Reps. Johanson and Ward Address SB 2394 - Lending Practices
News Release from House Republican Caucus: Stand. Comm. Rep. No. 1689-12 S.B. No. 2394, S.D. 1, H.D. 3 RELATING TO CONSUMER PROTECTION.(Consumer Protection; Lending Practices; Military Members; Distressed Residential Properties Program) AS AMENDED, PASS THIRD READING
Dept. of the AG: Had concerns about bill, and asked for amendments. (1) Declaration of public purpose to use public monies for this plan. (2) Condemnation is normally associated with eminent domain. (3) Bill seeks to transfer into special fund the money from multistate settlement. Concerned about this. If bill were to try to take money, would conflict with consent judgment. (The HD3 attempts to address these concerns, but its effectiveness on the first two concerns is debatable.)
HI Association of Realtors: "We are concerned about the impact this measure will have on Hawaii's bond rating. Specifically, the provision that the Hawai'i Housing Finance and Development Corporation (HHFDC) issue ...revenue bonds, which is exempt from the debt ceiling and taxes, may impact Hawaii's bond rating and needs to be carefully considered.
HI Financial Services Association: Bill is "short on sound reasons for the HHFDC to purchase (and in some instances force the purchase of)...a problematic loan and then make a new loan on that property to bailout that same homeowner."
Reps. Pine and Riviere address SB 2394 - Lending Practices
Stand. Comm. Rep. No. 1689-12 S.B. No. 2394, S.D. 1, H.D. 3 RELATING TO CONSUMER PROTECTION.(Consumer Protection; Lending Practices; Military Members; Distressed Residential Properties Program) AS AMENDED, PASS THIRD READING
Rep. Riviere asked HI Credit Union League: Q: What is most troubling about this bill? A: The Second Part. (We are OK with First Part.) Second Part could put taxpayer money in jeopardy.
Rep. Yamane asked AG: Q: Wouldn't condemnation be allowed, for public purposes, since we buy distressed property? A: Eminent domain is for real property. There are problems with using eminent domain for personal property. Mortgages, we consider, are more personal property. (AG told Rep. Ichiyama they would do research on laws in other states.)
Rep. Jordan asked AG: Q: What do you do for forgiveness of debt? Who takes on responsibility? A: Not sure how transaction could go. If homeowner owns the debt at the time, then it would apply to homeowner. If State, then State.
Q: What about deficiency judgment? A: Homeowner will still owe. It's like a monkey on your back.
Q; Does that liability affect income tax of homeowner? A: Don't know.
Q: If I was the homeowner, will I still be burdened with having to pay tax on forgiven debt? A: Yes.
Contact: [email protected] or [email protected] Excerpt from capitol tv:
Reps. Marumoto and Fontaine address SB 2394 – Lending Practices
Stand. Comm. Rep. No. 1689-12 S.B. No. 2394, S.D. 1, H.D. 3 RELATING TO CONSUMER PROTECTION.(Consumer Protection; Lending Practices; Military Members; Distressed Residential Properties Program) AS AMENDED, PASS THIRD READING
HI Bankers Association (oral testimony): “This bill doesn't make sense. This distressed residential properties program is a wholesale bailout of lenders who made bad loans. It creates a State of Hawaii portfolio of toxic mortgages. The State will is basically becoming the mortgagor. The full faith and credit of the state is what will make the lenders whole. This could adversely impact state's credit and bond rating. The bill allows state to issue $25 million revenue bonds (Note: HD3 now says $10 million). This will just repeat what brought the mortgage crisis upon us in the first place—toxic mortgages were bundled up and sold to unsuspecting bondholders. Future borrowers will have more difficulty qualifying for a mortgage; banks will pass onto them the costs by requiring a high down payment, and by being more conservative in the underwriting. We also question the legality of the provision allowing condemnation of private personal property for public use provision.”
Contact:: [email protected] or [email protected]
excerpt from Capitol TV: http://www.youtube.com/watch?v=SER0hTNmNaY
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