment of officers of the bank;
(4) Meet regularly with the board of the bank of the State of Hawaii to present any recommendations concerning the bank; and
(5) Participate on loan committees, pursuant to rules adopted by the board of the bank of the State of Hawaii under section -7.
§ -4 Deposits of public funds. (a) The bank of the State of Hawaii may accept deposits of public funds. Except as otherwise provided in section -5, the bank may not accept deposits of private funds. All income earned by the bank for its own account on public funds shall be credited to and become a part of the revenues and income of the bank.
(b) Whenever any public funds are deposited in the bank, the official having control of the public funds and the sureties on the bond of the official shall be exempt from all liability by reason of loss of any of the funds while deposited in the bank.
(c) The bank shall pay interest on deposits of public funds at a rate comparable to rates paid by private depositories of public funds and, as determined by the board of the bank of the State of Hawaii, may offer other financial products to the department of budget and finance.
(d) The department of budget and finance shall deposit into the bank moneys from the general fund in an amount that the department of budget and finance determines is necessary to allow the bank to fulfill its duties under this chapter.
§ -5 Powers of the bank. The bank of the State of Hawaii may:
(1) Make, purchase, guarantee, or hold loans:
(A) To state chartered or federally chartered lending agencies or institutions or other financial institutions;
(B) That are insured or guaranteed in whole or in part by the United States, its agencies, or instrumentalities;
(C) Obtained as security pledged for or originated in the restructuring of, any other loan properly originated or participated in by the bank; or
(D) To instrumentalities of the State;
(2) Purchase participation interests in loans made or held by banks, bank holding companies, state chartered or federally chartered lending agencies or institutions, or any other financial institution or entity that provides financial services and meets underwriting standards that are established by the board of the bank of the State of Hawaii and that are generally accepted by state or federal financial regulatory agencies;
(3) Invest its funds in conformity with policies of the board of the bank of the State of Hawaii and the department of budget and finance;
(4) Buy and sell federal funds;
(5) Lease, assign, sell, exchange, transfer, convey, grant, pledge, or mortgage all real and personal property, title to which has been acquired in any manner;
(6) Perform all acts and do all things necessary, convenient, advisable, or desirable to carry out the powers expressly granted or necessarily implied in this chapter through or by means of its president, officers, agents, or employees or by contracts with any person, firm, or corporation;
(7) Purchase, guarantee, or hold loans originated by financial institutions doing business in this State;
(8) Make loans in the form of participation loans to qualified persons residing in or doing business in this State where the originator of the loan is a private financial institution;
(9) Act as a custodian bank for financial institutions organized under the laws of this State and accept deposits from the financial institutions in connection with this function;
(10) Issue bank stock loans to financial institutions organized under the laws of this State;
(11) For financial institutions that make the bank a reserve depository, perform the functions and render the services of a clearinghouse, including all facilities for providing domestic and foreign exchange and may rediscount paper, on terms prescribed by the board of the bank of the State of Hawaii;
(12) Enter into contractual agreements with local financial institutions to provide mortgage servicing for properties subject to the short-sale program for problematic mortgages under section -13; and
(13) Enter into contractual agreements with local financial institutions for the purpose of supporting the availability of mortgage servicing by licensees maintaining an office in the State pursuant to section 454M-5.
§ -6 Income; excess earnings. Except as otherwise provided, as soon as possible after the end of each calendar year, the board of the bank of the State of Hawaii shall determine the amount of income, if any, earned by the bank of the State of Hawaii in that calendar year that is in excess of amounts necessary to pay for expenses of administering the activities of the bank. The amount of the excess shall be transferred to the general fund.
§ -7 Rulemaking powers. (a) The board of the bank of the State of Hawaii shall adopt rules to:
(1) Ensure the safety and soundness of the bank of the State of Hawaii that, to the extent possible, reflect applicable standards for safety and soundness set forth in 12 C.F.R. part 364;
(2) Specify the bank's powers and permissible investments and activities;
(3) Authorize specific services that the bank may provide;
(4) Specify limits for loans and other obligations the bank makes or undertakes;
(5) Specify reserve requirements;
(6) Effectuate a short-sale program for the purpose of purchasing owner-occupied residential property in conformity with section -13; and
(7) Establish other requirements that the board considers necessary.
(b) The department of commerce and consumer affairs shall examine the bank no less than once each calendar quarter to verify that the bank is complying with the rules adopted pursuant to subsection (a). The department of commerce and consumer affairs shall report the results of the examination to the board of the bank of the State of Hawaii and to the legislature. The report shall be a public record subject to disclosure pursuant to chapter 92.
(c) The state auditor shall audit the accounts and financial affairs of the bank no less than once every two years.
§ -8 Deposits; guaranteed by State; exempt from taxation. (a) All deposits in the bank of the State of Hawaii shall be guaranteed by the State.
(b) The deposits and any income earned by the bank of the State of Hawaii shall not be subject to state or local taxes of any kind.
§ -9 Civil actions. (a) Civil actions may be brought as provided in this section against the State on account of claims for relief asserted to have arisen out of transactions connected with the operation of the bank of the State of Hawaii.
(b) In an action brought under this section, the State shall be designated as the State of Hawaii, doing business as the bank of the State of Hawaii.
(c) An action brought under this section may be brought in the same manner and shall be subject to the same laws as other civil actions. The action shall be brought in a circuit court in the State.
§ -10 Public officials; exemption from liability. Whenever any public funds are deposited in the bank of the State of Hawaii, the public official who deposited the funds and the sureties on any bond of the public official shall be exempt from liability by reason of loss of any of the funds while the funds are deposited in the bank of the State of Hawaii.
§ -11 Conduct of business; execution of instruments. (a) All business of the bank of the State of Hawaii shall be conducted under the name of the bank of the State of Hawaii. Title to property pertaining to the operation of the bank shall be obtained and conveyed in the name of the bank of the State of Hawaii, doing business as the bank of the State of Hawaii.
(b) Instruments shall be executed in the name of the State of Hawaii. Within the scope of authority granted by the board of the bank of the State of Hawaii, the president of the bank may execute instruments on behalf of the bank, including any instrument granting, conveying, or otherwise affecting any interest in or lien upon real or personal property.
(c) Other officers or employees of, and legal counsel to, the bank may execute instruments on behalf of the bank when authorized by the board of the bank of the State of Hawaii.
§ -12 Certain records confidential. (a) The following records of the bank of the State of Hawaii shall be confidential and shall not be disclosed:
(1) Commercial or financial information of a customer of the bank, whether obtained directly or indirectly, other than information disclosed in routine credit inquiries concerning information that is required to be disclosed in accordance with due legal process;
(2) Internal or interagency memoranda or letters that would not be available by law to a party other than in litigation with the bank; and
(3) Except as provided in section -7, information that is contained in or related to a report of an examination or operating or condition reports prepared by, on behalf of, or for the use of, a state or federal agency responsible for the regulation or supervision of any bank activity.
(b) As used in this section, "customer" means any person that has transacted or is transacting business with, or has used, or is using the services of, the bank of the State of Hawaii, or for which the bank has acted or is acting as a fiduciary with respect to trust property.
§ -13 Purchase program for distressed residential properties encumbered by problematic mortgages. (a) Pursuant to rules adopted under section -7, the bank of the State of Hawaii shall establish a purchase program for the purpose of acquiring title to residential property encumbered by certain mortgages and connected to promissory notes.
Under the purchase program, the bank of the State of Hawaii may purchase residential property occupied by one or more persons who hold title to the property if the mortgagee's lien and its supporting documentation fail to adequately demonstrate that the mortgagee has the right to collect on the mortgagor's indebtedness or that the mortgagee has legal authority to foreclose on a property.
(b) An owner-occupant who has been using the subject property as a primary residence for a continuous period of not less than two hundred days immediately prior to the date when the owner-occupant received a letter of default on the mortgage or notice that the owner-occupant's application for a mortgage modification under a federally sponsored program has been denied shall be entitled to apply for consideration into the purchase program. The application shall conform to rules adopted pursuant to section -7 and shall include copies of:
(1) The three most recent statements for the mortgage loan;
(2) The promissory note;
(3) The mortgage agreement; and
(4) The letter of default or notice that the owner-occupant's application for a mortgage modification under a federally sponsored program has been denied.
(c) Within forty-five days of receiving an application pursuant to subsection (b), the bank of the State of Hawaii shall review the application and determine whether the property shall be accepted for further evaluation.
If the bank of the State of Hawaii determines
that the property shall be accepted for further evaluation, within the
forty-five day review period, the bank shall send notice to the mortgagee and
its agents on record at the bureau of conveyances, including all affiliates
that may be reported pursuant to any affiliate statement recorded pursuant to
sections 454M-5(a)(4)(F) and 667-58(a), and any entities purporting to
represent the mortgagee as reflected in the mortgage statements provided in the
application. The notice shall describe the purchase program and include
details about the program's
requirements as set forth by rules adopted pursuant to
section -7.
If the bank of the State of Hawaii determines that the application shall not be accepted for further evaluation, the bank shall provide written notification to the applicant stating the reasons for that determination within the forty-five day review period.
(d) Within thirty days of receiving notice under subsection (c), the mortgagee shall submit a written response to the bank of the State of Hawaii. The response shall include:
(1) A copy of the promissory note, signed by the mortgagor, including any endorsements, allonges, amendments, or riders to the note evidencing the mortgage debt;
(2) A copy of the mortgage document and any amendments, riders, or other documentation evidencing the mortgagee's right to foreclose and interest in the property, including any interest as a successor or assignee; and
(3) A certification under penalty of perjury describing the nature of the mortgagee's legal ownership of the mortgage loan that includes:
(A) Information about the chain of possession and the transfer between all holders in due course of the mortgage note from the origination of the mortgage loan to the present mortgagee; provided that descriptions of each transaction that effectuated a transfer of the mortgage note shall include:
(i) The names of the individuals involved;
(ii) The principal employers and the employers' state of incorporation for the individuals involved;
(iii) The authority conferred to the individuals;
(iv) The dates on which the mortgage note was negotiated; and
(v) The manner in which the note was endorsed;
(B) Information about the assignment or transfer of each mortgage agreement, including:
(i) The entities assigned the rights to enforce the mortgage agreement;
(ii) The individuals who signed documentation to effectuate the transfer;
(iii) Their titles;
(iv) Their principal employers;
(v) The state of incorporation of those employers;
(vi) A description of the authority conferred to the individuals;
(vii) The dates on which the mortgage agreements were assigned or transferred;
(viii) The manner of the assignment or transfer; and
(ix) A description of the extent to which the mortgage agreement transfers or assignments coincided with the negotiations or transfers of the mortgage note; and
(C) The bureau of conveyances document number for every assignment or transfer of the mortgage note or mortgage agreement recorded and a copy of each filing.
The mortgagee's response shall provide an explanation for any failure to provide any of the items enumerated in this subsection.
Failure to respond to a notice received under subsection (c) within seventy-five days shall result in an automatic referral to the department of the attorney general and the department of commerce and consumer affairs for investigation pursuant to subsection (f), as well as to the attorney general of the state within which the mortgagee is incorporated. An automatic referral pursuant to this subsection shall pursuant to subsection (f) operate as an automatic stay on any foreclosure action.
(e) At any time after receiving notice under subsection (c), a mortgagee may elect to participate in the purchase program as a qualified mortgagee pursuant to rules adopted under section ‑7.
(f) Within forty-five days of receiving the mortgagee's response pursuant to subsection (d), the bank of the State of Hawaii shall make a determination whether to refer the subject mortgage loan to the department of the attorney general, the department of commerce and consumer affairs, and the attorney general of the state within which the mortgagee is incorporated for a legal investigation and possible action for the purpose of determining the mortgagee's legal authority to collect on the mortgage indebtedness and enforce the mortgage agreement; provided that if no document was filed or recorded respecting a given assignment or transfer of the mortgage note or mortgage agreement, or such filing or recording occurred more than months after the assignment or transfer, the bank of the State of Hawaii shall make the referral.
Written notification of the referral for legal investigation pursuant to this section shall operate as a stay of any foreclosure proceeding under chapter 667, and may be filed or recorded, as appropriate, at the land court or bureau of conveyances.
Upon a stay pursuant to this subsection, a mortgagee shall not foreclose upon a mortgage subject to the stay until the department of the attorney general or the department of commerce and consumer affairs releases the stay by recording a release at the bureau of conveyances, or as otherwise provided by law or court order.
If the bank of the State of Hawaii determines that a referral for investigation is not warranted, the bank shall promptly notify the mortgagee and the owner-occupant applicant before the end of the forty-five day period that the subject property is no longer being evaluated by the purchase program. The notice may be recorded at the bureau of conveyances to release the stay of any foreclosure activity.
Nothing in this subsection shall be construed as preventing a mortgagee from filing a claim in circuit court to lift the stay by order.
(g) Terms and conditions for owner-occupants and qualified mortgagees participating in the purchase program shall be set forth by rule under section -7; provided that:
(1) Should the mortgagee agree to participate in the purchase program, the stay on any foreclosure process and the referral for investigation made pursuant to subsection (f) shall be withdrawn;
(2) Should the owner-occupant decline the offer purchase price under paragraph (3), the stay on any foreclosure process and the referral for investigation made pursuant to subsection (f) shall be withdrawn;
(3) Upon agreement by the owner-occupant and the qualified mortgagee, the bank of the State of Hawaii may offer to purchase the subject property from the owner-occupant for a price that shall not exceed seventy-five per cent of the principal balance due on the mortgage loan at the time of the mortgagee's election to participate;
(4) The amount of the purchase price of the property shall be paid to the qualified mortgagee and shall be deemed to fully satisfy the subject mortgage debt and release the lien held by the mortgagee;
(5) The former owner-occupant shall be permitted to rent the property for a minimum period of six months from the date of transfer at a rate that shall be based upon an independent appraisal of the fair-market rent for the property;
(6) The former owner-occupant shall be required to consult with an approved housing counselor or an approved budget and credit counselor as defined under chapter 667;
(7) Upon the recommendation of an approved housing counselor or an approved budget and credit counselor, the bank of the State of Hawaii may offer to sell the subject property back to the former owner-occupant without the property being subject to a mortgage and for a price that shall not exceed ninety per cent of the prior mortgagee's mortgage loan balance; provided that the payment plan is reasonable and affordable to the owner-occupant; and
(8) The owner-occupant shall:
(A) Be prohibited from selling the property for a period of months after repurchasing it pursuant to paragraph (7); and
(B) Agree that, upon any resale of the property to a subsequent purchaser, the owner-occupant shall pay the bank of the State of Hawaii a share of the appreciation represented by the proportion of the price at which the owner-occupant purchased the property from the bank of the State of Hawaii to the subsequent sale price; provided that the property is sold for fair market value at a price approved of by the bank of the State of Hawaii.
(h) Pursuant to rules adopted under section -7, the bank of the State of Hawaii shall provide grants to approved housing counselors and approved budget and credit counselors, as defined under chapter 667, that are based within the State for the purposes of subsection (g)."
SECTION 2. Section 36-1, Hawaii Revised Statutes, is amended to read as follows:
"§36-1 Responsibility for moneys.
[The] Except for moneys deposited with the bank of the State of
Hawaii, the director of finance shall be responsible for the safekeeping of
all moneys paid into the treasury, and for the proper disbursement and
appropriation thereof, pursuant to the laws; and the director shall be liable
therefor on the director's official bond, provided that in case of the larceny
or embezzlement of any moneys, by any officer of the director's department, or
other persons, the director shall be allowed to give that fact, and that the
director had no collusive knowledge thereof, in evidence, and the establishment
of these facts shall discharge the director from responsibility."
SECTION 3. Section 38-1, Hawaii Revised Statutes, is amended by amending the definition of "depository" to read as follows:
"Depository includes the bank of the State of Hawaii, any federally insured national or state bank, savings and loan association, or financial services loan company; or federal or state credit union insured by the national credit union administration authorized to do business in this State."
SECTION 4. Section 412:1-109, Hawaii Revised Statutes, is amended by amending the definition of "depository institution" to read as follows:
""Depository institution" means a financial institution that is authorized to accept deposits under its chartering or licensing authority and includes the bank of the State of Hawaii, a bank, savings bank, savings and loan association, depository financial services loan company, credit union, or intra-Pacific bank."
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act shall take effect on July 1, 2112.
Report Title:
Financial Institutions; State Bank; Mortgage Foreclosure
Description:
Establishes the bank of the State of Hawaii. Effective July 1, 2112. (HB2103 HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
