454M-6  Prohibited activities.  (a)  It shall be a violation of this chapter for any mortgage servicer in the course of any mortgage loan transaction, or in connection with any mortgage servicing business, to:

Terms Used In Hawaii Revised Statutes 454M-6

  • 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.
  • complaint: A written statement by the plaintiff stating the wrongs allegedly committed by the defendant.
  • credit bureau: An agency that collects individual credit information and sells it for a fee to creditors so they can make a decision on granting loans. Typical clients include banks, mortgage lenders, credit card companies, and other financing companies. (Also commonly referred to as consumer-reporting agency or credit-reporting agency.) Source: OCC
  • escrow: Money given to a third party to be held for payment until certain conditions are met.
  • foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
  • fraud: Intentional deception resulting in injury to another.
  • mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • mortgage loan: A loan made by a lender to a borrower for the financing of real property. Source: OCC
  • mortgagee: The person to whom property is mortgaged and who has loaned the money.
  • 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.
  • truth in lending act: The Truth in Lending Act is a federal law that requires lenders to provide standardized information so that borrowers can compare loan terms. In general, lenders must provide information on Source: OCC

     (1)  Misrepresent or conceal material facts, make false promises, or pursue a course of misrepresentation through its agents or otherwise;

     (2)  Engage in any transaction, practice, or course of business that is not in good faith, does not constitute fair dealing, or that constitutes a fraud upon any person, in connection with the servicing, purchase, or sale of any mortgage loan;

     (3)  Obtain property by fraud or misrepresentation;

     (4)  Misapply residential mortgage loan payments;

     (5)  Misapply payments to escrow accounts;

     (6)  Require any amount of funds to be remitted by means more costly to the borrower than a bank or certified check or attorney’s check from an attorney’s account to be paid by the borrower;

     (7)  Fail to timely pay taxes or insurance premiums of the borrower, if and as required by this chapter;

     (8)  Fail to follow procedures concerning escrows for the payment of taxes and insurance as required by this chapter;

     (9)  Place hazard, homeowner’s, or flood insurance on the mortgaged property when the mortgage servicer knows or has reason to know that the borrower has an effective policy for such insurance;

    (10)  Fail to provide written notice to a borrower upon taking action to place hazard, homeowner’s, or flood insurance on the mortgaged property, including a clear and conspicuous statement of the procedures by which the borrower may demonstrate that the borrower has the required insurance coverage and by which the mortgage servicer shall terminate the insurance coverage placed by the mortgage servicer and refund or cancel any insurance premiums and related fees paid by or charged to the borrower;

    (11)  Place hazard, homeowner’s, or flood insurance on a mortgaged property, or require a borrower to obtain or maintain such insurance, in excess of the replacement cost of the improvements;

    (12)  Fail to provide to the borrower a refund of unearned premiums paid by a borrower or charged to the borrower for hazard, homeowner’s, or flood insurance placed by a mortgagee or the mortgage servicer if the borrower provides reasonable proof that the borrower has obtained coverage such that the forced placement insurance is no longer necessary and the property is insured.  If the borrower provides reasonable proof that no lapse in coverage occurred such that the forced placement was not necessary, the mortgage servicer shall promptly refund the entire premium;

    (13)  Collect private mortgage insurance beyond the date for which private mortgage insurance is required;

    (14)  Collect, charge, attempt to collect or charge, or use or propose any agreement purporting to collect or charge, any fee not in compliance with, or prohibited by, this chapter;

    (15)  Fail to provide a timely and accurate statement of account, as required by this chapter;

    (16)  Fail to handle a consumer complaint or inquiry in accordance with this chapter;

    (17)  Provide inaccurate information to a credit bureau, thereby harming a borrower’s creditworthiness;

    (18)  Fail to report both the favorable and unfavorable payment history of the borrower to a nationally recognized consumer credit bureau at least annually if the mortgage servicer regularly reports information to a credit bureau;

    (19)  Fail to provide or submit a timely, complete, and accurate notice, acknowledgment, statement, information, explanation, reminder, communication, or other information to any person as required by this chapter;

    (20)  Fail to comply with loss mitigation option requirements of this chapter;

    (21)  Fail to offer loan modifications in compliance with the Home Affordable Modification Program guidelines or directives, if the mortgage servicer is participating in the Home Affordable Modification Program;

    (22)  Fail to comply with the requirements of chapter 667 and ensure that the mortgage servicer’s attorneys and agents comply with chapter 667;

    (23)  Refuse to communicate with an authorized representative of the borrower who provides a written authorization signed by the borrower; provided that the mortgage servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the borrower;

    (24)  Fail to provide a timely payoff statement as required by this chapter;

    (25)  Fail to issue a release of mortgage in accordance with section 506-8;

    (26)  Conduct any business for which this chapter requires a license without holding a valid license as required under this chapter or assist or aid and abet any person in the conduct of business without a valid license as required under this chapter;

    (27)  Engage in the business of mortgage servicing without complying with bonding requirements of this chapter;

    (28)  Transfer or assign its mortgage servicer license;

    (29)  Change its name or office address without complying with the requirements of this chapter;

    (30) Fail to maintain adequate records of each residential mortgage loan transaction at the office named in the mortgage servicer license; or

    (31)  Make any false statement or omission of a material fact, in connection with any information or reports filed with a governmental agency or NMLS or in connection with any investigation conducted by the commissioner or another governmental agency.

     (b)  It shall be a violation of this chapter for any mortgage servicer in the course of any mortgage loan transaction to fail to comply with any:

     (1)  Applicable federal law or regulation related to mortgage servicing, including but not limited to:

          (A)  The Real Estate Settlement Procedures Act, including the mortgage loan servicing transfer, escrow account administration, and borrower request for information and error resolution requirements;

          (B)  The Truth in Lending Act, title 15 United States Code sections 1601 through 1667f, as amended, and Regulation Z adopted thereunder, title 12 C.F.R. part 1026, as amended; or

          (C)  Rules and regulations issued or administered by the Consumer Financial Protection Bureau, and interpretations of the rules by the Consumer Financial Protection Bureau through interpretive rules, bulletins, statements of policy, and statements of guidance;

     (2)  Agreement with a governmental entity, agency, agent, or regulator, or state attorney general that applies to the mortgage servicer, including:

          (A)  A servicer participation agreement or other agreement to participate in the Home Affordable Modification Program or other Making Home Affordable program;

          (B)  Home Affordable Modification Program rules, including guidance provided by Making Home Affordable program handbooks, and supplemental directives; or

          (C)  The National Mortgage Settlement reached in 2012 by the federal government and forty-nine states, with the five largest mortgage servicers in the United States, to address mortgage servicing, foreclosure, and bankruptcy abuses;

     (3)  Order of a court or government regulator that applies to the mortgage servicer;

     (4)  Provision of this chapter or any rule adopted pursuant to this chapter; or

     (5)  Federal or state law, rule, or regulation.

     (c)  It shall be a violation of this chapter for any mortgage servicer to provide any mortgage loan modifications or other services that would require licensing pursuant to chapter 454F, unless the mortgage servicer is licensed under chapter 454F.

     (d)  Notwithstanding any other provision of this chapter, a mortgage servicer shall not be in violation of this chapter if performance of a requirement under this chapter would constitute a violation of federal law, rules, or regulations.