Hawaii Enacts Provisions Regarding Licensing Requirements for Mortgage Servicers
The state of Hawaii has recently updated several requirements for mortgage loan servicers, effective September 1, 2017.
The legislature of the state of Hawaii has amended chapter 454M of the Hawaii revised statutes by adding two new sections relating to licensed mortgage servicers. The first section relates to changes in control of a licensee, while the second section relates to the presumption of control of an entity.
The revised provisions require approval by the Commissioner of Financial Institutions (“Commissioner”) for a change in control of a licensed mortgage servicer. If a licensee wishes to make a change in control, the licensee must first request approval of the proposed change. To do so, the licensee must submit a request in the form of an application to the Commissioner, along with a nonrefundable $500 application fee.
The Commissioner must then approve the proposed change of control if, after investigation, he or she is able to determine that the following three conditions are met: the person or persons who obtain control will be in compliance with the applicable regulations once approved; the person or persons who will obtain control have the competence, experience, character, and general fitness to control the licensee in a lawful manner; and the interests of the public will not be jeopardized by the change of control.
The revised provisions also clarify which persons associated with a mortgage servicer are presumed to exercise control and are subject to interviews, examination, and disclosure requirements. The provisions state that an individual is presumed to control an entity under two circumstances. First, control is presumed if he or she is an executive officer of the entity. And second, control is presumed if he or she is a director, general partner, or managing member who directly or indirectly has the right to vote ten percent or more of a class of voting securities of the entity or has the power to sell or direct the sale of ten percent or more of a class of voting securities of an entity.
Lastly, the new provisions add a definition of an “executive officer,” which is defined as “a president, chairperson of an executive committee, senior officer responsible for the business of the subject entity or organization, chief financial officer, or any other person who performs similar functions related to the subject entity or organization.”
Zachary Pearlstein, JD, is a Regulatory Compliance Director with CLA's Mortgage Advisory Division. He joined CLA on January 1, 2014, as part of its acquisition of Bankers Advisory, Inc. Zachary oversees Mortgage Advisory's regulatory compliance team, which focuses on federal and state compliance, fair lending, and the Home Mortgage Disclosure Act (HMDA). He is a graduate of Brandeis University and earned his juris doctor at Suffolk University Law School. He is admitted to the Massachusetts Bar.
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