§480E-10  Prohibitions.  (a)  A distressed property consultant shall not:

     (1)  Represent, expressly or by implication, in connection with the advertising, marketing, promotion, offering for sale, or performance of any mortgage assistance relief service, that a distressed property owner cannot or should not contact or communicate with the distressed property owner’s lender or servicer;

     (2)  Misrepresent, expressly or by implication, any material aspect of any mortgage assistance relief service, including but not limited to:

          (A)  The likelihood of negotiating, obtaining, or arranging any represented service or result, such as those set forth in the definition of mortgage assistance relief service;

          (B)  The amount of time it will take the distressed property consultant to accomplish any represented service or result, such as those set forth in the definition of “mortgage assistance relief service”;

          (C)  That a mortgage assistance relief service is affiliated with, endorsed or approved by, or otherwise associated with:

               (i)  The United States government;

              (ii)  Any governmental homeowner assistance plan;

             (iii)  Any federal, state, or local government agency, unit, or department;

              (iv)  Any nonprofit housing counselor agency or program;

               (v)  The maker, holder, or servicer of the consumer’s residential loan; or

              (vi)  Any other individual, entity, or program;

          (D)  The distressed property owner’s obligation to make scheduled periodic payments or any other payments pursuant to the terms of the distressed property owner’s residential loan;

          (E)  The terms or conditions of the distressed property owner’s residential loan, including but not limited to the amount of the debt owed;

          (F)  The terms or conditions of any refund, cancellation, exchange, or repurchase policy for any mortgage assistance relief service, including but not limited to the likelihood of obtaining a full or partial refund, or the circumstances in which a full or partial refund will be granted, for a mortgage assistance relief service;

          (G)  That the distressed property consultant has completed the represented services or has a right to claim, demand, charge, collect, or receive payment or other consideration;

          (H)  That the distressed property owner will receive legal representation;

          (I)  The availability, performance, cost, or characteristics of any alternative to for-profit mortgage assistance relief services through which the distressed property owner can obtain mortgage assistance relief, including negotiating directly with the residential loan holder or servicer, or using any nonprofit housing counselor agency or program;

          (J)  The amount of money or the percentage of the debt amount that a distressed property owner may save by using any mortgage assistance relief service;

          (K)  The total cost to purchase any mortgage assistance relief service; or

          (L)  The terms, conditions, or limitation of any offer of mortgage assistance relief the distressed property consultant obtains from the distressed property owner’s residential loan holder or servicer, including the time period in which the distressed property owner must decide to accept the offer;

     (3)  Make any representation, expressly or by implication, about the benefits, performance, or efficacy of any mortgage assistance relief service unless, at the time such representation is made, the provider possesses and relies upon competent and reliable evidence that substantiates that the representation is true.  For the purposes of this paragraph, “competent and reliable evidence” means tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that have been conducted and evaluated in an objective manner by individuals qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results;

     (4)  Conceal any material fact;

     (5)  Induce or attempt to induce a distressed property owner to waive any provision of this chapter;

     (6)  Make any promise or guarantee not fully disclosed in the distressed property consultant contract;

     (7)  Engage or attempt to engage in any activity or act concerning the distressed property not fully disclosed in the distressed property consultant contract;

     (8)  Induce or attempt to induce a distressed property owner to engage in any activity or act not fully disclosed in the distressed property consultant contract;

     (9)  Take, ask for, claim, demand, charge, collect, or receive any compensation until after the distressed property consultant has fully performed each service the distressed property consultant contracted to perform or represented would be performed;

    (10)  Take, ask for, claim, demand, charge, collect, or receive for any reason, any fee, interest, or any other compensation that exceeds the two most recent monthly mortgage installments of principal and interest due on the loan first secured by the distressed property or the most recent annual real property tax charged against the distressed property, whichever is less;

    (11)  Take or ask for a wage assignment, a lien of any type on real or personal property, or other security to secure the payment of compensation.  This type of security is void and not enforceable;

    (12)  Receive any consideration from any third party in connection with services rendered to a distressed property owner unless the consideration is fully disclosed in the distressed property consultant contract;

    (13)  Acquire any interest, directly or indirectly, or by means of a subsidiary or affiliate, in a distressed property from a distressed property owner with whom the distressed property consultant has contracted;

    (14)  Require or ask a distressed property owner to sign any lien, encumbrance, mortgage, assignment, or deed unless the lien, encumbrance, mortgage, assignment, or deed is fully described in the distressed property consultant contract, including all disclosures required by this chapter;

    (15)  Take any power of attorney from a distressed property owner for any purpose, except to inspect documents concerning the distressed property as allowed by law;

    (16)  Advise or instruct a distressed property owner to stop making payments to any lending party if that property owner is not in receipt of a written notice that the property owner’s residential loan has been accelerated;

    (17)  Fail to disclose, at the time the distressed property consultant furnishes the distressed property owner with the lending party’s written offer for mortgage assistance relief, the following information:

 

               “This is an offer of mortgage assistance we obtained from your lender [or servicer].  You may accept or reject the offer.  If you reject the offer, you do not have to pay us.  If you accept the offer, you will have to pay us [same amount as disclosed in the distressed property consultant contract] for our services.”

 

          The disclosure required by this paragraph shall be made in a clear and prominent manner, on a separate written page, and preceded by the heading:

 

               “IMPORTANT NOTICE: Before buying this service, consider the following information.”

 

          The heading shall be in boldface type that is two-point type larger than the type size of the required disclosure;

    (18)  Fail to provide, at the time the distressed property consultant furnishes the distressed property owner with the written agreement specified in paragraph (17), a notice from the lending party that describes all material differences between the terms, conditions, and limitations associated with the distressed property owner’s current residential loan and the terms, conditions, and limitations associated with the distressed property owner’s residential loan if the owner accepts the lending party’s offer, including but not limited to differences in the loan’s:

          (A)  Principal balance;

          (B)  Contract interest rate, including the maximum rate and any adjustable rates, if applicable;

          (C)  Amount and number of the owner’s scheduled periodic payments on the loan;

          (D)  Monthly amounts owed for principal, interest, taxes, and any mortgage insurance on the loan;

          (E)  Amount of any delinquent payments owing or outstanding;

          (F)  Assessed fees or penalties; and

          (G)  Term.

          The notice required by this paragraph shall be made in a clear and prominent manner, on a separate written page, and preceded by the heading:  “IMPORTANT INFORMATION FROM YOUR [name of lender or servicer] ABOUT THIS OFFER.”  The heading shall be in boldface type that is two-point type larger than the type size of the required disclosure;

    (19)  Fail to disclose in the notice specified in paragraph (18), in cases where the offer of mortgage assistance relief obtained by the distressed property consultant from the lending party is a trial residential loan modification, the terms, conditions, and limitations of the offer, including but not limited to:

          (A)  The fact that the distressed property owner may not qualify for a permanent loan modification; and

          (B)  The likely amount of the scheduled periodic payments and any arrears, payments, or fees that the distressed property owner would owe in failing to qualify; or

    (20)  File any document in the bureau of conveyances of the State of Hawaii that purports to modify, reduce, eliminate, discharge, contest, or otherwise affect any mortgage, lien, or encumbrance of record without either the express written consent of the lending party or lienholder or a court order permitting or directing the document to be filed, with the exception of a notice of pendency of action or lis pendens.

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Terms Used In Hawaii Revised Statutes 480E-10

  • Appraisal: A determination of property value.
  • Consideration: means any payment or thing of value provided to an owner of a distressed property, including reasonable costs paid to independent third parties necessary to complete the distressed property conveyance or payment of money to satisfy a debt or legal obligation of an owner of the distressed property. See Hawaii Revised Statutes 480E-2
  • Contract: A legal written agreement that becomes binding when signed.
  • 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.
  • Deed: The legal instrument used to transfer title in real property from one person to another.
  • Distressed property: means any residential real property that:

         (1)  Is in foreclosure or at risk of foreclosure because payment of any loan that is secured by the residential real property is more than sixty days delinquent;

         (2)  Had a lien or encumbrance charged against it because of nonpayment of any taxes, lease assessments, association fees, or maintenance fees;

         (3)  Is at risk of having a lien or encumbrance charged against it because the payments of any taxes, lease assessments, association fees, or maintenance fees are more than ninety days delinquent;

         (4)  Secures a loan for which a notice of default has been given;

         (5)  Secures a loan that has been accelerated; or

         (6)  Is the subject of any solicitation, representation, offer, agreement, promise, or contract to perform any mortgage assistance relief service. See Hawaii Revised Statutes 480E-2

  • Distressed property consultant: means any person who performs or provides, or attempts to perform or provide, or who arranges for others to perform or provide, or who assists others to perform or provide, or who makes any solicitation, representation, or offer to perform or provide, any mortgage assistance relief service. See Hawaii Revised Statutes 480E-2
  • Distressed property consultant contract: means any agreement or obligation between an owner or agent of an owner of a distressed property and a distressed property consultant. See Hawaii Revised Statutes 480E-2
  • Distressed property conveyance: means the transfer of any interest in a distressed property effected directly or indirectly by or through a distressed property consultant. See Hawaii Revised Statutes 480E-2
  • Distressed property conveyance contract: means any agreement or obligation affecting a distressed property conveyance. See Hawaii Revised Statutes 480E-2
  • Distressed property purchaser: means any person who acquires any interest in a distressed property directly or indirectly through a distressed property conveyance or distressed property conveyance contract. See Hawaii Revised Statutes 480E-2
  • Escrow: Money given to a third party to be held for payment until certain conditions are met.
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
  • Fully performed: means :

         (1)  In the case of relief requiring the consent of any lending party, the distressed property consultant or attorney has:

              (A)  Carried out and provided all of the services the distressed property consultant or attorney contracted to perform or represented would be performed; and

              (B)  Obtained from the lending party a written offer for mortgage assistance relief that the consumer has accepted by executing the written contract. See Hawaii Revised Statutes 480E-2

  • Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • Lending party: means the person from whom mortgage assistance relief is sought and includes the residential loan holder or servicer. See Hawaii Revised Statutes 480E-2
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Material: means likely to affect a consumer's choice of, or conduct regarding, any mortgage assistance relief service. See Hawaii Revised Statutes 480E-2
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Mortgage assistance relief service: means any service, plan, or program that is offered or provided to the consumer in exchange for consideration and is represented, expressly or by implication, to assist or attempt to assist the consumer with any of the following:

         (1)  Stopping, preventing, or postponing the loss of any residential real property, whether by mortgage or deed or trust foreclosure sale or repossession, or otherwise saving any consumer's residential real property from foreclosure or repossession;

         (2)  Stopping, preventing, or postponing the charging of any lien or encumbrance against any residential real property or reducing or eliminating any lien or encumbrance charged against any residential real property for the nonpayment of any taxes, lease assessments, association fees, or maintenance fees;

         (3)  Saving the owner's property from foreclosure or loss of home due to nonpayment of taxes;

         (4)  Negotiating, obtaining, or arranging any modification of any term of a residential loan, including a reduction in the amount of interest, principal balance, monthly payments, or fees;

         (5)  Negotiating, obtaining, or arranging any extension of the period of time within which the consumer may:

              (A)  Cure the default on a residential loan;

              (B)  Reinstate the residential loan;

              (C)  Redeem any residential real property; or

              (D)  Exercise any right to reinstate a residential loan or redeem a residential real property;

         (6)  Negotiating, obtaining, or arranging, with respect to any residential real property:

              (A)  A short sale;

              (B)  A deed-in-lieu of foreclosure; or

              (C)  Any other disposition of the property other than a sale to a third party who is not the residential loan holder;

         (7)  Obtaining any forbearance or modification in the timing of payments from any residential loan holder or servicer;

         (8)  Obtaining any forbearance from any beneficiary or mortgagee, or any relief with respect to a tax sale of any residential real property;

         (9)  Obtaining any waiver of an acceleration clause or balloon payment contained in any promissory note or other contract secured by a mortgage on any residential real property or contained in the mortgage;

        (10)  Obtaining any extension of the period within which the owner may reinstate the owner's rights with respect to the owner's property;

        (11)  Obtaining a loan or advance of funds while the consumer is in foreclosure or at risk of foreclosure due to nonpayment of any obligation related to a residential real property, including but not limited to one or more loans, taxes, lease assessments, association fees, or maintenance fees;

        (12)  Obtaining a loan or advance of funds during any post-tax sale redemption period;

        (13)  Considering or deciding whether a consumer should continue making payments on any loan, taxes, lease assessments, association fees, or maintenance fees or any other obligation related to a residential real property;

        (14)  Exercising any cure of default;

        (15)  Avoiding or ameliorating the impairment of the property owner's credit resulting from the recording or filing of a notice of default or the conduct of a foreclosure sale or tax sale;

        (16)  Drafting, preparing, performing, creating, or otherwise obtaining a forensic loan audit, a forensic securitization audit, or any other type of audit, report, summary, affidavit, or declaration involving an opinion, determination, or analysis of whether a lending party has an enforceable mortgage or lien, predicated upon claims that a lending party that is a party to a pooling and service agreement failed to adhere to the terms of that agreement, or that errors occurred after the signing of the mortgage loan, or disputing whether the lending party is the holder of the promissory note, or any argument that the lending party has failed to comply with federal or state mortgage lending laws;

        (17)  Drafting, preparing, performing, creating, or otherwise obtaining any documentation used or intended to be used to advance any legal theory in defense of a foreclosure or ejectment action, regardless of any disclaimer as to providing legal advice; or

        (18)  Understanding any legal theory that may be used in defense of a foreclosure or ejectment action, regardless of any disclaimer as to providing legal advice. See Hawaii Revised Statutes 480E-2

  • 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.
  • Person: means any individual, partnership, corporation, limited liability company, association, or other group or entity, however organized. See Hawaii Revised Statutes 480E-2
  • Personal property: All property that is not real property.
  • Power of attorney: A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Source: OCC
  • property owner: means the owner of any distressed property. See Hawaii Revised Statutes 480E-2
  • Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
  • Residential loan: means any loan that is secured by a mortgage against residential real property, regardless of whether the property owner lacks sufficient equity in the property so as to render the loan partially or entirely unsecured. See Hawaii Revised Statutes 480E-2
  • Residential loan holder: means any person who holds the residential loan that is the subject of the offer to provide mortgage assistance relief services. See Hawaii Revised Statutes 480E-2
  • Servicer: means the person responsible for:

         (1)  Receiving any scheduled periodic payments pursuant to the terms of the residential loan that is the subject of the offer to provide mortgage assistance relief services; and

         (2)  Making the payments of principal and interest and such other payments with respect to the amounts received from the consumer as may be required pursuant to the terms of the mortgage servicing loan documents or servicing contract. See Hawaii Revised Statutes 480E-2

  • Trial: A hearing that takes place when the defendant pleads "not guilty" and witnesses are required to come to court to give evidence.

     (b)  A distressed property purchaser shall not:

     (1)  Misrepresent or conceal any material fact;

     (2)  Induce or attempt to induce a distressed property owner to waive any provision of this chapter;

     (3)  Make any promise or guarantee not fully disclosed in the distressed property conveyance contract;

     (4)  Engage or attempt to engage in any activity or act concerning the distressed property not fully disclosed in the distressed property conveyance contract;

     (5)  Induce or attempt to induce a distressed property owner to engage in any activity or act not fully disclosed in the distressed property conveyance contract;

     (6)  Enter into or attempt to enter into a distressed property conveyance unless the distressed property purchaser verifies and can demonstrate that the distressed property owner has a reasonable ability to pay any amounts due to reacquire an interest in the distressed property or to make monthly or any other payments due under a distressed property conveyance contract or distressed property lease, if the distressed property purchaser allows any distressed property owner to remain in, occupy, use, or repurchase the distressed property;

     (7)  Fail to make a payment to the  distressed property owner at the time the title is conveyed so that the distressed property owner has received consideration in an amount of at least eighty-two per cent of the property’s fair market value, or, in the alternative, fail to pay the distressed property owner no more than the costs necessary to extinguish all of the existing obligations on the distressed property, as set forth in this chapter; provided that the distressed property owner’s costs to repurchase the distressed property pursuant to the terms of the distressed property conveyance contract do not exceed one hundred twenty-five per cent of the distressed property purchaser’s costs to purchase the property.  If a distressed property owner is unable to repurchase the property pursuant to the terms of the distressed property conveyance contract, the distressed property purchaser shall not fail to make a payment to the distressed property owner so that the distressed property owner has received consideration in an amount of at least eighty-two per cent of the property’s fair market value at the time of conveyance or at the expiration of the distressed property owner’s option to repurchase;

     (8)  Enter into any repurchase or lease agreement as part of a distressed property conveyance contract or subsequent conveyance of an interest in the distressed property back to a distressed property owner that is unfair or commercially unreasonable or engage in any other unfair conduct;

     (9)  Represent, directly or indirectly, that the distressed property purchaser is acting as an advisor or a consultant or is acting on behalf of or assisting a distressed property owner to “remain in the house”, “save the house”, “buy time”, or “stop the foreclosure” or is doing anything other than purchasing the distressed property;

    (10)  Misrepresent the distressed property purchaser’s status as to licensure or certification;

    (11)  Do any of the following until after the time during which a distressed property owner may cancel the distressed property conveyance contract:

          (A)  Accept from a distressed property owner execution of any instrument of conveyance of any interest in the distressed property;

          (B)  Execute an instrument of conveyance of any interest in the distressed property; or

          (C)  Pursuant to chapter 501 or 502, record any document signed by a distressed property owner, including any instrument of conveyance;

    (12)  Fail to re-convey title in a distressed property to the distressed property owner or owners when the terms of the distressed property conveyance contract have been fulfilled if the distressed property consultant or distressed property purchaser contracted or represented that title in the distressed property would be re-conveyed to the distressed property owner or owners when the terms of the distressed property conveyance contract have been fulfilled;

    (13)  Induce or attempt to induce a distressed property owner to execute a quitclaim deed concerning a distressed property;

    (14)  Enter into a distressed property conveyance contract where any party to the contract is represented by power of attorney;

    (15)  Immediately following the conveyance of the distressed property, fail to extinguish all liens encumbering the distressed property at the time of the distressed property conveyance or fail to assume all liability with respect to all liens encumbering the distressed property at the time of the distressed property conveyance, which assumption shall be accomplished without violations of the terms and conditions of the lien or liens being assumed.  Nothing herein shall preclude a lender from enforcing any provision in a contract that is not otherwise prohibited by law;

    (16)  Fail to complete a distressed property conveyance through:

          (A)  An escrow depository licensed by the department of commerce and consumer affairs;

          (B)  A bank, trust company, or savings and loan association authorized under any law of this State or of the United States to do business in the State;

          (C)  A person licensed as a real estate broker in this State who is the broker for a party to the escrow; provided that the person does not charge any escrow fee; or

          (D)  A person licensed to practice law in this State who, in escrow, is not acting as the employee of a corporation; provided that the person does not charge any escrow fee; or

    (17)  Cause the property to be conveyed or encumbered without the knowledge or permission of all distressed property owners or in any way frustrate the ability of any distressed property owner to reacquire the distressed property.

     (c)  There shall be a rebuttable presumption that an appraisal by a person licensed or certified as a real property appraiser by the State or the federal government is an accurate determination of the fair market value of the property.

     (d)  An evaluation of “reasonable ability to pay” under this chapter shall include debt to income ratio, fair market value of the distressed property, and the distressed property owner’s payment history.