454M-4  License; fees; renewals; notices; voluntary surrender of license; bonds.  (a)  The commissioner may approve a license or license renewal application upon receipt of a complete application; provided that an applicant for licensure shall file an application on a form prescribed by NMLS or by the commissioner and shall pay an application fee of $675.  Each license shall expire on December 31 of each calendar year unless the license is renewed.  A licensee may apply for license renewal by filing a renewal statement on a form prescribed by NMLS or by the commissioner and paying a renewal fee of $600, at least four weeks prior to December 31.  The minimum standards for license renewal shall include the following:

Terms Used In Hawaii Revised Statutes 454M-4

  • assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
  • bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
  • conviction: A judgement of guilt against a criminal defendant.
  • corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • felony: A crime carrying a penalty of more than a year in prison.
  • indictment: The formal charge issued by a grand jury stating that there is enough evidence that the defendant committed the crime to justify having a trial; it is used primarily for felonies.
  • injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.
  • jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • lawsuit: A legal action started by a plaintiff against a defendant based on a complaint that the defendant failed to perform a legal duty, resulting in harm to the plaintiff.
  • misdemeanor: Usually a petty offense, a less serious crime than a felony, punishable by less than a year of confinement.
  • mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • mortgagee: The person to whom property is mortgaged and who has loaned the money.
  • obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • real estate settlement procedures act: Federal law that, among other things, requires lenders to provide "good faith" estimates of settlement costs and make other disclosures regarding the mortgage loan. RESPA also limits the amount of funds held in escrow for real estate taxes and insurance. Source: OCC
  • settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.

     (1)  The licensee continues to meet the minimum standards for licensure established pursuant to this section;

     (2)  The licensee has paid all required fees for renewal of the license; and

     (3)  The licensee is registered with the business registration division of the department of commerce and consumer affairs.

All fees paid pursuant to this section, including fees paid in connection with an application, shall be nonrefundable.  No fee paid pursuant to this section shall be prorated if the license is surrendered, revoked, or suspended prior to the expiration of the period for which it was approved.

     (b)  To fulfill the purposes of this chapter, the commissioner may establish relationships or contracts with NMLS or other entities designated by NMLS to collect and maintain records and process transaction fees or other fees related to licensees or other persons subject to this chapter.

     (c)  To the extent reasonably necessary to participate in NMLS, the commissioner may modify any or all of the requirements of subsections (e) and (i).

     (d)  The commissioner may use NMLS as an agent for requesting information from and distributing information to the United States Department of Justice, any governmental agency, or any other source, as directed by the commissioner.

     (e)  The applicant shall submit any other information that the commissioner may require, including the applicant’s:

     (1)  Form and place of organization;

     (2)  Tax identification number; and

     (3)  Proposed method of doing business.

The applicant shall disclose whether the applicant or any of its officers, directors, employees, managers, agents, partners, or members have ever been issued or been the subject of an injunction or administrative order pertaining to any aspect of the lending business, have ever been convicted of a misdemeanor involving the lending industry or any aspect of the lending business, or have ever been convicted of any felony.

     (f)  A mortgage servicer license shall not be transferable or assignable.  No licensee shall use any name other than the licensee’s legal name or a fictitious name approved by the commissioner; provided that no licensee shall use the licensee’s legal name if the commissioner disapproves of the use of the licensee’s legal name.

     (g)  A mortgage servicer licensee may change the licensee’s name or the address of any of the licensee’s offices specified on the most recent filing with NMLS if:

     (1)  The licensee files the change with NMLS and provides directly to the commissioner a bond rider or endorsement, or addendum, as applicable, to any bond on file with the commissioner that reflects the new name or address;

     (2)  The commissioner approves the change in writing; and

     (3)  The mortgage servicer pays to the commissioner a fee of $100 and any fees charged by NMLS.

     (h)  The mortgage servicer licensee shall file with NMLS or, if the information cannot be filed with NMLS, directly notify the commissioner in writing no later than five business days after the licensee has reason to know of the occurrence of any of the following events:

     (1)  Filing for bankruptcy or the consummation of a corporate restructuring of the licensee;

     (2)  Filing of a criminal indictment against the licensee or receiving notification of the filing of any criminal felony indictment or felony conviction of any of the licensee’s officers, directors, employees, managers, agents, members, partners, or shareholders owning ten per cent or more of the outstanding stock of the licensee;

     (3)  Receiving notification of the initiation of license denial, cease and desist, suspension or revocation procedures, or other formal or informal regulatory action by any governmental agency against the licensee and the reasons for the action;

     (4)  Receiving notification of the initiation of any action against the licensee by the state attorney general or the attorney general of any other state and the reasons for the action;

     (5)  Suspension or termination of the licensee’s status as an approved servicer by the Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, or Government National Mortgage Association;

     (6)  Receiving notification that certain servicing rights of the licensee will be rescinded or canceled, and the reasons provided therefor;

     (7)  Receiving notification of filing for bankruptcy of any of the licensee’s officers, directors, members, managers, agents, partners, or shareholders owning ten per cent or more of the outstanding stock of the licensee; or

     (8)  Receiving notification of the initiation of a class action lawsuit on behalf of consumers against the licensee that is related to the operation of the licensed business.

    (i)  A mortgage servicer licensed under this chapter may voluntarily cease business and surrender its license by giving written notice to the commissioner of its intent to surrender its mortgage servicer license.  Notice pursuant to this subsection shall be given at least thirty days before the surrender of the license and shall include:

     (1)  The date of surrender;

     (2)  The name, address, telephone number, facsimile number, and electronic address of a contact individual with knowledge and authority sufficient to communicate with the commissioner regarding all matters relating to the licensee during the period that it was licensed pursuant to this chapter;

     (3)  The reason or reasons for surrender;

     (4)  The original license issued pursuant to this chapter to the mortgage servicer; and

     (5)  If applicable, a copy of all notices to affected borrowers required by the Real Estate Settlement Procedures Act of the assignment, sale, or transfer of the servicing of all relevant loans that the licensee is currently servicing under the license being surrendered.

     Voluntary surrender of a license shall be effective upon the date of surrender specified on the written notice to the commissioner as required by this subsection; provided that if a mortgage servicer is required to assign, sell, or transfer the servicing of any loans, the voluntary surrender of the mortgage servicer’s license shall be effective upon the effective date of the assignment, sale, or transfer of the servicing of all loans.

     (j)  Before a mortgage servicer’s license becomes effective, the applicant or licensee shall file with the commissioner a surety bond written by a surety authorized to write surety bonds in this State, covering the applicant or licensee in a penal sum of $100,000.  No mortgage servicer licensee shall act as a mortgage servicer in this State without maintaining the surety bond required by this section.

     The surety bond shall be:

     (1)  In a form approved by the attorney general of this State; and

     (2)  Conditioned upon the mortgage servicer licensee faithfully performing any and all written agreements or commitments with or for the benefit of borrowers and mortgagees, truly and faithfully accounting for all funds received from a borrower or mortgagee in the person’s capacity as a mortgage servicer, and conducting the mortgage business consistent with the provisions of this chapter to perform any written agreements or commitments.

     (k)  The commissioner, or any person claiming to have sustained damage by reason of the failure of the mortgage servicer to comply with the mortgage servicer’s bond, or by the wrongful conversion of funds paid by a borrower to the mortgage servicer, may bring an action on the bond to recover the damage therefrom.  The commissioner may deposit with a court of competent jurisdiction all or any part of the sum of the bond.  The proceeds of the bond, even if mixed with other assets of the principal, shall be deemed by operation of law to be held in trust for the benefit of claimants against the principal in the event of bankruptcy of the principal and shall be immune from attachment by creditors and judgment creditors.  The surety bond shall run concurrently with the period of the license for the principal office of the mortgage servicer and the aggregate liability under the bond shall not exceed the penal sum of the bond.  The principal shall notify the commissioner of the commencement of an action on the bond.  When an action is commenced on a principal’s bond, the commissioner may require the filing of a new bond and immediately on recovery on any action on the bond, the principal shall file a new bond.

     (l)  A surety may cancel the surety bond required by this section at any time by a written notice to the principal stating the date cancellation shall take effect.  The notice shall be sent by certified mail to the principal at least thirty days prior to the date of cancellation.  A surety bond shall not be canceled unless the surety notifies the commissioner, in writing, not less than thirty days prior to the effective date of cancellation.  After receipt of the notification from the surety, the commissioner shall give written notice to the principal of the date the cancellation shall take effect.  The commissioner shall automatically suspend the license of a mortgage servicer on that date.  No automatic suspension or inactivation shall occur if, prior to the date that the bond cancellation shall take effect:

     (1)  The principal submits a letter of reinstatement of the bond or a new bond; or

     (2)  The mortgage servicer licensee has ceased business in this State and has surrendered all licenses in accordance with this chapter.

     Automatic suspension of a mortgage servicer license by the commissioner, and subsequent orders and proceedings, if any, shall be conducted pursuant to section 454M-7.

     (m)  If the commissioner finds that the financial condition of a mortgage servicer so requires, as evidenced by the reduction of tangible net worth, financial losses, or potential losses as a result of a violation of law or rule, the commissioner may require one or more additional bonds that meet the requirements of this section.  The licensee shall file any additional bonds no later than ten days after receipt of the commissioner’s written notice of the requirement for one or more additional bonds.  A mortgage servicer or mortgage lender licensee shall file, as the commissioner may require, any bond rider or endorsement or addendum, as applicable, to any bond on file with the commissioner to reflect any changes necessary to maintain the surety bondrequired by this section.

     (n)  For purposes of this section, “principal” means, in the context of a surety bond requirement, the primary party who will perform the contractual obligation.