Hawaii House Bill HB2386

Hawaii 2024 Regular Session

• Introduced: 1/24/24
• Refer: 1/26/24

Caption

Relating To The Mortgage Loan Recovery Fund.

Impact

The proposed changes will raise the maximum recoverable amount from the fund to $150,000 for each licensee. This is a significant increase from the previous limit, which could improve consumers' access to justice when faced with mortgage-related fraud. It is expected that these amendments will strengthen the regulatory environment surrounding mortgage originators, paving the way for greater accountability and encouraging ethical practices within the industry. Furthermore, the establishment of annual funding for training and educational initiatives for both the commission and consumers signals a proactive approach to improving overall industry standards.

Summary

House Bill 2386 proposes amendments to the Hawaii Revised Statutes concerning the Mortgage Loan Recovery Fund. The bill aims to enhance consumer protection by clarifying the eligibility criteria for aggrieved consumers seeking compensation for damages caused by acts of fraud, misrepresentation, or deceit by mortgage loan originators and companies. Specifically, it allows individuals who have suffered due to these unlawful acts to recover damages through a recovery fund maintained by the state. This ensures a more transparent mechanism for restitution in mortgage transactions, especially amidst increasing concerns regarding deceptive practices in the mortgage industry.

Contention

While there is general support for enhancing consumer protections in the mortgage sector, there could be contention around the funding mechanisms for the recovery fund, including the increase in fees for mortgage loan originators. Some stakeholders may argue that these increases could potentially raise costs for consumers or drive smaller businesses out of the market. Additionally, there may be concerns regarding how the expanded use of the fund for educational purposes will be managed, as critics may question the efficacy of such spending compared to direct consumer restitution. Therefore, the bill will likely ignite discussions about the balance between consumer protection and the economic implications for mortgage service providers.