Hawaii Legislative Update

Hawaii Legislative Update

The Hawaii legislature recently amended its laws governing mortgage servicers, effective May 31, 2013.



“Nationwide Mortgage Licensing System” (“NMLS”) means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the state licensing and registration of state-licensed loan originators and other financial services providers, or any system provided by the Consumer Financial Protection Bureau.



A mortgage servicer application fee is $675 (previously $500).  A mortgage servicer license may be renewed by filing a renewal statement on a form prescribed by the NMLS or by the Commissioner and by paying a renewal fee of $425 (previously $250) at least four weeks prior to the renewal period for licensure for the following year (previously on or before July 1).



The Commissioner of Financial Institutions (the “Commissioner”) has the authority to conduct investigations and examinations regarding mortgage servicers.  The Commissioner may access, receive, and use any books, accounts, records, files, documents, information, or evidence that the Commissioner finds relevant to the inquiry or investigation, regardless of the location, possession, control, or custody of the documents, information, or evidence.



For the purposes of investigating violations or complaints, or for the purposes of examination, the Commissioner may review, investigate, or examine any licensee or mortgage servicer, as often as necessary to carry out the purposes of the mortgage servicer provisions.  The Commissioner may direct, subpoena, or order the attendance of, and examine under oath, all persons whose testimony may be required about loans or the business or subject matter of any examination or investigation and may direct, subpoena, or order the person to produce books, accounts, records, files, and any other documents the Commissioner finds relevant to the inquiry.



Each licensee or mortgage servicer must provide to the Commissioner upon request the books and records relating to the operations of the licensee or mortgage servicer.  The Commissioner must have access to the books and records and must be permitted to interview the officers, principals, mortgage loan originators, employees, independent contractors, agents, and customers of the licensed mortgage loan originator or mortgage servicer concerning their business.



Each licensee or mortgage servicer must make or compile reports or prepare other information as directed by the Commissioner in order to carry out the purposes of the mortgage servicer provisions, including:

  • Accounting compilations;
  • Information lists and data concerning loan transactions in a format described by the Commissioner; or
  • Other information that the Commissioner finds necessary.


In conducting any examination or investigation, the Commissioner may control access to any documents and records of the licensee or person under examination or investigation.  The Commissioner may take possession of the documents and records or place a person in exclusive charge of the documents and records.  During the period of control, a person must not remove or attempt to remove any of the documents and records except according to a court order or with the consent of the Commissioner.



Unless the Commissioner has reasonable grounds to believe the documents or records of the licensee or person under examination or investigation have been, or are at risk of being, altered or destroyed for purposes of concealing a violation, the licensee or owner of the documents and records must have access to the documents or records as necessary to conduct its ordinary business affairs.



The Commissioner may:

  • Retain accountants or other professionals and specialists as examiners, auditors, or investigators to conduct or assist in the conduct of examinations or investigations;
  • Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information, or evidence obtained;
  • Use, hire, contract, or employ public or privately available analytical systems, methods, or software to examine or investigate the licensee or mortgage servicer;
  • Accept and rely on examination or investigation reports made by other government officials, within or outside of Hawaii; and
  • Accept audit reports made by an independent certified public accountant for the licensee or mortgage servicer in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of the examination, report of investigation, or other writing of the Commissioner.


The mortgage servicer investigation and examination authority remains in effect, whether a licensee or mortgage servicer acts or claims to act under any licensing or registration law of Hawaii or claims to act without such authority.



A licensee or person subject to investigation or examination must not knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information.



The Commissioner may charge an examination or investigation fee, payable to the Commissioner, based upon the cost per hour per examiner for all licensees and mortgage servicers examined or investigated by the Commissioner or the Commissioner’s staff.  The hourly fee is $60 or an amount that the Commissioner establishes by rule.  In addition to the examination or investigation fee, the Commissioner may charge any person who is examined or investigated by the Commissioner or the Commissioner’s staff additional amounts for travel, per diem, mileage, and other reasonable expenses incurred in connection with the examination or investigation, payable to the Commissioner.



Any person having reason to believe that the mortgage servicer provisions or the rules adopted pursuant to such provisions have been violated, or that a mortgage servicer license issued should be suspended or revoked, may file a written complaint with the Commissioner setting forth the details of the alleged violation or grounds for suspension or revocation.